<PAGE> 1
As filed with the Securities and Exchange Commission
on September 26, 1996
Registration No. 333-______
-----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
---------------------------------------
KUSHI MACROBIOTICS CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
-------------------------------
13-3768554
(I.R.S. Employer Identification No.)
Three Stamford Landing
Stamford, Connecticut 06905
(203) 973-2929
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
-------------------------------
DANIEL A. FRANCE
Three Stamford Landing
Stamford, Connecticut 06905
(203) 973-2929
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
------------------------------------
Copies to:
RICHARD F. HOROWITZ, ESQ.
IRVING ROTHSTEIN, ESQ.
Heller, Horowitz & Feit, P.C.
292 Madison Avenue
New York, New York 10017
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- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date
of the registration statement
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 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, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [___] __________
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. |___|
<TABLE>
<CAPTION>
*-----------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
*-----------------------------------------------------------------------------------------------------------
Proposed
Maximum Proposed
Title of Each Class Amount Offering Maximum Amount of
of Securities to to be Price Per Aggregate Registra-
be Registered Registered Unit Price tion Fee
- ------------------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Common Stock
Purchase Warrants(1) 4,442,906 $ .375(2) $1,666,090(2) $ 574.47
Common Stock(3) 6,052,906 $2.125 $12,862,425 $3,255.32(4)
- ------------------------------------------------------------------------------------------------------------
Total Registration Fee $14,528,515 $3,829.79(4)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
</TABLE>
(1) To be offered by selling security holders, at their
discretion, from time to time beginning from the effective
date of this Registration Statement, at prevailing market
prices at time of sale. Includes (i) 1,575,000 warrants
ii
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issued to various persons or entities for services performed
or in settlement of claims and (ii) 2,867,906 warrants issued
as a distribution to all stockholders.
(2) Estimated solely for the purpose of calculating the
registration fee. Proposed maximum offering price per share
is estimated based upon the closing price on
September 17, 1996.
(3) Represents shares of Common Stock underlying the Warrants
being registered herewith. Also includes 1,610,000 shares
of Common Stock underlying the warrants registered and
issued in the Company's IPO, for which a current prospectus
is required for exercise.
(4) Does not include payment for the shares of Common Stock
underlying the IPO warrants discussed in footnote 3 above,
for which a fee was paid in conjunction with the filing of
Registration No. 33-92154-NY.
iii
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The registrant hereby amends the 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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
KUSHI MACROBIOTICS CORP.
Cross Reference Sheet Showing Location in Prospectus of
Information Required Therein by Item 1 through 13 of Form S-3
Registration Statement Prospectus Caption
Item and Heading of Location
---------------------- ------------------
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus............ Outside Front Cover
2. Inside Front and Outside Back
Cover Pages and Prospectus.......... Inside Front Cover
Page
3. Summary Information,
Prospectus Summary
and Ratio of Earnings to Outside Front Cover,
Fixed Charges....................... Risk Factors
4. Use of Proceeds..................... Use of Proceeds
5. Determination of Offering Price..... Not Applicable
6. Dilution............................ Not Applicable
7. Selling Security Holders ........... Selling Security
Holders
8. Plan of Distribution................ Cover Page,
Plan of Distribution
9. Description of the Securities to
be Registered....................... Not Applicable
10. Interest of Named Experts and
Counsel............................. Not Applicable
11. Material Changes.................... Not Applicable
iv
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12. Incorporation of Certain
Information by Reference............ Incorporation of Certain
Documents by Reference
13. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities..................... Disclosure of Commission
Position on
Indemnification for
Securities Act
Liabilities
v
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SUBJECT TO COMPLETION
DATED SEPTEMBER 26, 1996
-----------------
KUSHI MACROBIOTICS CORP.
----------------------
This Prospectus covers the offer and proposed sale of the following
securities:
(i) up to 1,575,000 Common Stock Purchase Warrants to acquire a
like number of shares of Common Stock, $.001 par value (the
"Common Stock"), of Kushi Macrobiotics Corp. (the "Company")
held by security holders who acquired them directly from the
Company for services provided or in settlement of claims (the
"Settlement Warrants");
(ii) up to 2,867,906 Common Stock Purchase Warrants to purchase a
like number of shares of Common Stock issued by the Company as
a distribution to all of its stockholders (the "Dividend
Warrants");
(iii) up to 4,442,906 shares of Common Stock underlying the
Settlement Warrants and the Dividend Warrants; and
(iv) up to 1,610,000 shares of Common Stock underlying the Common
Stock Purchase Warrants registered and issued in the Company's
initial public offering (the "IPO Warrants") included herein
so that their holders will have a current prospectus to permit
their exercise.
