As filed with the Securities and Exchange Commission on May 22, 1997
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GREENMAN TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-13776 71-0724248
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
7 Kimball Lane, Building A
Lynnfield, Massachusetts 01940
(617) 224-2411
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Maurice E. Needham
Chief Executive Officer
GreenMan Technologies, Inc.
7 Kimball Lane, Building A
Lynnfield, Massachusetts 01940
(617) 224-2411
(Name, address, including zip code, telephone number,
including area code, of agent for service)
Copy to:
John A. Piccione, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
(617) 338-2800
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Approximate date of commencement of proposed sale to the public: From
time to time or at one time after the effective date of the Registration
Statement as determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_| _____________
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| _____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following
box. |_|
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Amount of
Title of Each Class of Securities to Amount to Maximum Registration
be Registered be Registered Price to Public Offering Price Fee(3)
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<S> <C> <C> <C> <C>
Common Stock, par value $.01 per 2,577,890 $ .92 $2,371,658.80 $718.68
share(1)(2)
<FN>
(1) The Common Stock being registered consists of (i) up to 2,123,051 shares issuable upon conversion of the Company's Convertible
Notes due October 1998 (the "Notes"); (ii) 300,000 shares underlying common stock purchase warrants (the "Investor Warrants")
issued to the purchasers of the Notes in connection with the sale of the Notes; and (iii) 154,839 shares underlying common
stock purchase warrants issued to the placement agent in connection with the sale of the Notes and Investor Warrants, all as
described in the "SELLING STOCKHOLDERS" and "PLAN OF DISTRIBUTION" sections of the Prospectus.
(2) Pursuant to Rule 416, there are also registered hereby such additional indeterminate number of shares of such Common Stock as
may become issuable in accordance with the terms of the Notes and Warrants referred to above.
(3) The registration fee is calculated pursuant to Rule 457(c) of the Securities Act of 1933 by taking the average of the closing
bid and asked prices of the registrant's Common Stock, $.01 par value per share, on May 20, 1997 as reported on the NASDAQ
SmallCap Market.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
(ii)
<PAGE>
Subject to Completion
Preliminary Prospectus dated May 22, 1997
PROSPECTUS
GreenMan Technologies, Inc.
2,577,890 Shares of Common Stock
This Prospectus relates to 2,577,890 shares of Common Stock, $.01 par
value per share ("Common Stock" or the "Shares"), of GreenMan Technologies, Inc.
(the "Company", the "Registrant" or "GreenMan") consisting of (i) up to
2,123,051 Shares issuable upon conversion of the Company's Convertible Notes due
October 1998 (the "Notes"); (ii) 300,000 Shares issuable by the Company upon
exercise of common stock purchase warrants (the "Investor Warrants") issued to
the purchasers of the Notes in connection with the sale of the Notes; and (iii)
154,839 Shares issuable by the Company upon exercise of common stock purchase
warrants issued to the placement agent (the "Broker Warrants" and, together with
the Investor Warrants, the "Warrants") in connection with the sale of the Notes
and the Investor Warrants. There are also registered hereby a currently
indeterminate number of shares of Common Stock that may become issuable in
accordance with the terms of the Notes and the Warrants. Each Warrant is
exercisable for one share of Common Stock. A total of 150,000 Warrants are
exercisable at a price of $1.0625 per Warrant, a total of 60,000 Warrants are
exercisable at $1.00 per Warrant and a total of 244,839 Warrants are exercisable
at a price of $.96875 per Warrant. To the extent that the Warrants are
exercised, the Company will receive proceeds equal to the exercise price of the
Warrants.
All Shares to be registered hereby are to be offered by the selling
stockholders listed herein (the "Selling Stockholders"), and the Company will
receive no proceeds from the resale by the Selling Stockholders of Shares
issuable upon conversion of the Notes or exercise of the Warrants. The Company
has agreed to indemnify certain of the Selling Stockholders against certain
liabilities, including certain liabilities under the Securities Act of 1933, as
amended (the "Act"), or to contribute to payments which such Selling
Stockholders may be required to make in respect thereof.
The Company's Common Stock is listed on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") and traded on the
NASDAQ SmallCap Market under the symbol "GMTI" and on the Boston Stock Exchange
under the symbol "GMY". The last reported bid price of the Common Stock on the
NASDAQ SmallCap Market on May 20, 1997 was $.84375.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COM-
MISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" AT PAGES 5 THROUGH 13.
----------------------
It is anticipated that usual and customary brokerage fees will be paid
by the Selling Stockholders on the sale of the Common Stock registered hereby.
The Company will pay the other expenses of this offering. See "PLAN OF
DISTRIBUTION". The offer of 2,577,890 shares of Common Stock by the Selling
Stockholders as described in this Prospectus is referred to as the "Offering".
----------------------
The date of this Prospectus is ______, 1997.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained in this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Selling Stockholders. This
Prospectus does not constitute an offer to sell or solicitation of an offer to
buy securities in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that there
has been no change in the affairs of the Company since the date hereof or the
information contained or incorporated by reference herein is correct at any time
subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The Registration
Statement, the exhibits and schedules forming a part thereof and the reports,
proxy statements and other information filed by the Company with the Commission
can be inspected and copies obtained at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and New York Regional Office, Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at its principal office at 450 Fifth Street, N.W., Washington,
D.C. 20549. Such materials may also be accessed electronically by means of the
Commission's home page at http://www.sec.gov. This prospectus, which constitutes
part of a Registration Statement filed by the Company with the Commission under
the Act omits certain information contained in the Registration Statement in
accordance with the rules and regulations of the Commission. Reference is hereby
made to the Registration Statement and the Exhibits relating thereto for further
information with respect to the Company and the Securities offered hereby. Any
statements contained herein concerning provisions of any documents are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an Exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission
pursuant to the Exchange Act, are hereby incorporated in this Prospectus and
specifically made a part hereof by reference: (i) the Company's Annual Report on
Form 10-KSB for the fiscal year ended May 31, 1996; (ii) the Company's Quarterly
Reports on Form 10-QSB for the quarters ended August 31, 1996, November 30, 1996
and February 28, 1997; (iii) the Company's Current Report on Form 8-K dated May
5, 1997 and (iv) the description of the Company's Common Stock contained in the
Registration Statement on Form SB-2 File No. 33-86138 filed with the Commission
on November 9, 1994, as amended. All documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the Offering of the Shares shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the respective dates of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that
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<PAGE>
a statement contained herein (or in the applicable Prospectus Supplement), or in
any subsequently filed document that also is or is deemed to be incorporated
herein by reference, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference in this Prospectus (excluding exhibits unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests for such copies should be made to the Company at its
principal executive offices, 7 Kimball Lane, Building A, Lynnfield,
Massachusetts 01940, Attention: Charles Coppa, telephone (617) 224-2411.
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<PAGE>
PROSPECTUS SUMMARY
<TABLE>
<CAPTION>
The following summary information is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus or incorporated
herein by reference and the financial statements which are incorporated herein
by reference.
