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Filed Pursuant to Rule 424B(3)
File Number 333-23709
PROSPECTUS
ROMTECH, INC.
789,667 Shares of Common Stock
The shares offered hereby (the "Shares") consist of 789,667 shares of
Common Stock, no par value (the "Common Stock"), of RomTech, Inc., a
Pennsylvania corporation ("RomTech" or the "Company"), which are owned by the
selling shareholders listed herein under "Selling Shareholders" (collectively,
the "Selling Shareholders"). RomTech shall pay all expenses incident to the
registration of the Common Stock, including, without limitation, the filing of
this Registration Statement, including all registration and filing fees, fees
and expenses of compliance with state securities or "blue sky" laws, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel for
the Company and all independent certified public accountants retained by the
Company. Each Selling Shareholder shall pay all expenses relating to the sale of
the Shares including any commissions, discounts or other fees payable to
broker-dealers and any attorney fees or other expenses incurred by such Selling
Shareholder. RomTech will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders. RomTech will receive the proceeds from the
issuance of Shares to the Selling Shareholders upon exercise of certain
warrants, which will be used for general working capital purposes.
The Selling Shareholders have not advised RomTech of any specific plans
for the distribution of the Shares covered by this Prospectus, but it is
anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) in the Nasdaq SmallCap
Market at the market price then prevailing, although sales may also be made in
negotiated transactions or otherwise. The Selling Shareholders and the brokers
and dealers through whom sale of the Shares may be made may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and their commissions or discounts and other compensation may
be regarded as underwriters' compensation. See "Plan of Distribution."
The Company's Common Stock is traded on the Nasdaq SmallCap Market
under the symbol "ROMT". The average of the bid and asked price of the Common
Stock as reported by the Nasdaq SmallCap Market on April 9, 1997 was $4.22 per
share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL 10, 1997
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AVAILABLE INFORMATION
RomTech has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act (the
"Registration Statement") with respect to the registration of RomTech Common
Stock owned by the Selling Shareholders. This Prospectus constitutes a part of
the Registration Statement and, in accordance with the rules of the Commission,
omits certain of the information contained in the Registration Statement. For
such information, reference is made to the Registration Statement and the
exhibits thereto.
RomTech 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
Commission. The Registration Statement, as well as such reports, proxy
statements and other information, can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth Street
N.W., Washington, D.C. 20549, and at the Commission's regional offices at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and at Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material also can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such materials and other information concerning RomTech are
also filed electronically with the Commission and are accessible via the
Worldwide Web at http://www.sec.gov.
The Company's Common Stock is traded on the Nasdaq SmallCap Market
under the symbol "ROMT." Reports, proxy statements and other information
concerning the Company will also be available for inspection at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference into this Prospectus and made a part hereof:
(i) the Company's Annual Report on Form 10-KSB for the year ended June 30, 1996;
(ii) the Quarterly Reports on Form 10-QSB for the quarters ended September 30,
1996 and December 31, 1996; (iii) the Company's Definitive Proxy Statement in
connection with its 1996 Annual Meeting of Shareholders; (iv) the Current Report
on Form 8-K dated November 22, 1996; and (v) the Current Report on Form 8-K
dated February 4, 1997.
All documents filed by RomTech pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing thereof. Any statement contained herein or in any document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus, except as so modified or superseded.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the information that has been incorporated by reference in this Prospectus (not
including exhibits to such information unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Written or oral requests for such copies should be directed to
RomTech, Inc., 2000 Cabot Boulevard, Suite 110, Langhorne, Pennsylvania 19047,
Attention: Joyce Falsetti, Secretary, telephone (215) 750-6606.
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THE COMPANY
RomTech develops, publishes, markets and resells a diversified line of
personal computer software for consumer, educational and business applications.
The Company offers software titles and personal productivity application
products in the education, astronomy and business application markets for use at
home and in the office. The Company's product line enables it to serve customers
who are seeking a broad range of high-quality software titles and personal
productivity application software products. RomTech is a Pennsylvania
corporation that was organized in July 1992. RomTech's principal executive
offices are located at 2000 Cabot Boulevard, Suite 110, Langhorne, PA 19047, and
its telephone number is (215) 750-6606.
RISK FACTORS
The following factors should be considered carefully in evaluating the
Company and its business.