See "Selling Securityholders".
The holders of the above-listed securities (the "Securities")
are collectively referred to herein as the "Selling Securityholders." The
Settlement Warrants, Dividend Warrants and IPO Warrants are collectively
referred to herein as the "Warrants."
Each of the Selling Securityholders may be deemed to be an
"underwriter" of the Company's securities offered hereby, as that term is
defined under the Securities Act of 1933, as amended (the "Act"). Each of the
Selling Securityholders intends to sell the Warrants or the Securities offered
hereby from time to time for their own account in the open market at the prices
prevailing therein, or in individually negotiated transactions at such prices as
may be agreed upon. Each of the Selling Securityholders will bear all expenses
with respect to the offering of the Securities by them except the costs
associated with registering the Securities under the Act and preparing and
printing this Prospectus.
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The net proceeds from the Securities to be sold by the Selling
Securityholders will inure entirely to their benefit and not that of the
Company.
The Company's Warrants and Common Stock are traded on NASDAQ (Symbols -
"KMACW" AND "KMAC," respectively). The closing prices of the Company's IPO
Warrants and Common Stock on September 17, 1996 were $.375 and $2.125,
respectively.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL
DILUTION AS DESCRIBED HEREIN. See "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------
With respect to the proposed sale of the Securities by the Selling
Securityholders (if any of such holders are deemed to be an "affiliate" of the
Company), the Company is taking steps either to register the Securities or
permit such sales (or resales) pursuant to exemption from registration under the
laws only of New York. However, if purchasers of the Securities are not
residents of the aforementioned state, the Company will not be able to permit
them to effect transfers of the Securities sold by the Selling Securityholders
or to permit exercises of the Warrants, unless the purchaser or exerciser
resides in a state which permits such transactions as exempt from registration.
Under such circumstances, the only alternatives may be to sell to a resident of
the aforementioned state or to sell to an entity, such as a state registered
broker - dealer, which may be exempt under applicable state laws. Potential
purchasers of the Securities should consult with their broker and/or attorney to
determine what actions should be taken to comply with the laws of their state
with respect to any such Securities to be purchased by them. To the extent any
state laws require, transactions may only be conducted through state registered
broker-dealers.
The Company will furnish to each person to whom this Prospectus is
delivered, upon written request, a copy of any or all of the documents referred
to by reference, other than exhibits to such documents unless such exhibits are
specifically incorporated herein by reference. Requests should be addressed to:
Mr. Daniel A. France, Vice President, Kushi Macrobiotics Corp., Three Stamford
Landing, Stamford, CT 06905. The Company's telephone number is (203) 973-2929.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. ANY INFORMATION OR REPRESENTATION NOT HEREIN CONTAINED, IF GIVEN OR
MADE, MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN RESPECT OF THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE OF THIS PROSPECTUS.
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ADDITIONAL INFORMATION
The Company has filed with the headquarters office of the Securities
and Exchange Commission located at 450 Fifth Street, N.W., Washington, D.C.
20549, a Registration Statement on Form S-3 under the Securities Act of 1933
with respect to the securities offered hereby. This Prospectus filed as part of
such Registration Statement does not contain all the information set forth in,
or annexed as exhibits to, the Registration Statement. For further information
pertaining to the securities offered hereby and the Company, reference is made
to the Registration Statement and the exhibits thereto. The Registration
Statement and exhibits thereto may be inspected at the Headquarters Office of
the Securities and Exchange Commission located at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549 and at certain of the Commission's regional offices
at the following addresses: 7 World Trade Center, 13th Floor, New York, New York
10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material may be obtained from the Public Reference Section of the SEC,
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. at prescribed rates. The
Commission also maintains a Web Site that contains reports, proxy and
information statements and other information regarding registrants such as the
Company, that file electronically with the Commission. This material can be
found at http://www.sec.gov.