<S> <C>
THE COMPANY.............................. GreenMan Technologies, Inc. was formed primarily to develop,
manufacture and sell "environmentally friendly" plastic and
thermoplastic rubber parts and products that are manufactured
using recycled materials and/or are themselves partially or wholly
recyclable. The Company has two business segments, a molding
operation located in Malvern, Arkansas and a recycling operation,
located in Jackson, Georgia. The Company also owns all of the
outstanding common stock of DuraWear Corporation
"DuraWear"), an Alabama corporation located in Birmingham,
Alabama, which manufactures, installs and markets high quality
ceramic, polymer composite, and alloy steel materials utilized in
such industries as paper and pulp, mining, coal handling and grain
storage and transportation. On April 18, 1997, the Company
announced the signing of a letter of intent with Browning Ferris
Industries, Inc. ("BFI") to purchase all of the issued and
outstanding stock of BFI's tire recycling subsidiaries in Jackson,
Georgia and Savage, Minnesota and certain tire processing related
assets at BFI's Azusa, California facility. See "MATERIAL
DEVELOPMENTS."
RISK FACTORS............................. The Offering involves substantial risk. See "RISK FACTORS".
SECURITIES OFFERED....................... 2,577,890 shares of Common Stock, $.01 par value per share.
OFFERING PRICE........................... All or part of the Shares offered hereby may be sold from time to
time in amounts and on terms to be determined by the Selling
Stockholders at the time of sale.
USE OF PROCEEDS.......................... The Company will receive no part of the proceeds from the sale of
the shares registered pursuant to this Registration Statement other
than the exercise price of the Warrants.
NASDAQ TRADING SYMBOL.................... GMTI
</TABLE>
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RISK FACTORS
An investment in the Securities offered hereby involves a high degree
of risk and should only be purchased by investors who can afford to lose their
entire investment. The following factors, in addition to those discussed
elsewhere in the Prospectus, should be considered carefully in evaluating the
Company and its business.
Limited Operating History
Since its inception in 1992, the Company's primary activities have been
raising capital, establishing its injection molding and assembly operations and
developing its proprietary "GEM" (GreenMan Environmental Materials) Stock
materials and tire recycling activities. The Company's success is dependent upon
the successful development and marketing of its current and future products and
increasing revenue. The probability of such success is highly dependent upon the
Company increasing its customer base and volume of injection molding and
assembly operations, its ability to market successfully its proposed GreenMan
consumer products, as well as the commencement of operations for the recovery of
crumb rubber from tires, among other things. The likelihood of the Company's
overall success must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection with
the establishment of a new business and the development of new technologies.
These include, but are not limited to, manufacturing on a high-capacity,
multi-shift basis, competition, technological obsolescence, development of new
products by competitors, the need to develop market expertise, setbacks in
product development, market acceptance, sales and marketing and government
regulation.
Continuing Operating Losses; Explanatory Paragraph in Independent Auditors'
Report on GreenMan's Financial Statements Regarding the Company's Ability to
Continue as a Going Concern
The Company has not been profitable since its inception. For the fiscal
years ended May 31, 1994, 1995 and 1996, the Company incurred net losses of
$660,105, $1,092,006 and $1,578,321, respectively. For the nine months ended
February 28, 1997, the Company reported a net loss of $3,498,550, a working
capital deficit of $4,413,630 and an accumulated deficit of $7,197,004. The
Company expects to continue to incur losses for the foreseeable future, and
there can be no assurance that the Company will achieve or maintain
profitability or that any revenue growth can be sustained in the future.
The Company's independent auditors have included an explanatory
paragraph in their report on the Company's financial statements for the year
ended May 31, 1996 to the effect that the Company's ability to continue as a
going concern is contingent upon its ability to secure financing and attain
profitable operations. In addition, the Company's ability to continue as a going
concern must be considered in light of the problems, expenses and complications
frequently encountered by its entrance into established markets and the
competitive environment in which the Company operates.
Uncertainty of Success of Proposed Crumb Rubber Facility
The Company allocated approximately $1,000,000 from the proceeds of its
initial public offering in September 1995 for the construction of a crumb rubber
recycling facility. As of February 28, 1997, the construction was complete and
approximately $900,000 of the total estimated construction costs of $1,000,000
had been expended. The Company's recycling operation, which has not yet begun
generating significant revenue, is operating under limited conditions as the
Company has made a decision to upgrade its Jackson, Georgia crumb rubber
production facility to produce a higher-grade product. As a result, the Company
will redeploy its current equipment in a yet-to-be-announced joint venture.
During this
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<PAGE>
refacilitation, the Company is required to sell lower value-added Tire Derived
Fuel ("TDF") as a way to fulfill its obligation to BFI Tire Recyclers of
Georgia, Inc., a wholly owned subsidiary of Browning-Ferris Industries ("BFI"),
as described herein. The Company is obligated to "take or pay" for 605 tons of
TDF chips per month starting in August 1996 from BFI pursuant to a December 1995
agreement. BFI has acknowledged the delay in production and has agreed to reduce
the Company's obligation by fifty percent (50%) through May 1997. This
obligation will be eliminated if the Company is successful in completing the
proposed acquisition of certain BFI tire recycling operations. See "MATERIAL
DEVELOPMENTS". In addition, there can be no assurance that crumb rubber will
ever be produced in commercial quantities at a price that will be competitive
with, or at a level of quality that will be comparable or superior to, crumb
rubber currently available on the market, or that any significant revenues or
profits will be generated by sales of crumb rubber.
Limited Experience in Producing GEM Stock; Uncertainty of Market Acceptance
The Company has developed, and is currently marketing on a limited
basis, a proprietary thermoplastic rubber material, called GEM Stock, using
recovered crumb rubber in combination with recycled plastic waste and virgin
plastic. In April 1996, GreenMan signed a license agreement with an unaffiliated
third party for the exclusive worldwide right and license to use the company's
proprietary additive technology for co-mingling (mixing and blending) dissimilar
plastics and rubber. This license agreement provides GreenMan with the ability
to incorporate significantly more types of low cost recycled plastic and rubber
into the production of GEM Stock. As currently manufactured, products made using
GEM Stock have properties that are comparable to those products made using
virgin rubber or plastic at a significant cost savings to the Company. The
Company believes that GEM Stock is suitable as a raw material for use in the
manufacture of many of the types of commercial parts and products currently
manufactured by its molding operation. To date, revenues from products made
using GEM Stock have accounted for less than 10% of the Company's revenues, and,
as a result, there can be no assurance that the Company will be able to
manufacture GEM Stock in quantities necessary to achieve significant revenues
and profits. The Company may encounter difficulties in increasing production or
in hiring and training additional personnel to produce and sell its GEM Stock
material in commercial quantities in a timely manner, which could have a
materially adverse effect on the Company's business, financial condition and
results of operations.
In addition, the costs of producing crumb rubber for the GEM Stock
material may be more than anticipated by the Company, in which event the expense
of producing GEM Stock material may result in its not being a cost-effective
alternative to other raw materials even if its environmental advantages, if any,
can be demonstrated, of which there can be no assurance.
No independent market surveys or reports have been obtained regarding
the markets for the Company's GEM Stock material or for products using GEM
Stock, nor are any such reports planned by the Company. Management believes that
the Company's internal needs for GEM Stock will be addressed first, thereby
allowing the Company to become its own customer for raw materials for use in the
manufacture of its GreenMan products. Accordingly, there can be no assurance
that there will be commercial acceptance of GEM Stock or products manufactured
using GEM Stock or that significant revenues can be generated therefrom.