Early Stage Company; Multimedia Software Business; Losses. The Company
commenced operations in July 1992. The Company has experienced losses since
inception. The accumulated deficit for the Company through June 30, 1996 and
December 31, 1996 is $5,655,004 and $6,246,640 respectively. The Company's
operations to date have been funded primarily through proceeds from the
Company's initial public offering of common stock in October 1995. The Company's
operations are subject to all of the risks inherent in the development of an
early stage business, particularly in a highly competitive industry, including,
but not limited to, development, production and marketing difficulties,
competition and unanticipated costs and expenses. The Company's future success
will depend upon its ability to increase revenues from the development and
marketing of its current and future software products. The development of
multimedia software products, which combine text, sound, high quality graphics,
images and video, is difficult and time consuming, requiring the coordinated
participation of various technical and marketing personnel. Other factors
affecting the Company's future success include, but are not limited to, the
ability of the Company to overcome problems and delays in product development,
market acceptance of products and successful implementation of sales and
marketing programs. There can be no assurance that the Company will successfully
develop a sustainable multimedia or personal productivity software business and
achieve profitability.
Management of Growth. The Company's ability to manage growth
effectively will depend on its ability to improve and expand its operations,
including its financial and management information systems, and to recruit,
train and manage additional sales, software development and administrative
personnel. There can be no assurance that management will be able to manage
growth effectively, or that it will be able to recruit and retain such
personnel, and the failure to do either will have a material adverse effect on
the Company.
Need for Additional Funds. The Company's future capital requirements
will depend on many factors, including cash flow from operations, continued
progress in its software development program, competing technological and market
developments and the Company's ability to market its products successfully. If
the Company is not able to increase cash flow from operations to a level
sufficient to support continued growth of its business, the Company may require
additional funds to sustain and expand its product development activities.
Adequate funds for these purposes may not be available or may be available only
on terms that would result in significant dilution or otherwise be unfavorable
to existing stockholders. If the Company is unable to secure additional funding,
or if the Company is unable to obtain adequate funds from operations or external
sources when required, the Company's inability to do so would have a material
adverse effect on the long-term viability of the Company.
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Shares Eligible for Future Sale. Shares of a substantial number of the
Company's Common Stock in the public market could adversely affect the market
price for the Common Stock. Of the 6,483,815 shares of Common Stock outstanding
on March 31, 1997, approximately 4,428,231 shares are "restricted securities"
which may be sold publicly pursuant to an effective registration statement under
the Securities Act or in reliance upon an applicable exemption from the
registration requirements of the Securities Act. As of March 31, 1997, options
and warrants to purchase 809,123 shares of Common Stock were outstanding and
were immediately exercisable, and 1,000,000 shares of Class One Convertible
Preferred Stock ("Class One Preferred Stock") were convertible into 303,030
shares of Common Stock. Shares issued upon the exercise of these options and
warrants and upon conversion of the Class One Preferred Stock will be eligible
for sale pursuant to an effective registration statement or in reliance upon an
applicable exemption from the registration requirements of the Securities Act.
On January 30, 1997, the Company completed a private placement of 1,271,340
shares of Class Two Convertible Preferred Stock (the "Class Two Preferred
Stock") and 355,975 Common Stock Purchase Warrants (the "Warrants") which
entitles the holder to purchase 355,975 shares of the Company's Common Stock.
The Class Two Preferred Stock and the Warrants were purchased for an aggregate
purchase price of $1,271,340. The Company also granted to the holders of the
Class Two Preferred Stock certain registration rights to register under the
Securities Act the shares of Common Stock issuable pursuant to the conversion of
the Class Two Preferred Stock. The number of shares of Class Two Preferred
Stock, which is convertible into Common Stock beginning on May 15, 1997, is
1,171,340 shares which were issued on November 15, 1996 in exchange for cash. An
additional 100,000 shares of Class Two Preferred Stock, which were issued in
exchange for the forgiveness of $100,000 of debt on January 30, 1997, will be
convertible into Common Stock beginning on July 30, 1997. The Class Two
Preferred Stock is convertible at the option of the holder beginning six months
following the date of issuance into the number of shares of Common Stock equal
to the number of shares of Class Two Preferred Stock surrendered for conversion
divided by the conversion price, which will be the lower of (i) $5.00 or (ii)
ninety percent (90%) of the average of the closing bid price of the Company's
Common Stock for the ten (10) business days immediately preceding the date on
which the Securities and Exchange Commission declares effective the registration
statement filed by the Company pursuant to the Registration Rights Agreement
between the Company and purchasers of the Class Two Preferred Stock. Each
Warrant entitles the holder to purchase one share of Common Stock at any time
during the period beginning six (6) months after the date of issuance of the
Warrant until five years after the date of issuance at a price equal to the
lesser of (i) $6.25 or (ii) the average of the closing bid price of the
Company's Common Stock plus $1.25 for the same ten (10) day period as the Class
Two Preferred Stock. The Company also granted 210,000 warrants, to purchase
210,000 shares of the Company's Common Stock, to the investment advisor
("Advisor Warrants") engaged by the Company to assist in the private placement.