4
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THE COMPANY
The Company was formed under the laws of the State of Delaware in May
1994, to develop, produce and/or market a full line of high quality natural
foods based on Michio Kushi's Standard Macrobiotic Diet. In August 1995, the
Company raised approximately $4.8 million in its initial public offering ("IPO")
of Common Stock and Warrants, which proceeds were used to fund activities
undertaken during the Company's development phase. The sale and shipment of
product began in the last quarter of fiscal 1995. In early 1996, management
determined that revenues and profit margins were not adequate to sustain the
business as a going concern. Since then, the Company's management has focused on
finding a merger, joint venture or strategic alliance partner to protect
stockholder equity. To conserve its working capital pending fulfillment of this
objective, the Company reduced its staff and liquidated or otherwise resolved
certain of its contractual obligations. In May 1996, the Company executed a
definitive agreement to merge (the "Merger") with American Phoenix Group, Inc. a
Nevada corporation ("American Phoenix"), which was subsequently amended in July
1996 (the "Merger Agreement"). The process of curtailment of operations and the
reduction of overhead has been continued following execution of the Merger
Agreement. The Company continues to seek a business combination or marketing
alliance to enhance the long-term viability of its natural foods business, which
will be spun off to a new entity at the Merger.
Upon effectiveness of the Merger, American Phoenix will be merged with
and into the Company, the separate existence of American Phoenix will cease and
the Company will be the surviving corporation. As a consequence of the Merger,
title to all of the property and assets of American Phoenix will be vested in
the Company and the Company will be subject to all of the liabilities of
American Phoenix.
The Merger Agreement contemplates the pre-Merger Spin-off of the
natural foods business of the Company to the Company's stockholders. The
Spin-off will be accomplished by (i) the transfer and assignment of
substantially all of the assets and certain of the liabilities of the Company to
Kushi Foods and (ii) the declaration by the Company of a dividend, on each share
of Common Stock outstanding as of a record date prior to the effective time of
the Merger of the stock of Kushi Foods, the distribution of such dividend to be
contingent upon consummation of the Merger.
The Merger Agreement also provides for the declaration by the Company
of a dividend on each share of Common Stock outstanding as of a record date
prior to the Merger consisting of a Redeemable Common Stock Purchase Warrant of
the Company. Distribution of the Dividend Warrants will be contingent upon the
consummation of the
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Merger. Each Dividend Warrant (as well as the other Warrants), upon exercise,
will entitle the owner thereof to purchase one share of Common Stock during the
period ending on August 10, 2000 at a price (subject to certain anti-dilution
adjustments) of $3.75 per share.
The Merger Agreement provides that, as soon as practicable following
satisfaction of all conditions to the Merger, Certificates of Merger will be
filed with the Secretary of State of Delaware and the Secretary of State of
Nevada. The Merger will become effective upon the acceptance for filing of such
Certificates of Merger by the Secretary of State of Delaware and the Nevada
Secretary of State. It is currently expected that the Merger will occur on or
shortly after September 26, 1996, provided that the failure of the Merger to
occur on or before such date does not result from a breach of the Merger
Agreement by the terminating party.
The Company's corporate office is located at Three Stamford Landing,
Stamford, Connecticut 06905 at which its telephone number is (203) 973-2929.
The Company's IPO Warrants and Common Stock are traded on NASDAQ
(Symbols - "KMACW" AND "KMAC," respectively). The closing prices of the
Company's Warrants and Common Stock on September 17, 1996 was $.375 and $2.125,
respectively.
RISK FACTORS
The securities being offered hereby represent a speculative investment
and a high degree of risk. Therefore, prospective investors should thoroughly
consider all of the risk factors discussed below and should understand that they
could lose all or part of their investment. No person should consider investing
who cannot afford to lose a substantial part or all of his investment or who is
in any way dependent upon the funds that he is investing.
NECESSITY OF AN EFFECTIVE REGISTRATION STATEMENT: BLUE SKY REGISTRATION
OR EXEMPTION. There can be no assurance that the market price of the Common
Stock will at any time during the term of Warrants reach a level that would
result in the exercise of the Warrants. Moreover, any exercise of the Warrants
must be made pursuant to a registration statement which is current at the time
of exercise. The Company will endeavor promptly to maintain a current effective
registration statement under the Act covering the Common Stock issuable upon
exercise of the Warrants. If the Company is unable to maintain a current
registration statement for any reason, or if the market price of the Common
Stock does not exceed the exercise price of the Warrants during the term
thereof, the benefits of purchasing the Warrants will not be realized. Moreover,
holders of the Warrants may not be able to exercise their Warrants or
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transfer the Securities if they or their intended transferee reside in a state
or which such transactions would not be permitted under state securities laws.