Uncertainty of Market Acceptance of Proposed GreenMan Consumer Products
In May 1997, the Company commenced production and sale of the first of
its proposed GreenMan consumer products, a GEM Stock trash container. The
Company also intends to use GEM Stock as the primary raw material in the
manufacture of the Company's proposed line of environmentally friendly, or
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"green" consumer products, such as recycling totes, playground and recreational
furniture, landscape timbers, corral and picket fencing, storage bins, and
home-use composters. These products are intended to be made using the broad
spectrum of crumb rubber mesh (or particle) sizes to be produced at the Jackson,
Georgia facility. The Company is evaluating the economic and manufacturing
feasibility of several of these proposed products and has conducted preliminary
discussions with possible distributors of such products. There can be no
assurance that such discussions will result in orders for the products, consumer
acceptance of the products or significant revenues for the Company. There also
can be no assurance that the Company will be able to manufacture and market its
proposed GreenMan consumer products, and if successfully commercialized, that
the Company will ever receive significant revenues from sales of its proposed
consumer products, or that any sales therefrom will be profitable. Results of
operations will depend on numerous factors, including regulatory actions,
competition and market acceptance of the Company's proposed consumer products.
The potential profitability of the Company's consumer product operations will
also depend upon the costs associated with producing crumb rubber, as well as
the costs of complying with any applicable environmental regulations, over which
the Company may have little or no control.
Need for Additional Financing to Finance Expansion Plans; Restrictions on Future
Equity Financing
Based on the Company's operating plans, management believes that the
available working capital together with revenues from operations, the sale of
common stock and the purchase of equipment through lease financing arrangements,
will be sufficient to meet the Company's cash requirements through the first
quarter of the fiscal year ending May 31, 1998. The Company expects that
additional financing will be required after this time in order to fund continued
growth. Management has identified and is currently evaluating several additional
financing alternatives and is diligently working to determine the feasibility of
each alternative. If the Company is unable to obtain additional financing, its
ability to maintain its current level of operations could be materially and
adversely affected and the Company may be required to adjust its operating plans
accordingly.
In April 1997, the Company completed a $1,500,000 offering of
convertible notes due October 1998 (the "Notes") and warrants to purchase
300,000 shares of Common Stock (the "April Offering"). The Notes are convertible
into shares of Common Stock at a conversion price equal to 70% of the average of
the closing bid prices on the five trading days immediately prior to the
conversion of the Notes, provided however, that the conversion price per share
shall be no greater than 70% of the average of the closing bid prices of the
Common Stock on the five trading days immediately prior to the date of issuance
of the Notes. The net proceeds from the April Offering were approximately
$1,280,000 after deducting commissions and expenses of approximately $220,000.
The net proceeds will be used to pay a $650,000 deposit to BFI in connection
with the proposed acquisition of certain BFI tire recycling operations (See
"MATERIAL DEVELOPMENTS"), for debt repayment and general working capital
purposes.
Pursuant to its Underwriting Agreement with the underwriter of its
initial public offering completed in October 1995, the Company may not, until
October 1997, issue any Common Stock or Preferred Stock or any warrants, options
or other rights to purchase Common Stock or Preferred Stock without the consent
of the underwriter. The Company currently has no commitments for any such
financing, and there can be no assurance that financing will be available when
needed or on terms acceptable to the Company or that the underwriter will
consent to the terms of any proposed financing. In the event that the Company is
unable to obtain financing when needed, it would be forced to restrict its
development activities to a significant extent or discontinue some or all of its
operations.
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Uncertainty of Success of Pending Acquisition of Certain Operations from
Browning Ferris Industries, Inc.
On April 18, 1997, the Company announced the signing of a letter of
intent with Browning Ferris Industries, Inc. ("BFI") to purchase all of the
issued and outstanding stock of BFI's tire recycling subsidiaries in Jackson,
Georgia and Savage, Minnesota and certain tire processing related assets at
BFI's Azusa, California facility (the "Acquisition") (See "MATERIAL
DEVELOPMENTS"). GreenMan was also granted an exclusive option to purchase BFI's
Ford Heights, Illinois tire recycling assets and contract rights. Upon the
closing of the Acquisition, the Company will pay BFI the sum of $4,850,000 in
cash plus an amount equal to the accounts receivable and inventory as shown on
the balance sheets of the operations. The closing is expected to occur in June
1997.
As of the date of this Prospectus, a definitive purchase and sale
agreement (the "Purchase and Sale Agreement") has not been executed by the
Company or BFI. Upon the signing of the Purchase and Sale Agreement, the Company
is required to pay BFI an additional deposit of $550,000 against the purchase
price. Although the Company currently has sufficient available cash to enter
into the Purchase and Sale Agreement, the Company does not have sufficient cash
to make the payment to BFI at the Closing. The Company is currently pursuing
discussions with various potential funding sources to provide the cash required.
There can be no assurance that the Company will be successful in raising the
financing required to close the acquisition or that such financing will be on
terms acceptable to the Company. In the event that the Company is not successful
in securing the financing on or before June 21, 1997, BFI could elect not to
proceed with the proposed acquisition and Company would lose all payments made
to BFI.
Assuming that the proposed acquisition is closed, there can be no
assurance that the anticipated benefits from the acquisition will be realized.
The integration of the three operations will require substantial attention from
management and there can be no assurance that management will be successful in
supervising and coordinating the activities of the additional locations. There
can be no assurance that the proposed acquisition will not have a material
adverse effect on the Company's business and results of operations. In addition,
the acquired operations may not achieve the revenue or profitability levels
experienced by the operations under BFI's ownership.
Dependence on Joint Ventures; Lack of Control Over Possible Joint Ventures
The Company's ability to develop, manufacture and market its proposed
line of environmentally friendly, or "green" consumer products as well as
manufacture GEM Stock on a cost effective basis, will be constrained by the
Company's limited financial and human resources. In order to increase its
potential ability to develop a broader range of products in a shorter period of
time than might otherwise be possible, the Company will seek to enter into joint
ventures or other strategic alliances with entities that have financial,
technical, marketing or other complementary resources. The inability of the
Company to enter into such arrangements could significantly impede the
development of products by the Company. Even if the Company enters into joint
venture agreements, the Company will not be in a position to control such joint
ventures since it is likely that joint venture partners will have greater
financial, technical or marketing resources. In addition, in the event of
disagreement between the Company and possible joint venture partners, the
Company's development and marketing plans could be seriously delayed or
terminated since the Company would likely not be in a position to alter or
terminate a joint venture agreement or to buy out its joint venture partners.
There can be no assurance that appropriate co-venturers or others can be found,
that the Company will be able to enter into such arrangements on acceptable
terms, or that such arrangements will result in the more rapid or successful
development, manufacture or sale of products.
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Dependence upon Major Customers
In the fiscal year ended May 31, 1996, two customers accounted for
approximately 38% and 14%, respectively, of the Company's consolidated net
sales. The Company does not have long-term contracts pursuant to which any
customer is required to purchase any minimum amount of products. There can be no
assurance that the Company will continue to receive orders of the same magnitude
from existing customers or that it will be able to market its current or
proposed products to new customers. The loss of any major customer by the
Company would have a materially adverse effect on the business of the Company as
a whole.