The terms and conditions of the Advisor Warrants are identical to the Warrants,
except that the Advisor Warrants are exercisable at an exercise price of $6.00.
Proposed Private Placement. The Company currently is in the process of
offering in a private placement to accredited investors 2,000,000 shares of
Class Three Convertible Preferred Stock (the "Class Three Preferred Stock "),
without par value, and 100,000 Common Stock Purchase Warrants (the "Common Stock
Warrants") to purchase 100,000 shares of the Company's Common Stock, for an
aggregate purchase price of $2,000,000.
One-half of the Class Three Preferred Stock is convertible at the
option of the holder beginning five days following the date that the
registration statement for the Common Stock underlying the Class Three Preferred
Stock has been declared effective by the Securities and Exchange Commission
("First Conversion Date"). The Company has agreed to file a registration
statement with the Securities and Exchange Commission within twenty days of the
closing of the private placement registering the Common Stock underlying the
Class Three Preferred Stock. The remaining one-half of the Class Three Preferred
Stock will become convertible thirty days after the First Conversion Date. In
the event that the registration statement does not become effective on or before
six months following the closing date, all of the outstanding shares of the
Class Three Preferred Stock shall become convertible at any time beginning on
the date that is six months from the closing date. The conversion price per
share ("Conversion Price"), shall be equal to the following:
(A) Beginning on the First Conversion Date and ending on the 30th day
thereafter, the Conversion Price shall be equal to 80% of the Average Quoted
Price for the five (5) trading days immediately preceding the Conversion Date;
(B) Beginning on the 31st day after the First Conversion Date and
ending on the 60th day after the First Conversion Date, the Conversion Price
shall be equal to 78% of the Average Quoted Price for the five (5) trading days
immediately preceding the Conversion Date;
(C) Beginning on the 61st day after the First Conversion Date and
ending on the 90th day after the First Conversion Date, the Conversion Price
shall be equal to 76% of the Average Quoted Price for the five (5) trading days
immediately preceding the Conversion Date;
(D) Beginning on the 91st day after the First Conversion Date and
ending on the 120th day after the First Conversion Date, the Conversion Price
shall be equal to 74% of the Average Quoted Price for the five (5) trading days
immediately preceding the Conversion Date;
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(E) Beginning on the 121st day after the First Conversion Date and
ending on the 150th day after the First Conversion Date, the Conversion Price
shall be equal to 72% of the Average Quoted Price for the five (5) trading days
immediately preceding the Conversion Date;
(F) Beginning on the 151st day after the First Conversion Date and
ending on the 180th day after the First Conversion Date, the Conversion Price
shall be equal to 70% of the Average Quoted Price for the five (5) trading days
immediately preceding the Conversion Date; provided, however, that in no event
shall the Conversion Price exceed $5.95 or be less than $.66.
Each Common Stock Warrant entitles the holder to purchase one share of
Common Stock at an exercise price of $4.30, subject to the condition that the
Common Stock Warrants will not be exercisable until the closing bid price of the
Company's Common Stock has reached $5.91.
The holders of the Class Three Preferred Stock and the Common Stock
Warrants are entitled to certain registration rights pursuant to a Registration
Rights Agreement, which provides that within twenty (20) days after the date of
issuance of the Class Three Preferred Stock, the Company will file with the
Securities and Exchange Commission a shelf registration statement (the
"Registration Statement") covering resales by holders of the Common Stock
issuable upon conversion of the Class Three Preferred Stock and upon exercise of
the Common Stock Warrants.
In the event the Company closes the proposed private placement, the
issuance of the Class Three Preferred Stock may result in anti-dillution
adjustments to the Company's Class One Preferred Stock, Class Two Preferred
Stock and outstanding options, warrants and/or other convertible securities
issued by the Company, depending on the terms of such preferred stock, options,
warrants and/or other convertible securities.
Rapid Technological Change; Product Development. The market for the
Company's products is characterized by rapid technological developments,
evolving industry standards, swift changes in customer requirements and frequent
new product introductions and enhancements. The Company's continued success will
be dependent upon its ability to continue to enhance its existing products,
develop and introduce in a timely manner new products incorporating
technological advances and respond to customer requirements. To the extent one
or more of the Company's competitors introduce products that more fully address
customer requirements, the Company's business could be adversely affected. There
can be no assurance that the Company will be successful in developing and
marketing enhancements to its existing products or new products on a timely
basis or that any new or enhanced products will adequately address the changing
needs of the marketplace. If the Company is unable to develop and introduce new
products or enhancements to existing products in a timely manner in response to
changing market conditions or customer requirements, the Company's business and
operating results could be adversely affected. From time to time, the Company or
its competitors may announce new products, capabilities or technologies that
have the potential to replace or shorten the life cycles of the Company's
existing products. There can be no assurance that announcements of currently
planned or other new products will not cause customers to delay their purchasing
decisions in anticipation of such products, which could have a material adverse
effect on the Company's business and operating results.