DILUTIVE EFFECT OF WARRANT EXERCISE. Although in the opinion
of management the infusion of capital resulting from exercise of the Warrants
would benefit the Company by providing a source of funding for the acquisition
and development expenses associated with its corporate objectives, any such
exercise of Warrants would dilute the percentage ownership of the Company.
Moreover, the issuance of substantial amounts of Common Stock upon the exercise
of the Warrants could negatively impact the market price of such stock.
INCURRENCE OF LIABILITIES RELATING TO THE PRE-MERGER
OPERATIONS OF THE COMPANY. From the date of its inception and thereafter, the
Company has incurred debts and liabilities in the operation of its natural foods
business. Pursuant to the Merger Agreement, in conjunction with the Spin-Off,
all of the liabilities of the Company, subject to specified exceptions, will be
transferred to Kushi Foods. Although this transfer of liabilities is valid and
effective as between the Company and Kushi Foods, the Company will remain liable
to third parties for all of claims and debts arising out of the pre-Spin-Off
business of the Company. Moreover, notwithstanding the Spin-Off, the Company
will remain liable on the two leaseholds entered into by the Company in
connection with its natural foods business, although Kushi Foods will provide
the Company with a contractual indemnification of such leasehold obligations.
In the event that the assets of Kushi Foods are insufficient
to satisfy any claim, obligation or liability arising out of the pre-Spin-Off
operations of the Company, a creditor of Kushi Foods may seek satisfaction of
any such claim, obligation or liability from the assets of the Company. Any such
claims which may arise, to the extent that they are material and to the extent
that the assets of Kushi Foods are insufficient to satisfy such claims, amy
adversely affect the financial condition of the Company.
UNSPECIFIED ACQUISITIONS. Following the Merger, the Company
intends to engage in acquisitions of other companies and businesses and will
likely use its stock as consideration therefor. This may result in a dilution of
the percentage of the equity to be owned by the investors in this offering. In
addition, such acquisitions may involve speculative and risky undertakings by
the Company. Under Delaware law, acquisitions do not require stockholder
approval; however, certain acquisitions accomplished by merger or consolidation
do require stockholder approval. The Company does not, in general, intend to
submit acquisitions to stockholder vote except where required by Delaware Law.
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DILUTION. Certain stockholders of the Company acquired their
interests in the Company at an average cost per share which is significantly
less than that which purchasers of the Securities offered hereby will pay for
their stockholdings. Consequently, the purchasers of the Securities offered
hereby will bear a disproportionate share of the risk of any loss that may be
incurred in the Company's operations and an investment in the Company's
securities will result in an immediate substantial dilution of the offering
price.
NO DIVIDENDS AND NONE ANTICIPATED. The Company has not
paid any dividends and does not contemplate or anticipate paying any
dividends in the foreseeable future.
LIMITED MARKET FOR SECURITIES. The Company's securities
currently trade on NASDAQ, and trading volume generally is not at a high level.
As a result, there is a limited market in the Company's securities, and there
can be no assurance that a more active market may develop. Accordingly, any
investments in the Company's securities may be highly illiquid. Further, no
assurance can be given that the Company will meet the criteria applicable to it
for maintaining a listing on NASDAQ upon the Merger and on an ongoing basis
thereafter. The NASDAQ By-Laws require that upon a change of control (such as
will occur upon the Merger) a listed issuer must comply with all requirements
applicable to initial inclusion. Currently, the NASDAQ criteria requires an
applicant of inclusion to have: (i) two registered and active market makers,
(ii) total assets of at least $4 million, (iii) minimum bid price per share of
$3.00, (iv) 300 stockholders, and (v) 100,000 shares held by non-insiders which
shares must have a market value of at least $100,000.