The Company's Dependence upon Suppliers of Raw Materials
Generally, raw materials required for the Company's molding operation
are purchased directly from suppliers on a purchase order basis rather than a
contract basis. There can be no assurance that, absent contracts with firm price
and delivery terms, that suppliers will not increase their prices, change their
credit terms or impose other conditions of sale that may be unfavorable to the
Company. While the Company does not believe that it would experience any
significant difficulty in obtaining materials from alternative sources on
comparable terms, there can be no assurance that such supplies could be obtained
on price and delivery terms favorable to the Company. Until such time, if ever,
that the Company begins to produce GEM Stock in sufficient quantities for its
own use on a cost effective basis, it is, and will be, required to purchase
crumb rubber and recycled and virgin plastic from third parties in order to
produce its proposed GreenMan consumer products. Management believes that there
are currently a limited number of suppliers of high-quality crumb rubber that is
free of fiber and metal. In addition, when and if the Company commences
production of GEM Stock in commercial quantities, it will primarily require used
tires as raw materials.
The Company believes that the overall supply of tires will be
sufficient to meet the Company's requirements for crumb rubber in the
foreseeable future based on the Company's agreement with BFI whereby BFI will
supply the Company's Recycling operation with a minimum of 3.5 million tires per
year, initially for 5 years with the ability to extend the agreement for another
15 years. The Company has reason to believe that through its nationwide
operations, BFI has access to more than 40 million additional tires per year for
processing. If the acquisition of certain BFI tire recycling operations is
completed, of which there can be no assurance, GreenMan will gain immediate
access to over 12 million tires. If GreenMan exercises its option to purchase
BFI's Ford Heights, Illinois tire recycling operations, GreenMan would gain
access to an additional 8 million tires. According to Scrap Tire News, nearly
250 million passenger automobile tires are currently discarded annually in the
U.S., and of that total approximately 1% are used for asphalt pavement, 11% are
burned to provide energy, approximately 2% are processed for retreading, and the
remaining tires are landfilled, adding more than 200 million tires annually to
the estimated 3 billion tires already stockpiled in landfills.
DuraWear obtains its primary raw materials, consisting of alumina and
nickel oxides from a number of sources on a purchase order rather than a
contract basis. Therefore, the price and other terms upon which such materials
are obtained are also subject to change over which DuraWear has no control.
Management believes that competitive alternate sources of such raw materials are
available, but there can be no assurance that this would be the case at a time
when such sources might be needed by the Company.
DuraWear's Dependence upon Third-Party Manufacturers
DuraWear manufactures its ceramic products at the facility it owns in
Birmingham, Alabama. DuraWear's polymer composites and other products are
manufactured by third parties on a contract basis. DuraWear's polymer composite
products are currently produced by only one supplier to DuraWear's
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<PAGE>
specifications under a confidentiality agreement, and the number of alternative
suppliers is limited. Management has identified several alternative suppliers
for DuraWear's polymer composite products in the event that there are any
adverse changes in its existing relationships. With the exception of its polymer
composites, the Company believes that there are multiple manufacturing sources
available for DuraWear's other products. While DuraWear has longstanding
relationships with its current suppliers, such facilities are not controlled by
DuraWear, and they could sever their relationships with DuraWear at any time. In
such event, particularly as regards the products for which there are now limited
suppliers, it could be difficult for DuraWear to find other suppliers that could
manufacture DuraWear's products to the specifications required by DuraWear on
acceptable terms, if at all.
Significant Competition
The injection molding contract manufacturing industry is highly
competitive and characterized by severe price-cutting by small regional
contractors. While the Company believes that its facility, modern equipment and
advanced quality control are attractive features to potential customers, there
can be no assurance that the Company can capture adequate competitive contracts
to achieve or sustain profitability, either at its present location or at any
satellite location it seeks to establish.
In seeking to introduce and market its proposed GreenMan consumer
products, the Company will be competing with many established manufacturers of
similar products. Most of these competitors have substantially greater financial
and marketing resources and significantly greater name recognition among both
retailers and consumers than the Company. A number of companies with products
made from recycled tires have already entered the market. For example, OMNI
Rubber Products manufactures solid-rubber, non-steel reinforced railroad
crossings from recycled crumb rubber and R.A.S. Recycling, Inc., together with
Royal Rubber Manufacturing, are developing playground and recreational surfacing
mats made of recycled tire rubber. In addition, several companies manufacture
products similar to the Company's proposed GreenMan line of products, such as
industrial floor mats, playground furniture, and landscape timbers. There can be
no assurance that the Company will be able to compete successfully in the
consumer market.
If the Company is successful in manufacturing and selling its GEM
Stock, of which there can be no assurance, the Company will compete with other
producers and suppliers of traditional plastic and thermoplastic rubber
products, including recycled and virgin products. The Company's success in
marketing its products will depend on its ability to convince potential buyers
that its products are of comparable or superior quality to alternative products
and that they are also comparable in cost to competing products. There can be no
assurance that the Company will be able to compete effectively with established
producers, many of which have substantially greater financial and manufacturing
resources than those of the Company.
DuraWear has several competitors for its products, most of whom have
greater financial and marketing resources than DuraWear. In the ceramics market,
competitors include Coors Ceramics Co., Champion and Packo International
Ceramics, Inc. and in the polymer composite market include Solidur Plastics,
DuPont and BP America. DuraWear competes on the basis of the longer-lasting wear
resistance performance of its products as compared to products offered by
competitors. Management believes that DuraWear products offer customers
significant cost advantages, notwithstanding DuraWear's products' higher prices.
Government and Environmental Regulation
The Company's tire recycling and manufacturing activities are subject
to extensive and rigorous government regulation designed to protect the
environment. Management does not expect that the Company's
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activities will result in the emission of air pollutants, the disposal of
combustion residues, or the storage of hazardous substances (as is the case with
other tire recycling processes such as pyrolysis). The establishment and
operation of plants for tire recycling are subject to obtaining numerous permits
and complying with environmental and other government regulations, both in the
U.S. and most foreign countries. The process of obtaining required regulatory
approvals can be lengthy and expensive. Moreover, regulatory approvals, if
granted, may include significant limitations on the Company's operations. The
EPA and comparable state and local regulatory agencies actively enforce
environmental regulations and conduct periodic inspections to determine
compliance with government regulations. Failure to comply with applicable
regulatory requirements can result in, among other things, fines, suspensions of
approvals, seizure or recall of products, operating restrictions, and criminal
prosecutions. Furthermore, changes in existing regulations or adoption of new
regulations could impose costly new procedures for compliance, or prevent the
Company from obtaining, or affect the timing of, regulatory approvals.
The effect of government regulation may be to delay for a considerable
period of time or to prevent the Company from developing its business as planned
and/or impose costly requirements on the Company, the result of which may be to
furnish an advantage to its competitors or to make the Company's business less
profitable, or unprofitable, to operate.
Technological Changes
The Company has limited resources to devote to research and development
of new products, and as a result, technological advances by any present or
potential competitors could render obsolete both present and future products of
the Company. Although the Company is not currently aware of any technological
changes which have rendered the Company's products obsolete, there can be no
assurance that in the future the Company's technology will not be rendered
obsolete as a result of technological developments. Many companies with
substantially greater resources than the Company are engaged in the development
of products and processes using recycled tires.