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Uncertainty of Future Operating Results; Fluctuations in Quarterly
Operating Results. Historical results of the Company's revenue and operating
results should not necessarily be considered indicative of future growth, or of
future operating results. Future operating results will depend upon many
factors, including the demand for the Company's products, the level of product
and price competition, the length of the Company's sales cycle, seasonality of
individual customer buying patterns, the size and timing of new product
introductions and product enhancements by the Company and its competitors, the
mix of sales by products, services and distribution channels, levels of
international sales, acquisitions by competitors, changes in foreign currency
exchange rates, the ability of the Company to develop and market new products
and control costs, and general domestic and international economic and political
conditions. As a result of these factors, revenues and operating results for any
quarter are subject to variation and the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful until a
representative historical time period is established and should not be relied
upon as indications of future performance.
Competition. The markets for personal computer software for consumer,
educational and business applications are highly competitive particularly at the
retail shelf level where a rapidly increasing number of software titles are
competing for the same amount of shelf space. There are certain competitors of
the Company with substantially greater sales, marketing, development and
financial resources. The Company believes that the competitive factors affecting
the market for its products and services include the traditional attributes used
in determining a product's value such as: vendor and product reputation; product
quality, performance and price; the availability of products on multiple
platforms; product scalability; product integration with other enterprise
applications; product functionality and features; product ease-of-use; and the
quality of customer support services and training. The relative importance of
each of these factors depends upon the specific customer involved and while the
Company believes it competes favorably in each of these areas, there can be no
assurance that it will continue to do so. Moreover, the Company's present or
future competitors may be able to develop products comparable or superior to
those offered by the Company, offer lower price products or adapt more quickly
than the Company to new technologies or evolving customer requirements.
Competition is expected to intensify. In order to be successful in the future,
the Company must respond to technological change, customer requirements and
competitors current products and innovations. There can be no assurance that it
will be able to continue to compete effectively in its market or that future
competition will not have a material adverse effect on its business operating
results and financial condition.
Software Technology and Other Proprietary Rights. The Company's success
depends in part on its ability to protect its proprietary rights to the
technologies and concepts used in its principal products. The Company relies on
a combination of copyrights, trademarks, trade secrets, confidentiality
procedures and contractual provisions to protect its proprietary rights. There
can be no assurance that the Company's existing or future copyrights,
trademarks, trade secrets or other intellectual property rights will be of
sufficient scope or strength to provide meaningful protection or commercial
advantage to the Company. The Company has no software patents. Also, in selling
certain of its products, the Company relies on "shrink wrap" licenses that are
not signed by licensees and, therefore, may be unenforceable under the laws of
certain jurisdictions. In addition, the laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. There can be no assurance that such factors would not have a
material adverse effect on the Company's business or operating results. The
Company may from time to time be notified that it is infringing certain patent
or intellectual property rights of others. Combinations of technology acquired
through past or future acquisitions and the Company's technology will create new
products and technology which may give rise to claims of infringement. While no
actions are currently pending against the Company for infringement of patent or
other proprietary rights of third parties, there can
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be no assurance that third parties will not initiate infringement actions
against the Company in the future. Any such action could result in substantial
cost to and diversion of resources of the Company. If the Company were found to
infringe upon the rights of others, no assurance can be given that licenses
would be obtainable on acceptable terms or at all, that significant damages for
past infringement would not be assessed or that further litigation relative to
any such licenses or usage would not occur. The failure to obtain necessary
licenses or other rights, or the advent of litigation arising out of any such
claims, could have a material adverse effect on the Company's operating results.
Dependence on Key Management and Technical Personnel. The Company's
success depends to a significant degree upon the continued contributions of its
key management, marketing, technical and operational personnel, including
members of senior management and technical personnel of acquired companies. The
Company has agreements providing for the continued employment of its key
employees for a period of one or two years. Notwithstanding the agreements, the
employees may voluntarily terminate their employment with the Company at any
time. The loss of the services of one or more key employees, including key
employees of acquired companies, could have a material adverse effect on the
Company's operating results. The Company also believes its future success will
depend in large part upon its ability to attract and retain additional highly
skilled management, technical, marketing, product development and operational
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be successful in attracting and retaining such
personnel.