POSSIBLE ISSUANCE OF PREFERRED STOCK AND POSSIBLE ADVERSE
EFFECT ON RIGHTS OF HOLDERS OF COMMON STOCK. The Company is authorized to issue
5,000,000 shares of preferred stock which is to be expanded to 10,000,000 upon
the Merger. Only 117,909 shares of preferred stock have been issued (and are
being converted to Common Stock) and the Company has no present intention of
issuing any preferred stock. However, the Board of Directors has broad powers to
fix the rights and terms of any preferred stock without requiring shareholder
approval. The issuance of preferred stock could have an adverse effect on the
rights of holders of the Company's Common Stock.
TEMPORARY LOSS OF MARKET-MAKERS. Pursuant to Rule 10b-6, any
of the Company's market-makers will be prohibited from engaging in any
market-making activities with respect to the Company's securities for the period
of ten business days prior to any solicitation by it of the exercise of any of
the Company's public warrants until the termination of such activity.
Accordingly, such market-maker may be unable to provide a market for the
Company's securities during certain periods and, as a result, holders of the
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Company's securities may find it more difficult to sell their holdings.
REQUIRED DISCLOSURE CONCERNING TRADING OF PENNY STOCKS OR
LOW-PRICED SECURITIES. The Securities and Exchange Commission ("SEC") has
adopted regulations that define a "penny stock" to be any equity security that
has a market price (as defined) of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. Effective
July 15, 1992, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction of a disclosure schedule
prepared by the SEC relating to the penny stock market. Commencing January 1,
1993, the broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer's presumed control over the
market. Finally, monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks.
While many NASDAQ-listed securities would be covered by the
definition of penny stock, transactions in a NASDAQ-listed security would be
exempt from all but the sole market-maker provision for (i) issuers who have
$2,000,000 in tangible assets ($5,000,000 if the issuer has not been in
continuous operation for three years), (ii) transactions in which the customer
is an institutional accredited investor, and (iii) transactions that are not
recommended by the broker-dealer. In addition, transactions in a NASDAQ security
directly with a NASDAQ market-maker for such securities would be subject only to
the sole market-maker disclosure, and the disclosure with respect to commissions
to be paid to the broker-dealer and the registered representative. Finally, all
NASDAQ securities would be exempt if NASDAQ raised its requirements for
continued listing so that any issuer with less than $2,000,000 in net tangible
assets or stockholders' equity would be subject to delisting. These criteria are
more stringent than the current NASDAQ maintenance requirements. Consequently,
these rules may restrict the ability of broker-dealers to sell the Company's
securities and may affect the ability of purchasers to sell the Company's
securities in the secondary market.
The following additional factors should be considered in connection
with evaluating the business and prospectus of American Phoenix which, upon the
Merger, will become the business of the Company.
LIMITED OPERATING HISTORY. The current corporate strategy of American
Phoenix is to identify, acquire and develop emerging technologies. This strategy
will continue to be pursued by the Company. American Phoenix has only a limited
history operating
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under its present corporate strategy. Between August 1994 and August 1995,
American Phoenix discontinued all operations in its original environmental
business and entered a development stage. American Phoenix first generated net
revenues during the second quarter ending February 29, 1996. Currently, American
Phoenix's revenues are generated principally by its subsidiary MTA, manufacturer
of high speed interdiction boats and Masling an engineering subsidiary of MTA.
American Phoenix also earns revenue from its note portfolio. MTA has not begun
commercial production of the next generation of its principal product. There can
be no assurance that American Phoenix will be profitable or that subsidiaries
will generate significant revenue from product sales or services. The likelihood
of success of American Phoenix must be considered light of the problems,
experiences, difficulties, complications and delays frequently encountered in
connection with the operation and development of new and expanding businesses.
COMPETITION. Management anticipates that the industries in
which the Company will operate will be intensely competitive. This competition
is expected to increase with the pace of technological developments. Current and
future competitors may have significantly greater financial, technical,
manufacturing and marketing resources than the Company and its subsidiaries.