Limited Protection of Proprietary Information
None of the equipment or machinery that the Company currently uses or
intends to use in its current or proposed manufacturing activities are
proprietary. Any competitor can acquire equivalent equipment and machinery on
the open market. The Company believes that it has developed specialized know-how
in the blending of plastics and rubber for use in its molding machines and that
its processes are proprietary. The Company has acquired exclusive world-wide
rights to a proprietary additive technology which will enable the Company to
blend a broader range of virgin and recycled plastics together, and/or combine
such plastics with crumb rubber from recycled tires. The Company also believes
that many of the formulae and processes used in manufacturing DuraWear's
products are proprietary, and DuraWear has executed confidentiality agreements
with the appropriate employees and subcontractors. However, there can be no
assurance that competitors will not develop processes or products of comparable
efficiency and quality. DuraWear does not have any patents and does not believe
any of its products are patentable. Moreover, there can be no assurance that any
patents that may be granted in the future will be enforceable or provide the
Company with meaningful protection from competitors. Even if a competitor's
products were to infringe patents owned by the Company, it could be very costly
for the Company to enforce its rights in an infringement action, and such action
would divert funds and resources otherwise used in the Company's operations.
Consequently, there can be no assurance that the Company would elect to
prosecute potential patent infringement claims it might have. Furthermore, there
can be no assurance that the Company's proposed products will not infringe any
patents or rights of others.
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<PAGE>
The Company has used the name "GreenMan" and other trade names in
interstate commerce and asserts a common law right in and to such names. A
trademark search has been conducted for the name "GreenMan" which found that
there are no significantly similar names currently being used in the Company's
current and intended industries. The Company intends to file an application with
the U.S. Department of Commerce, Patent and Trademark Office to register its
name and establish trademark rights. There can be no assurance, however, that
such a trademark application will be approved. Although the Company has been
using the GreenMan name for its custom molding services and has not yet begun
significant marketing for its consumer products, the inability of the Company to
continue to use the name in connection with such services as well as in
connection with the proposed GreenMan consumer products could have an adverse
effect on the Company's efforts to establish name recognition for its products
in the commercial and consumer marketplace.
DuraWear has registered trademarks for a number of products, including
CeraDur and Xylethon and has used the name "ExcelloSlide" and other trade names
in interstate commerce and asserts a common law right in and to such names.
There can be no assurance, however, that such right would sufficiently protect
the Company's right to use such names or that, if and when the Company files
trademark applications for such names, that such applications would be approved.
Current Lack of, and Possible Unavailability of, Product Liability Insurance
Coverage
The Company presently maintains limited product liability insurance
relating to its products, and does not intend to increase such coverage for its
current products in the foreseeable future. The Company intends to seek
additional coverage with respect to any consumer products it markets in the
future. However, there can be no assurance that such coverage will be available
at affordable rates or that the coverage limits of the Company's insurance
policies, if any, will be adequate, if and when the Company markets its proposed
GreenMan consumer products. Such insurance is expensive and in the future may
not be available on acceptable terms, if at all. Although the Company has not
experienced any product liability claims to date, a successful claim brought
against the Company could have a materially adverse effect on the Company's
business, financial condition and results of operations.
Dependence Upon Key Personnel
The Company's success depends, to a significant extent, upon key
members of management. The loss of services of one or more of these persons,
especially the Company's Chief Executive Officer and Chairman of the Board of
Directors, Maurice E. Needham, and the Company's President, James F. Barker,
could have a materially adverse effect on the business of the Company. The
Company has entered into three-year employment agreements with each of Messrs.
Needham, Barker and Joseph E. Levangie, a director and the Company's Chief
Financial Officer. The Company has purchased key-employee life insurance
policies, each in the amount of $1,000,000, to insure the lives of Mr. Needham
and Mr. Barker. The Company believes that its future success will also depend in
part upon its ability to attract, retain and motivate qualified personnel.
Competition for such personnel is intense. There can be no assurance that the
Company will be successful in attracting and retaining such personnel.
Volatility of Stock Price
The market for securities of early stage, rapidly growing companies,
including those of the Company, has been highly volatile. The market price of
the Company's Common Stock has fluctuated between $8.63 and $.75 from October
1995 to April 1997 and was $.81 on May 15, 1997, and it is likely that the price
of the Common Stock will continue to fluctuate widely in the future.
Announcements of technical innovations,
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new commercial products, patent or proprietary rights or other developments by
the Company or its competitors could have a significant impact on the Company's
business and the market price of the Common Stock.
Limited Trading Volume of Common Stock
The development of a public market having the desirable characteristics
of liquidity and orderliness depends upon the presence in the marketplace of a
sufficient number of willing buyers and sellers at any given time, over which
neither the Company nor any market maker has any control. Accordingly, there can
be no assurance that a significant trading market for the securities offered
hereby will develop, that quotations will be available on the NASDAQ as
contemplated, or if a significant market develops, that such market will
continue. Although the trading volume for the Common Stock, as reported by
NASDAQ, averaged 246,344 shares per week during the period from October 1995 to
March 1997 and 1,119,077 shares per week during the four-week period ended April
30, 1997, there can be no assurance that persons purchasing the securities
offered hereby will be able readily to sell the securities at the time or price
desired.
Adverse Consequences Associated with Reservation of Substantial Shares of Common
Stock
As of February 28, 1997, the Company had reserved 4,258,233 shares of
Common Stock for issuance upon the exercise of its publicly-traded warrants,
underwriter warrants and other warrants. The foregoing number of shares does not
include (i) up to 1,700,000 shares of Common Stock reserved for issuance upon
conversion of its 7% convertible subordinated debentures or the 1,200,000 shares
of Common Stock reserved for issuance upon the exercise of the warrants issued
in an offering in January 1997; (ii) up to 2,577,890 shares of Common Stock
reserved for issuance upon conversion of the notes or exercise of the warrants
issued in the April Offering; (iii) nor the 1,200,000 shares of Common Stock
issuable upon conversion of the note issued to Palomar Medical Technologies,
Inc. on December 31, 1996. In addition, the Company has reserved 1,270,700
shares for issuance to employees, officers, directors and consultants under its
1993 Stock Option Plan and its 1996 Director Stock Option Plan and 866,000
shares for issuance under other options and warrants. The price which the
Company may receive for the Common Stock issuable upon exercise of such options
and warrants will, in all likelihood, be less than the market price of the
Common Stock at the time of such exercise. Consequently, for the life of such
options and warrants, the holders thereof may have been given, at nominal cost,
the opportunity to profit from a rise in the market price of the Common Stock.
The exercise of all of the aforementioned securities may also adversely
affect the terms under which the Company could obtain additional equity capital.
In all likelihood, the Company would be able to obtain additional equity capital
on terms more favorable to the Company at the time the holders of such
securities choose to exercise them. In addition, should a significant number of
these securities be exercised, the resulting increase in the amount of the
Common Stock in the public market may reduce the market price of the Common
Stock. Also, the Company has agreed that, under certain circumstances, it will
register under Federal and state securities laws certain securities issuable in
connection with warrants issued to the underwriter of the Company's initial
public offering.
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<PAGE>
THE COMPANY
The Company was incorporated under the laws of the State of Arkansas on
September 16, 1992 and reincorporated under the laws of the State of Delaware on
June 27, 1995. The Company was formed primarily to develop, manufacture and sell
"environmentally friendly" plastic and thermoplastic rubber parts and products
that are manufactured using recycled materials and/or are themselves partially
or wholly recyclable. On October 10, 1995, the Company acquired all of the
outstanding common stock of DuraWear.