International Sales. In fiscal 1996, the Company derived approximately
14% of its total revenues from international sales. International business is
subject to certain risks including varying technical standards, tariffs and
trade barriers, political and economic instability, reduced protection for
intellectual property rights in certain countries, difficulties in supporting
foreign customers, difficulties in managing foreign distributors, potentially
adverse tax consequences, the burden of complying with a wide variety of complex
operations, customs, foreign laws, regulations and treaties and the possibility
of difficulties in collecting accounts receivable.
Acquisition-Related Risks. The acquisitions completed by the Company
will present it with numerous challenges, including difficulties in the
assimilation of the operations, technologies and products of the acquired
companies and managing separate geographic operations. Since its initial public
offering the Company has acquired Applied Optical Media Corporation and Virtual
Reality Laboratories, Inc. On September 27, 1996, the Company entered into an
agreement in principle to acquire FileABC(TM), a Nevada Limited Partnership,
("File ABC") in exchange for $500,000 in cash and 200,000 shares of the
Company's common stock and an additional 1,000,000 shares contingent upon
achieving certain revenue targets. The terms of the agreement were amended on
October 18, 1996, whereby FileABC will be paid $325,000 in cash in addition to
the payments of $50,000 received on July 17, 1996 and $125,000 on October 30,
1996. Additionally, a maximum of 1,200,000 shares will be issued to FileABC for
each $1,000,000 of revenues generated from the sale of File ABC's current
software product and any enhancements or derivative products on or before March
31, 2000. File ABC develops, publishes and markets document imaging, management
and archiving software for the Windows(TM) operating systems. The acquisition of
File ABC is subject to certain conditions and, if completed, the acquisition
will be accounted for using the purchase method of accounting. In addition to
the acquisition of File ABC, other acquisitions may be contemplated from
time-to-time. The process of integrating the business operations of the acquired
companies into the Company's operations may result in unforeseen operating
difficulties and expenditures and may absorb significant management attention
that would otherwise be available for the ongoing development of the Company's
business. If the Company's management does not respond to these challenges
effectively, the Company's results of operations could be adversely affected.
Moreover, there can be no assurance that the anticipated benefits of the
acquisitions will be realized. The Company and the acquired companies could
experience
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difficulties or delays in integrating their respective technologies or
developing and introducing new products. Delays in, or the non-completion of,
the development of these new products, or lack of market acceptance of such
products, could have an adverse impact on the Company's future results of
operations and result in a failure to realize anticipated benefits of the
acquisitions.
Product Liability. The Company's license agreements with customers
typically contain provisions designed to limit their exposure to potential
product liability claims. However, it is possible that such limitation of
liability provisions may not be effective under the laws of certain
jurisdictions. Although the Company has not experienced any product liability
claims to date, the sale and support of products may entail the risk of such
claims, and there can be no assurance that the Company will not be subject to
such claims in the future. A successful product liability claim brought against
the Company could have a material adverse effect upon the Company's business,
operating results and financial condition.
Stock Price Volatility. The Company believes that a variety of factors
could cause the price of its Common Stock to fluctuate, perhaps substantially,
including quarter to quarter variations in operating results; announcements of
developments related to its business; fluctuations in its order levels; general
conditions in the technology sector or the worldwide economy; announcements of
technological innovations; new products or product enhancements by the Company
or its competitors; key management changes; changes in joint marketing and
development programs; developments relating to patents or other intellectual
property rights or disputes; and developments in the Company's relationships
with its customers, distributors and suppliers. In addition, in recent years the
stock market in general, and the market for shares of software and high
technology stock in particular, has experienced extreme price fluctuations which
have often been unrelated to the operating performance of affected companies.
Such fluctuations could adversely affect the market price of the Company's
Common Stock.
Possible Delisting of Securities; Risk of Low Priced Stocks. The Common
Stock is listed for trading on the Nasdaq SmallCap Market under the symbol ROMT.