RAPID TECHNOLOGICAL CHANGE. The industries which have in the
past been targeted by American Phoenix are characterized by rapid technological
change. As a result, other technologies may emerge that offer
technological,price or other marketing advantages over technologies to which
American Phoenix's presently or hereafter becomes committed. Lower profit
margins frequently are obtained on newer products than might be typical of
mature products. American Phoenix focuses on companies with emerging
technologies which are not likely to have mature products or substantial market
share. Characteristically of participants in industries experiencing rapid
technological change, American Phoenix's subsidiaries are likely to use product
components that are not of standard industry design and products and services
supplied by a small number of suppliers. Although these suppliers may be
replaceable, American Phoenix could face significant production delays if any
components or services were to become unavailable. The Company's ability to
exploit emerging technologies will be subject to all of the foregoing risks as
well as being dependent upon its ability to develop and market applications of
emerging technologies.
ADDITIONAL FUNDING MAY BE REQUIRED. Achievement of
Management's objectives will be dependent upon its ability to access significant
capital. Current Management believes that it can raise sufficient capital
through private placements, registered public offerings or exercise of
outstanding warrants. If, for any reasons, sufficient capital is unavailable,
the ability to develop and market
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existing businesses and to acquire new or additional businesses will
be adversely affected.
DILUTION. In the recent past, American Phoenix has sought to
acquire technologies and assets though the issuance or exchange of the capital
stock of American Phoenix, rather than cash. After the Merger, management
anticipates that the Company will continue to seek acquisition and merger
transactions that can be effected in this manner. If the net tangible book value
of such businesses or assets divided by the number of shares issued in
connection with such transaction is less than the net tangible book value of the
American Phoenix shares outstanding prior to such transaction, the then current
owner of the Common Stock will suffer immediate dilution in the net tangible
book value of their investment. No assurance can be given that such transactions
will not result in dilution to existing stockholders.
INTERNATIONAL RISKS. American Phoenix's subsidiaries currently
operate in Australia and are expected to conduct substantial business activities
in the Pacific Rim. Foreign manufacturing and sales activities are subject to
the risks of operating in an international environment. These risks include
unstable political and economic environments, local labor laws and customs,
local laws and taxes, the potential imposition of trade or foreign exchange
restrictions, tariff increases and transportation delays. In addition, financial
results are subject to fluctuations in foreign currency exchange rats within the
countries where it operates. The risk of foreign exchange losses has been
mitigated by the conduct of most of American Phoenix's foreign business
transactions in local currency. It is anticipated that this practice will be
continued by the Company.
DEPENDENCE UPON MANAGEMENT. The Company will be dependent upon
the international expertise of its new management team (which will come
primarily from current management of American Phoenix) and financial advisors to
meet its strategic objectives. None of these persons necessarily have
significant operational or marketing experience in the industries in which
companies that the Company may acquire will compete.
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USE OF PROCEEDS
The net proceeds from the Securities to be sold by the Selling
Securityholders will inure entirely to their benefit and not that of the
Company.
PLAN OF DISTRIBUTION
It is anticipated that the Selling Securityholders will exercise the
Warrants and/or offer the Securities for sale at the prices prevailing in the
over-the-counter market (or other principal market, if any, on which the
Securities may then be traded) on the date of sale. Such holders also may sell
the Securities privately, either directly to the purchaser or through a broker
or brokers. There are no arrangements or agreements with any brokers or dealers
to act as underwriter of the Securities as of the date hereof. All costs,
expenses and fees incurred in connection with the registration of the
Securities, including but not limited to all registration and filing fees,
printing expenses and fees (if any) and disbursements of the Company's counsel
and accountants are being borne by the Company, but all selling and other
expenses incurred by the holders will be borne by the holders.
SELLING SECURITY HOLDERS
This Prospectus covers the proposed offer and resale of up to 4,442,906
Warrants and their underlying shares of the Company's Common Stock, and up to
1,610,000 shares of Common Stock underlying the IPO Warrants. The Warrants were
issued to the Securityholders in payment for services rendered to the Company or
in settlement of outstanding obligations, as a distribution or in a registered
offering.
The Dividend Warrants were distributed to all stockholders on the
record date for such distribution on a one-to-one basis for each outstanding
share of Common Stock. The officers and directors of the Company who received
Dividend Warrants and their percentage ownership is contained in the chart below
listing the holders of Settlement Warrants. The Company will receive no proceeds
from the Securities being offered hereby.
None of the IPO Warrants are held by officers or directors of the
Company or, to the Company's knowledge, by any 1% holders of the Company's
Common Stock.