The Company's molding operation, located in Malvern, Arkansas, provides
injection molding manufacturing services to customers' specifications in the
production of plastic and thermoplastic rubber parts for such products as stereo
components and speakers, water filters and pumps, plumbing components and
automotive accessories. The molding operation uses leased state-of-the-art
injection molding equipment that is energy and labor efficient, has fast cycle
times and minimizes production waste. The facility also conducts R&D testing and
development of the Company's GreenMan Environmental Materials ("GEM") Stock and
tests the use of these materials in the manufacture of a variety of "sample"
products.
The Company's molding operation commenced the manufacture of the
Company's first consumer product, a GEM Stock trash container, in the Spring of
1997. Future proposed products, to be manufactured utilizing injection molding,
will also be produced at the molding operation, which management expects to
result in a gradual transition from contract/custom molding to captive molding
activities.
The Company's recycling operation, located in Jackson, Georgia, was
established to develop low-cost sources of rubber and plastic waste (made from
recycled plastics and crumb rubber from tires) for use in the production of the
Company's GEM Stock and to develop markets for end-products to be made using the
GEM Stock.
The Company has targeted several markets with products incorporating
significant amounts of recovered crumb rubber and plastic waste, including the
building industry with anti-fatigue floor mats, roofing products, and timbers;
the lawn and garden market with landscape timbers, and fencing; the consumer
products market with trash containers, recycling totes, and storage containers;
and the transportation industry with nose cones, barriers, railroad ties and
railway crossing mats. Through an agreement with Browning Ferris Industries
("BFI"), the Company has a secured multi-year supply of waste tires to feed the
Company's Jackson, Georgia crumb rubber processing operation.
USE OF PROCEEDS
The Company will receive no part of the proceeds from the resale by the
Selling Stockholders of any Shares issuable upon conversion of the Notes or upon
exercise of the Warrants. The gross proceeds to be received by the Company from
exercise of all of the Warrants (assuming that all of the Warrants are exercised
will be $456,563, and management intends to use such proceeds for general
working capital purposes including expenditures in connection with the
development, sales and marketing of future products for the Company.
SELLING STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of shares of Common Stock by the Selling Stockholders as of the date
of this Prospectus and the number of such shares included for sale in this
Prospectus assuming the sale of all Shares being offered by this Prospectus. To
the best of the Company's knowledge, none of the Selling Stockholders has held
any office or maintained any material
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relationship with the Company or its predecessors or affiliates over the past
three years. The Selling Stockholders reserve the right to reduce the number of
Shares offered for sale or to otherwise decline to sell any or all of the Shares
registered hereunder.
The principal of the Notes is convertible, at any time commencing 60
days after the date of issuance and on or before one year from the date of
issuance, into shares of Common Stock at a conversion price per share equal to
seventy percent (70%) of the average of the closing bid prices of the Common
Stock as reported by NASDAQ on the five trading days immediately preceding the
date on which such Note is converted into Common Stock, provided however, that
the conversion price per share shall be no greater than seventy (70%) of the
average of the closing bid prices of Common Stock as reported by NASDAQ on the
five trading days immediately preceding the date of issuance of the Notes. Upon
conversion of the Notes, the Holder will also receive 400 shares of Common Stock
for each $10,000 of principal converted in payment of any and all interest on
the Note.
For purposes of the following table, the Company has assumed that all
of the principal of the Notes has been converted to Common Stock at a conversion
price per share which is 70% of the average of the closing bid prices of the
Common Stock on the five trading days immediately preceding the dates on which
the Notes were issued. A total of $750,000 in principal amount of Notes was
issued on April 7, 1997 and the assumed conversion price of these Notes is
$.8531 per share. A total of $300,000 in principal amount of Notes was issued on
April 21, 1997 and the assumed conversion price of these Notes is $.63875 per
share. The balance of $450,000 in principal amount of Notes was issued on April
30, 1997 and the assumed conversion price of these Notes is $.63 per share. The
calculation of the number of Shares owned after the Offering assumes that all of
the Shares offered hereby are sold.
<TABLE>
<CAPTION>
Shares to be Sold in Offering(1)
Shares from Shares from
Shares Owned Conversion of Exercise of Shares Owned
Name of Selling Stockholder Prior to Offering Debentures Warrants After Offering
--------------------------- ----------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Coutts & Co. AG, Zurich 0 1,234,559 190,000(2) 0
The Endeavour Capital
Fund, S.A. 0 481,667 60,000(2) 0
FT Trading Company 0 325,460 40,000(2) 0
Cook & CIE S.A. 0 81,365 10,000(2) 0
Tamosuis & Partners 0 0 98,065(3) 0
H.J. Meyers & Co., Inc. 0 0 28,387(3) 0
Taurus Financial, Inc. 0 0 28,387(3) 0
<FN>
(1) The actual number of Shares that can be sold in the Offering is subject to adjustment and could be materially less or more than
the estimated amount indicated depending upon factors which cannot be predicted by the Company at this time, including among other
things, the market price of the Common Stock on the five trading days immediately preceding the date the Notes are converted and the
principal amount of Notes actually converted.
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<PAGE>
(2) Represents shares of Common Stock issuable pursuant to Investor Warrants, each exercisable for Common Stock for two years from
the date of issuance, and issued in connection with the sale of the Notes to each purchaser of a Note in an amount equal to a
warrant to purchase one share of Common Stock for every $5.00 of principal of Notes purchased by such investor.
(3) Represents shares of Common Stock issuable pursuant to Broker Warrants, each exercisable for Common Stock at $.96875 per share
for two years from the date of issuance, which Warrants were issued to the placement agent and its designees in connection with
the sale of the Notes.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
Of the 2,577,890 Shares being registered herein for sale by the Selling
Stockholders, (i) up to 2,123,051 Shares are issuable upon conversion of the
Notes; (ii) 300,000 Shares are issuable upon exercise of the Investor Warrants;
and (iii) 154,839 Shares are issuable upon exercise of the Broker Warrants. All
Shares to be registered hereby are to be offered by certain security holders of
the Company, and, other than the exercise price of the Warrants, the Company
will receive no proceeds from the sale of Shares offered hereby.
The Selling Stockholders may sell the Common Stock registered in
connection with this Offering on the NASDAQ market system or otherwise. There
will be no charges or commissions paid to the Company by the Selling
Stockholders in connection with the issuance of the Shares. It is anticipated
that usual and customary brokerage fees will be paid by the Selling Stockholders
upon sale of the Common Stock offered hereby. The Company will pay the other
expenses of this Offering. The Shares may be sold from time to time by the
Selling Stockholders, or by pledges, donees, transferees or other successors in
interest. Such sales may be made on one or more exchanges or in the
over-the-counter market, or otherwise at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The Shares may be sold by one or more of the following: (a) a
block trade in which the broker so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
an exchange distribution in accordance with the rules of NASDAQ; and (d)
ordinary brokerage transactions. In effecting sales, brokers or dealers engaged
by the Selling Stockholders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from
Selling Stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Act in connection with such sales. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 of the Act may be sold under Rule 144 rather than pursuant
to this Prospectus.
The Company has agreed to indemnify certain of the Selling Stockholders
against certain liabilities, including certain liabilities under the Act, or to
contribute to payments which a Selling Stockholder may be required to make in
respect thereof.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Sullivan & Worcester LLP, One Post Office Square,
Boston, Massachusetts 02109. John A. Piccione, Esq., a partner at Sullivan &
Worcester LLP holds options to purchase 50,000 shares of Common Stock.