A listed company may be delisted if it fails to maintain minimum levels of
stockholders' equity, shares publicly held, number of stockholders or aggregate
market value, or if it violates other aspects of its listing agreement. At June
30, September 30 and December 31, 1996 the Company did not satisfy the minimum
level of stockholders' equity required to be listed ($1,000,000). The Company is
seeking additional capital and attempting to effect other equity transactions
to, among other things, increase its stockholders' equity to at least the
minimum level required. There can be no assurance that the Company will be able
to raise such additional capital or if it is able to raise additional capital it
will be on terms satisfactory to the Company, or to effect other equity
transactions currently under consideration. If the Company fails to satisfy the
criteria for continued listing, its Common Stock may be delisted. Public
trading, if any, would thereafter be conducted in the over-the-counter market in
the so-called "pink sheets," or on the NASD's "Electronic Bulletin Board." If
the Common Stock were delisted, it may be more difficult to dispose of, or even
to obtain quotations as to the price of, the Common Stock and the price, if any,
offered for the Common Stock may be substantially reduced. In addition, if the
Common Stock is delisted from trading on the Nasdaq SmallCap Market, and the
trading price of the Common Stock is less than $5.00 per share, or the Company
has less than $2 million in net tangible assets, trading in the Common Stock
would be subject to the requirements of Rule 15g-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Under this
rule, broker/dealers who recommend such securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5 million or individuals with a net worth in excess of $1
million or an annual income exceeding $200,000 or $300,000 jointly with their
spouses) must make a special written suitability determination for the purchaser
and receive the purchaser's written agreement to a transaction prior to sale.
The requirements of Rule 15g-9, if applicable, may affect the ability of
broker/dealers to sell the Company's securities and may also affect the ability
of purchasers in this offering to sell their shares in the
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secondary market. The Securities Enforcement Remedies and Penny Stock Reform Act
of 1990 (the "Penny Stock Rule") also requires additional disclosure in
connection with any trades involving a stock defined as penny stock (any
non-Nasdaq equity security that has a market price or exercise price of less
than $5.00 per share and less than $2 million in net tangible assets, subject to
certain exceptions). Unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
SEC explaining important concepts involving the penny stock market, the nature
of such market, terms used in such market, the broker/dealer's duties to the
customer, a toll-free telephone number for inquiries about the broker/dealer's
disciplinary history and the customer's rights and remedies in case of fraud or
abuse in the sale. Disclosure must also be made about commissions payable to
both the broker/dealer and the registered representative, and current quotations
for the securities. 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.
USE OF PROCEEDS
RomTech will not receive any proceeds from the sale of the Shares by
the Selling Shareholders. RomTech will receive the proceeds from the issuance of
Shares to the Selling Shareholders upon exercise of certain warrants, which will
be used for general working capital purposes.
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SELLING SHAREHOLDERS
The following table sets forth certain information as of the date of
this Prospectus regarding the ownership of shares of RomTech Common Stock of
each Selling Shareholder and as adjusted to give effect to the sale of the
Shares offered hereby. A description of the transactions under which the Selling
Shareholders received the Common Stock being registered herein is set forth in
the footnotes to the table below. The Shares are being registered to permit
public secondary trading in the Shares and the Selling Shareholders may offer
the Shares for resale from time to time. See "Plan of Distribution."
<TABLE>
<CAPTION>
# of Shares # of Shares # of Shares % of
Name of Owned Being Owned After Shares
Selling Shareholder Before the Offered for the Offering Owned
Offering(1) Sale After the
Offering
- -------------------------------------------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Allan M. Levine(2)................................ 77,500 77,500 -- --
Michael J. Schumacher(3).......................... 77,500 77,500 -- --
Lance and Susan Woeltjen(4)....................... 771,296 77,129 694,167 10.7
Clint H. Woeltjen................................. 383,137 38,313 344,824 5.3
R. Michael Smithwick.............................. 24,676 2,000 22,676 *
Zachary Gray...................................... 19,612 1,961 17,651 *
Curtis Borchardt(5)............................... 39,506 14,934 24,572 *
Lambert Thom...................................... 56,124 5,612 50,512 *
Robert Calder Davis, Jr........................... 7,781 778 7,003 *
John Gardiner, III................................ 3,890 389 3,501 *
Claire L. Broline................................. 3,890 389 3,501 *
Odyssey Capital Group, L.P.(6).................... 1,434,589 220,662 1,213,927 18.7
Sanford I. Feld(7)................................ 335,401 5,625 329,776 5.0
Franklin H. Spirn and Anthony J. Inverno(8)....... 131,522 5,625 125,897 1.9
George M. Spiridis(9)............................. 59,248 5,625 53,623 *
Alan D. Zelinsky Trust Dated 5/28/92(10).......... 134,839 5,625 129,214 2.0
Catalytic Group................................... 50,000 50,000 -- --
Kathleen Kaplan(11)............................... 100,000 100,000 -- --
Evdoxia Koritsoglou(12)........................... 100,000 100,000 -- --
</TABLE>
- ----------------------------
* Less than one percent of the outstanding Common Stock of RomTech, Inc.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes
voting or investment power with respect to securities. In accordance
with SEC Rules, shares which may be acquired upon exercise of stock
options which are currently exercisable or which become exercisable
within sixty
9
<PAGE>
days of the date of the information in the table are deemed to be
beneficially owned by the optionee. Except as indicated by footnote,
and subject to community property laws where applicable, the persons or
entities named in the table above have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned
by them.