Following the Merger, except for Mr. France, none of the persons listed
below will be officers or directors of the Company and their ownership of the
Company will be diluted by 85% due to the issuance of shares of Common Stock to
the stockholders of American Phoenix.
12
<PAGE> 18
================================================================================
Names Warrants Warrants Warrants
Held Offered owned
After Sale
================================================================================
Daniel A. France 100,000 100,000 -0-
Michio Kushi 100,000 100,000 -0-
Mark Schindler 200,000 200,000 -0-
Dr. Eugene Stricker 200,000 200,000 -0-
Fred Sternau 50,000 50,000 -0-
Morris Kirsner 50,000 50,000 -0-
Arnold J. Wrobel 135,000 135,000 -0-
Michael Evangelist 135,000 135,000 -0-
Gifford Dieterle 30,000 30,000 -0-
Heller, Horowitz & Feit
P.C. 65,000 65,000 -0-
Bayith Lepleitot Inc. 200,000 200,000 -0-
ACG International, Inc. 150,000 150,000 -0-
Millennium Securities
Corp. 135,000 135,000 -0-
Gabriel Palka 25,000 25,000 -0-
================================================================================
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) (1) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995, filed pursuant to Section 13 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(2) The Company's Quarterly Report on Form 10-QSB for the fiscal
Quarter ended March 31, 1996, filed pursuant to Section 13 of the Exchange Act.
The Company's Quarterly Report on Form 10-QSB for the fiscal
Quarter ended June 30, 1996, filed pursuant to Section 13 of the Exchange Act.
13
<PAGE> 19
(3) The description of the Common Stock contained in the
Company's Registration Statement on Form 8-A filed pursuant to Section 12(g) of
the Exchange Act.
(4) The Company Registration Statement on Form S-4 declared
effective September 3, 1996 (Registration No.333-10755).
(b) In addition, all reports and other documents to be filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all securities
offered hereby then remaining unsold, as well as all such reports filed after
the date hereof and prior to the termination of this offering, shall be deemed
to be incorporated by reference herein and shall be deemed to be a part hereof
from the date of the filing of each such report or document.
LEGAL OPINIONS
Legal matters in connection with the securities being offered hereby
will be passed upon for the Company by Heller, Horowitz & Feit, P.C., 292
Madison Avenue, New York, New York 10017.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the Delaware General Corporation Law, as amended,
authorizes the Company to indemnify any director or officer under certain
prescribed circumstances and subject to certain limitations against certain
costs and expenses, including attorneys' fees actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which such person is a party by reason of
being a director or officer of the Registrant if it is determined that such
person acted in accordance with the applicable standard of conduct set forth in
such statutory provisions, Article 9 of the Registrant's Certificate of
Incorporation contains provisions relating to the indemnification of directors
and officers, to the full extent permitted by Delaware law.
The Company may also purchase and maintain insurance for the benefit of
any director or officer which may cover claims for which the Company could not
indemnify such person.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Small Business Issues pursuant to the foregoing provisions, or otherwise,
the Small Business Issues has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore unenforceable.
14
<PAGE> 20
TABLE OF CONTENTS
PAGE NO.
THE COMPANY.................................................................. 5
RISK FACTORS................................................................. 6
USE OF PROCEEDS.............................................................. 12
PLAN OF DISTRIBUTION......................................................... 12
SELLING SECURITY HOLDERS..................................................... 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................. 13
LEGAL OPINIONS............................................................... 14
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES............................... 14
15
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated expenses in connection
with the offering described in the Registration Statement.
Securities and Exchange Commission Fee............ $ 5,528
NASDAQ Additional Listing Fee..................... 7,500
Accountants' Fees and Expenses.................... 1,000
Legal Fees and Expenses........................... 8,000
Blue Sky Qualification, Fees and Expenses......... 75
Miscellaneous..................................... 897
-------
TOTAL $23,000
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, as amended,
authorizes the Registrant to indemnify any director or officer under certain
prescribed circumstances and subject to certain limitations against certain
costs and expenses, including attorneys' fees actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which such person is a party by reason of
being a director or officer of the Registrant if it is determined that such
person acted in accordance with the applicable standard of conduct set forth in
such statutory provisions, Article 9 of the Registrant's Certificate of
Incorporation contains provisions relating to the indemnification of directors
and officers, to the full extent permitted by Delaware law.