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EXPERTS
The consolidated financial statements of the Company appearing in the
Company's Annual Report on Form 10-KSB for the fiscal year ended May 31, 1996,
have been audited by Wolf & Company, P.C. independent auditors as set forth in
their report thereon, which includes an explanatory paragraph regarding the
Company's ability to continue as a going concern, included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the Shares being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.
MATERIAL DEVELOPMENTS
Proposed Acquisition of Certain Operations from Browning Ferris Industries, Inc.
On April 18, 1997, GreenMan Technologies, Inc. (the "Company")
announced that it had signed a letter of intent with Browning Ferris Industries,
Inc. ("BFI") of Houston, Texas to purchase all of the issued and outstanding
stock of BFI's tire recycling subsidiaries located in Jackson, Georgia and
Savage, Minnesota and to purchase certain tire processing related assets at
BFI's Azusa, California facility (hereinafter the purchase of the stock and
assets is referred to as the "Acquisition"). The letter of intent also granted
the Company an exclusive option to purchase BFI's Ford Heights, Illinois tire
recycling assets.
Upon the closing of the Acquisition, of which there can be no
assurance, the Company will pay BFI the sum of $4,850,000 in cash plus an amount
equal to the accounts receivable and inventory as shown on the balance sheets of
the three operations. The Company has already paid $100,000 to BFI as a good
faith deposit against the purchase price and will pay an additional $550,000
upon signing of the definitive Purchase and Sale Agreement. The Closing, which
is subject to legal and financial due diligence by the Company is expected to
occur in June 1997.
Issuances of Common Stock Upon Conversion of Company's 7% Convertible Debentures
In accordance with the terms of the 7% Convertible Subordinated
Debentures (the "Debentures") issued by the Company in January 1997, the Company
issued to certain holders of the Debentures in the period from March 26, 1997 to
April 18, 1997 an aggregate of 1,249,809 shares of Common Stock in conversion of
an aggregate of $825,000 in principal amount of the Debentures. As of April 30,
1997, the
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<PAGE>
outstanding principal amount of Debentures totaled $700,000. The principal and
accrued interest on the Debentures are convertible by the holder into shares of
Common Stock at a conversion price per share equal to the lower of (a) the
closing bid price of the Common Stock, as reported by NASDAQ, on the date of
issuance of the Debentures, or (b) 70% of the Market Price of the Common Stock.
As defined in the Debentures, the "Market Price" is the closing bid price of the
Common Stock on the trading day immediately preceding the date on which such
Debenture is converted into Common Stock, or the closing bid price in the
over-the-counter market, or in the event the Common Stock is listed on a stock
exchange, the Market Price shall be the average closing price on the exchange,
as reported to the Wall Street Journal.
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================================================================================
No dealer, salesman or other person has been authorized to give any
information or make any representation other than those contained in this
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any of the
securities other than the specific securities to which it relates, or as offer
or solicitation to any person in any jurisdiction where such an offer or
solicitation would be unlawful.
TABLE OF CONTENTS
Page
Available Information....................................2
Incorporation of Certain
Documents by Reference.................................2
Prospectus Summary.......................................4
Risk Factors.............................................5
The Company.............................................14
Use of Proceeds.........................................14
Selling Stockholders....................................14
Plan of Distribution....................................16
Legal Matters...........................................16
Experts.................................................17
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ..........................................17
Material Developments...................................17
2,577,890 Shares of Common Stock
GREENMAN TECHNOLOGIES, INC.
PROSPECTUS
May __, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the issuance and distribution of the
Common Stock to be registered are estimated (except for the Securities and
Exchange Commission filing fee) below. All such expenses will be paid by the
Registrant.
Registration Fee Under Securities Act $ 718.68
Blue Sky Fees and Expenses 2,000.00
Legal Fees and Expenses 10,000.00
Accounting Fees and Expenses 4,000.00
Printing and Mailing Costs 1,000.00
Miscellaneous Fees and Expenses 2,000.00
---------
Total Expenses $ 19,718.68
Item 15. Indemnification of Directors and Officers
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation or an amendment thereto
validly approved by stockholders to eliminate or limit personal liability of
members of its Board of Directors for violation of a director's fiduciary duty
of care. However, the elimination or limitation shall not apply where there has
been a breach of the duty of loyalty, failure to act in good faith, engagement
in intentional misconduct or knowing violation of a law, payment of a dividend
or approval of a stock repurchase which was deemed illegal or the obtaining of
an improper personal benefit. The Company's Certificate of Incorporation
provides the following language:
"NINTH. To the maximum extent permitted by Section 102(b)(7)
of the General Corporation Law of Delaware, a director of this
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
TENTH. The Corporation shall, to the fullest extent permitted
by Section 145 of the General Corporation Law of Delaware, as amended
from time to time, indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was, or has agreed
to become, a director or officer of the Corporation, or is or was
serving, or has agreed to serve, at the request of the Corporation, as
a director, officer or trustee of, or in a similar capacity with,
another corporation, partnership, joint venture, trust or other
enterprise or by reason of any action alleged to have been taken or
omitted in such capacity, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom.
II-1
<PAGE>
Indemnification may include payment by the Corporation of
expenses in defending an action or proceeding in advance of the final
disposition of such action or proceeding upon receipt of an undertaking
by the person indemnified to repay such payment if it is ultimately
determined that such person is not entitled to indemnification under
this Article.
The Corporation shall not indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person unless the initiation thereof was approved by
the Board of Directors of the Corporation.
The indemnification rights provided in this Article TENTH
shall not be deemed exclusive of any other rights to which those
indemnified may be entitled under any law, agreement or vote of
stockholders or disinterested directors or otherwise, and (ii) shall
inure to the benefit of the heirs, executors and administrators of such
persons. The Corporation may, to the extent authorized from time to
time by its Board of Directors, grant indemnification rights to other
employees or agents of the Corporation or other person serving the
Corporation, and such rights may be equivalent to, or greater or less
than, those set forth in this Article."
Section 145 of the General Corporation Law of the State of Delaware
generally provides that a corporation may indemnify any director, officer,
employee or agent against expenses, judgements, fines and amounts paid in
settlement in connection with any action against him by reason of his being or
having been such a director, officer, employee or agent, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action, had no
reasonable cause to believe his conduct was unlawful. No indemnification shall
be made, however, if he is adjudged liable for negligence or misconduct in the
performance of his duty to the corporation, unless a court determines that he is
nevertheless entitled to indemnification. If he is successful on the merits or
otherwise in defending the action, the corporation must indemnify him against
expenses actually and reasonably incurred by him. Article 5 of the Company's
By-Laws provides indemnification as follows:
"Reference is made to Section 145 of and any other relevant
provisions of the General Corporation Law of the State of Delaware.