(2) Includes 77,500 shares of Common Stock issuable to Mr. Levine upon the
exercise of a warrant within 60 days of the date hereof.
(3) Includes 77,500 shares, of Common Stock issuable to Mr. Schumacher upon
the exercise of a warrant within 60 days of the date hereof.
(4) Mr. Woeltjen is a Director, the Chief Technological Officer and the
General Manager of RomTech, Inc. and the President of Virtual Reality
Laboratories.
(5) Includes 25,472 shares of Common Stock subject to options which are
immediately exercisable at $1.83 per share.
(6) Voting and investment power of the shares of Common Stock held by
Odyssey Capital Group L.P. ("Odyssey") are controlled by John P.
Kirwin, III, Bruce E. Terker and Kirk B. Griswold, the principals of
Odyssey. Excludes 303,030 shares of Common stock issuable upon the
conversion of the shares of the Company's Class One Preferred Stock,
held by Odyssey, which Class One Preferred Stock cannot be converted
until October 18, 1997. Excludes 100,000 shares of Class Two Preferred
Stock which is convertible into Common Stock at the option of the
holder beginning July 30, 1997, such Class Two Preferred Stock is
convertible into the number of shares of Common Stock equal to the
number of shares of Class Two Preferred Stock surrendered for
conversion divided by the conversion price, which will be the lower of
(i) $5.00 or (ii) ninety percent (90%) of the average of the closing
bid price of the Company's Common Stock for the ten (10) business days
immediately preceding the date on which the Securities and Exchange
Commission declares effective the registration statement filed by the
Company pursuant to the Registration Rights Agreement between the
Company and the purchasers of the Class Two Preferred Stock. Excludes
Warrants to purchase 28,000 shares of Common Stock, at any time on or
after July 30, 1997, at a price equal to the lesser of (i) $6.25 or
(ii) the average of the closing bid price of the Company's Common Stock
plus $1.25 for the same ten (10) day perod as the Class Two Preferred
Stock, which Warrants must be exercised by January 29, 2002. Excludes
an aggregate of 1,313 shares of Common Stock which Odyssey has agreed
to transfer to certain other shareholders within 60 days of the date
hereof.
(7) Includes 81,776 shares of Common Stock issuable upon the conversion of
the Company's Class Two Preferred Stock held by Mr. Feld, which Class
Two Preferred Stock can be converted within sixty days. The number of
shares of Common Stock issued upon the conversion of the Class Two
Preferred stock was calculated at an assumed conversion price of $4.28
per share. Includes Warrants to purchase 98,000 shares of Common Stock,
at any time on or after May 15, 1997, at a price equal to the lesser of
(i) $6.25 or (ii) the average of the closing bid price of the Company's
Common Stock plus $1.25 for the same ten (10) day perod as the Class
Two Preferred Stock, which Warrants must be exercised by November 14,
2001.
<PAGE>
(8) Includes 35,047 shares of Common Stock issuable upon the conversion of
the Company's Class Two Preferred Stock, held by Messrs. Spirn and
Inverno, which Class Two Preferred Stock can be converted within sixty
days. The number of shares of Common Stock issued upon the conversion
of the Class Two Preferred Stock was calculated at an assumed
conversion price of $4.28 per share. Includes Warrants to purchase
42,000 shares of Common Stock, at any time on or after May 15, 1997, at
a price equal to the lesser of (i) $6.25 or (ii) the average of the
closing bid price of the Company's Common Stock plus $1.25 for the same
ten (10) day perod as the Class Two Preferred Stock, which Warrants
must be exercised by November 14, 2001.
(9) 53,803 of the shares listed are owned by Sycamore Group, Ltd., Inc.
("Sycamore"). Mr. Spiridis is the Chief Executive Officer of Sycamore.
The 53,803 shares owned by Sycamore include 17,523 shares of Common
Stock issuable upon the conversion of the Company's Class Two Preferred
Stock, held by Sycamore, which Class Two Preferred Stock can be
converted within sixty days. The number of shares of Common Stock
issued upon the conversion of the Class Two Preferred Stock was
calculated at an assumed conversion price of $4.28 per share. Includes
Warrants to purchase 21,000 shares of Common Stock, at any time on or
after May 15, 1997, at a price equal to the lesser of (i) $6.25 or (ii)
the average of the closing bid price of the Company's Common Stock plus
$1.25 for the same ten (10) day perod as the Class Two Preferred Stock,
which Warrants must be exercised by November 14, 2001.