II-1
<PAGE> 22
The Registrant may also purchase and maintain insurance for the benefit
of any director or officer which may cover claims for which the Registrant could
not indemnify such person.
Item 16. Exhibits
Registrant hereby incorporates by reference the following documents
files as part of its Registration Statement on Form SB-2 (File No. 33-92154-NY),
declared effective August 11, 1995 (the "Registration Statement"):
3.1 Restated Certificate of Incorporation
3.2 By-Laws
4.1 Specimen Common Stock Certificate
Registrant hereby incorporates by reference the following documents that were
filed with Amendment No. 1 to the Registration Statement:
4.4 Specimen Warrant Certificate
4.5 Form of Warrant Agreement
The following exhibits are filed herewith:
5 Opinion re: legality
23(a) Consent of Israeloff, Trattner & Co.
Item 17. Undertakings.
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 to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the 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 therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
<PAGE> 23
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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 the 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 securities 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 the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this Registration Statement to be signed on
behalf of the undersigned, thereunto duly authorized, in the City of Los
Angeles, State of California, on September 19, 1996.
KUSHI MACROBIOTICS CORP.
By: /s/ Daniel A. France
------------------------------
Name: Daniel A. France
Title: Chief Operating &
Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
s/Michio Kushi Chairman and September 20, 1996
- ---------------------------- Chief Executive
Michio Kushi Officer
s/Daniel A. France Director, Chief September 19, 1996
- ---------------------------- Operating and
Daniel A. France Financial Officer
s/Mark Schindler Director September 19, 1996
- ----------------------------
Mark Schindler
s/Dr. Eugene Stricker Director September 19, 1996
- ----------------------------
Dr. Eugene Stricker
s/Fred Sternau Director September 19, 1996
- ----------------------------
Fred Sternau
Director September __, 1996
- ----------------------------
Morris Kirsner
II-4
<PAGE> 25
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
5 OPINION RE: LEGALITY
23.A CONSENT OF ISRAELOFF,
TRATTNER & CO.
<PAGE> 1
September 17, 1996
Kushi Macrobiotics Corp.
Three Stamford Landing
Stamford, Connecticut 06902
Attn: Mr. Daniel A. France
Gentlemen:
As counsel for your Company, we have examined your Articles of
Incorporation, By-Laws, such other corporate records, documents and proceedings
and such questions of law as we have deemed relevant for the purpose of this
opinion.
We have also, as such counsel, examined the Registration Statement (the
"Registration Statement") of your Company on Form S-3, covering the
registration under the Securities Act of 1933, as amended, of the proposed
offer and resale by selling security holders of up to (i) 4,442,906 Common
Stock Purchase Warrants (the "Warrants"), (ii) 4,442,906 shares of Common Stock
underlying the Warrants, and (iii) 1,610,000 shares of the Company's Common
Stock, par value $.001 (the "Common Stock") issuable to the holders of said
Warrants registered and issued in the Company's initial public offering
(collectively, items (i) - (iii), the "Registered Securities"). Our review has
also included the exhibits and form of prospectus (the "Prospectus") for the
resale of the Registered Securities.
On the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly
existing and in good standing under the laws of the State of Delaware,
with corporate power to conduct the business which it conducts as
described in the Registration Statement.
2. The Warrants identified in item (i) above have been duly and
validly authorized and created and have been validly issued and when
exercised in accordance their respective terms, the shares of Common
Stock identified in item (ii) above will be issued as fully paid and
nonassessable shares of Common Stock of the Company.
3. The Common Stock identified in item (iii) above have been duly
and validly authorized and created and, subject to the payment
therefore pursuant to their terms, will be duly and validly issued as
fully paid and nonassessable shares of Common Stock of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the Prospectus under the
caption "Legal Matters."
Very truly yours,
HH&F:p HELLER, HOROWITZ & FEIT, P.C.
<PAGE> 1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration
Statement of Kushi Macrobiotics Corp. on Form S-3 of our report dated
February 2, 1996 except for Note 11, as to which the date is
March 22, 1996, appearing in and incorporated by reference in the Annual
Report on Form 10-KSB of Kushi Macrobiotics Corp. for the year ended
December 31, 1995.
ISRAELOFF, TRATTNER & CO., P.C.
Valley Stream, New York
September 16, 1996