Particular reference is made to the class of persons hereinafter called
"Indemnitees", who may be indemnified by a Delaware corporation
pursuant to the provisions of such Section 145, namely, any person, or
the heirs, executors, or administrators of such person, who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, by reason of the fact that such
person is or was a director, officer, employee, or agent of such
corporation or is or was serving at the request of such corporation as
a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise. The Corporation
shall, and is hereby obligated to, indemnify the Indemnitees, and each
of them, in each and every situation where the Corporation is obligated
to made such indemnification pursuant to the aforesaid statutory
provisions. The Corporation shall indemnify the Indemnitees, and each
of them, in each and every situation where, under the aforesaid
statutory provisions, the Corporation is not obligated, but is
nevertheless permitted or empowered, to make such indemnification, it
being understood that, before making such indemnification with respect
to any situation covered under this sentence, (i) the Corporation shall
promptly make or cause to be made, by any of the methods referred to in
Subsection (d) of such Section 145, a determination as to whether each
Indemnitee acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the Corporation,
and, in the case of any criminal action or proceeding, had no
reasonable cause to believe that his
II-2
<PAGE>
conduct was unlawful, and (ii) that no such indemnification shall be
made unless it is determined that such Indemnitee acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Corporation, and, in the case of any criminal
action or proceeding, had no reasonable cause to believe that his
conduct was unlawful."
Item 16. Exhibits
The following documents have been previously filed as Exhibits and are
incorporated herein by reference except those exhibits indicated with an
asterisk which are filed herewith:
Exhibit No. Description
3.1 Certificate of Incorporation, as amended, incorporated by
reference to Exhibit No. 3.1 of the Company's Registration
Statement on Form SB-2 [Reg. No. 33- 86138] filed November 9,
1994.
3.2 By-laws of Registrant incorporated by reference to Exhibit No.
3.2 of the Company's Registration Statement on Form SB-2 [Reg.
No. 33-86138] filed November 9, 1994.
5* Opinion of Sullivan & Worcester LLP regarding legality of
shares registered hereunder
10.1 Form of Securities Purchase Agreement between the Company and
Investors in the April Offering, incorporated by reference to
Exhibit 10.1 of the Company's Current Report on Form 8-K filed
May 5, 1997
10.2 Form of Registration Rights Agreement between the Company and
Investors in the April Offering incorporated by reference to
Exhibit 10.2 of the Company's Current Report on Form 8-K filed
May 5, 1997
10.3 Form of Convertible Note due October 1998 incorporated by
reference to Exhibit 10.3 of the Company's Current Report on
Form 8-K filed May 5, 1997
10.4 Form of Common Stock Purchase Warrant incorporated by
reference to Exhibit 10.4 of the Company's Current Report on
Form 8-K filed May 5, 1997
23.1* Consent of Wolf & Company, P.C., independent public
accountants
23.2* Consent of Sullivan & Worcester LLP (included in Exhibit 5)
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered)
II-3
<PAGE>
and any deviation from the low or high end of the
estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission
pursuant to Rule 424(b) (Section 230.424(b) of 17
C.F.R.) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in the periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
and Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the Securities offered herein, and the offering of such
Securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Shares being registered which remain
unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in such Act and is, therefore,
unenforceable.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Company pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(2) For purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the Town of Lynnfield, Commonwealth of Massachusetts, on May
22, 1997.
GREENMAN TECHNOLOGIES, INC.
By: /s/ Maurice E. Needham
Maurice E. Needham
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Form S-3 relating to Common Shares has been signed below on May o, 1997 by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Maurice E. Needham Chief Executive Officer and May 22, 1997
Maurice E. Needham Chairman of the Board of Directors
/s/ James F. Barker President and Director May 22, 1997
James F. Barker
/s/ Joseph E. Levangie Chief Financial Officer, Secretary May 22, 1997
Joseph E. Levangie and Director
/s/ Lew F. Boyd Director May 22, 1997
Lew F. Boyd
</TABLE>
II-5
EXHIBIT 5
SULLIVAN & WORCESTER LLP
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
(617) 338-2800
FAX NO. 617-338-2880
IN WASHINGTON, D.C. IN NEW YORK CITY
1025 CONNECTICUT AVENUE, N.W. 767 THIRD AVENUE
WASHINGTON, D.C. 20036 NEW YORK, NEW YORK 10017
(202) 775-8190 (212) 486-8200
FAX NO. 202-293-2275 FAX NO. 212-758-2151
May 22, 1997
GreenMan Technologies, Inc.
7 Kimball Lane, Building A
Lynnfield, Massachusetts 01940
Gentlemen:
We are familiar with the Registration Statement on Form S-3 (the "S-3
Registration Statement") to which this opinion is an exhibit, to be filed by
GreenMan Technologies, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The S-3 Registration Statement relates to the proposed public offering by
certain securityholders of the Company of a total of 2,577,890 shares (the
"Shares") of the Company's Common Stock, $.01 par value per share ("Common
Stock"), consisting of (i) up to 2,123,051 Shares issuable upon conversion of
the Company's Convertible Notes due October 1998 (the "Notes"); (ii) 300,000
Shares issuable by the Company upon exercise of certain common stock purchase
warrants (the "Warrants") issued to the purchasers of the Notes in connection
with the sale of the Notes; and (iii) 154,839 Shares issuable by the Company
upon exercise of Warrants issued to the placement agent in connection with the
sale of the Notes and the Warrants. The Registration Statement also relates to a
currently indeterminate number of shares of Common Stock that may become
issuable in accordance with the terms of the Notes and the Warrants.
We have acted as counsel to the Company in connection with the
preparation of the S-3 Registration Statement, and we have examined and relied
on the originals or copies, certified or otherwise identified to our
satisfaction of all such corporate records of the Company and such other
instruments and other certificates of public officials, officers and
representatives of the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinion
expressed below. In making such examination, we
<PAGE>
GreenMan Technologies, Inc.
March 5, 1997
Page 2
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals and the
conformity to the originals of all documents submitted to us as copies, which
facts we have not independently verified. As to various facts material to the
opinions set forth herein, we have relied without independent verification upon
certificates of public officials and upon facts certified to us by officers of
the Company. We express no opinion herein as to any laws other than the General
Corporation Law of the State of Delaware.
Based upon the foregoing, we are of the opinion that the Company has
corporate power adequate for the issuance of the Shares issuable in the manner
set forth in the S-3 Registration Statement and offered pursuant to the S-3
Registration Statement. The Shares issuable upon conversion of the Notes or the
exercise of the Warrants, assuming conversion or exercise on the date hereof
(the "Relevant Shares") have been duly authorized and reserved for issuance.
Upon conversion of the Notes into Shares and the delivery of such Shares in
accordance with the terms of the Notes, the Relevant Shares so issued will be
validly issued, fully paid and non-assessable. Upon the exercise of the Warrants
into Shares and delivery of such Shares in accordance with the terms of the
Warrants, the Relevant Shares so issued will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
S-3 Registration Statement.
Very truly yours,
/s/ SULLIVAN & WORCESTER LLP
SULLIVAN & WORCESTER LLP
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement of
GreenMan Technologies, Inc. on Form S-3 of our report, which included an
explanatory paragraph about the Company's ability to continue as a going
concern, dated July 12, 1996, appearing in the Annual Report on Form 10-KSB of
GreenMan Technologies, Inc. for the fiscal year ended May 31, 1996 and to the
incorporation by reference of our reports dated July 28, 1995, appearing in the
Final Prospectus of GreenMan Technologies, Inc. dated September 29, 1995. We
also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement and to the reference to
us under the heading "Experts" in the Final Prospectus of GreenMan Technologies,
Inc. dated September 29, 1995.
/s/ WOLF & COMPANY, P.C.
WOLF & COMPANY, P.C.
Boston, Massachusetts
May 21, 1997