(10) Includes 23,364 shares of Common Stock issuable upon the conversion of
the Company's Class Two Preferred Stock, held by Alan D. Zelinsky Trust
dated 5/28/92, which Class Two Preferred Stock can be converted
within sixty days. The number of shares of Common Stock issued upon the
conversion of the Class Two Preferred Stock was calculated at an
assumed conversion price of $4.28 per share. Includes Warrants to
purchase
10
<PAGE>
30,800 shares of Common Stock, at any time on or after May 15, 1997, at
a price equal to the lesser of (i) $6.25 or (ii) the average of the
closing bid price of the Company's Common Stock plus $1.25 for the same
ten (10) day perod as the Class Two Preferred Stock, which Warrants
must be exercised by November 14, 2001.
(11) Includes 657 shares of Common Stock which will be transferred by
another shareholder to Ms. Kaplan within sixty days of the date hereof.
(12) Includes 656 shares of Common Stock which will be transferred by
another shareholder to Ms. Koritsoglou within sixty days of the date
hereof.
PLAN OF DISTRIBUTION
The Shares offered hereby by the Selling Shareholders may be sold from
time to time by the Selling Shareholders, or by pledgees, donees, transferees or
other successors in interest. Such sales may be made in the Nasdaq SmallCap
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 methods, without limitation: (a) a block
trade in which the broker-dealer 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)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) face-to-face transactions between the Selling Shareholders
and purchasers without a broker-dealer. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other brokers or dealers to
participate. Such brokers or dealers may receive commissions or discounts from
the Selling Shareholders in amounts to be negotiated immediately 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 Securities Act, in
connection with such sales. In addition, any securities covered by this
Prospectus that qualify for sale pursuant to Rule 144 might be sold under Rule
144 rather than pursuant to this Prospectus.
Upon RomTech being notified by a Selling Shareholder that any material
arrangement has been entered into with a broker or dealer for the sale of Shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplemented Prospectus will
be filed, if required, pursuant to Rule 424(c) under the Securities Act,
disclosing (a) the name of each such broker-dealer, (b) the number of Shares
involved, (c) the price at which such Shares were sold, (d) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), where applicable,
(e) that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this Prospectus, as
supplemented, and (f) other facts material to the transaction.
RomTech shall pay all expenses incident to the registration of the
Common Stock, including, without limitation, the filing of this Registration
Statement, including all registration and filing fees, fees and expenses of
compliance with state securities or "blue sky" laws, printing expenses,
messenger and delivery expenses, fees and disbursements of counsel for the
Company and all independent certified public accountants retained by the Company
and all fees and expenses incurred in connection with the listing of Common
Stock on the Nasdaq SmallCap Market. Each Selling Shareholder shall pay all
expenses relating to the sale of the shares including any commissions, discounts
or other fees payable to broker-dealers and any attorney fees or other expenses
incurred by such Selling Shareholder.
LEGAL MATTERS
An opinion has been rendered by the law firm of Blank Rome Comisky &
McCauley, Philadelphia, Pennsylvania, to the effect that the shares of Common
Stock offered by the Selling Shareholders hereby are legally issued, fully paid
and non-assessable.
EXPERTS
The financial statements of RomTech as of June 30, 1996 and for each of
the years in the two-year period ended June 30, 1996 have been incorporated by
reference herein and in the Registration Statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
11
<PAGE>
<TABLE>
<S> <C>
======================================================== =====================================================
No dealer, salesman or other person has been 789,667 Shares
authorized to give any information or to make any
representations other than those contained in this
Prospectus and, if given or made, such information or
representations must not be relied upon as having been
authorized by RomTech or the Selling Shareholders.
This Prospectus does not constitute an offer to sell or a ROMTECH, INC.
solicitation of an offer to buy to any person in any
jurisdiction in which such offer or solicitation would be
unlawful or to any person to whom it is unlawful.
Neither the delivery of this Prospectus nor any offer or
sale made hereunder shall, under any circumstances,
create any implication that there has been no change in
the affairs of RomTech or that information contained Common Stock
herein is correct as of any time subsequent to the date
hereof.
- ---------------
---------------
TABLE OF CONTENTS PROSPECTUS
---------------
Page
Available Information..................................2
Incorporation of Documents
by Reference........................................2
The Company............................................3
Risk Factors...........................................3
Use of Proceeds........................................8
Selling Shareholders...................................9
Plan of Distribution..................................11
Legal Matters.........................................11
Experts...............................................11
April 10, 1997
======================================================== =====================================================
</TABLE>
