As filed with the Securities and Exchange Commission on November 4, 1996
May 6, 2010
Registration No. 33-
333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
(Exact
(Exact name of registrantRegistrant as specified in its charter)
MINNESOTA
(State or other jurisdiction of
incorporation or organization)
41-1454591
(I.R.S. Employer
Identification No.)
Minnesota | 41-1454591 | |
(State or other jurisdiction of | (I.R.S. Employer |
7400 EXCELSIOR BOULEVARD
MINNEAPOLIS, MINNESOTA 55426
(612) 930-1700
(Address,Excelsior Boulevard
Minneapolis, MN 55426-4517
(952) 930-9000
(Address, including zip code, and telephone number, including area code, of registrant'sRegistrant’s principal executive offices)
EDWARD
Edward R. CAMERON, PRESIDENT
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
(Jack) Cameron
President and Chairman of the Board
Appliance Recycling Centers of America, Inc.
7400 EXCELSIOR BOULEVARD
MINNEAPOLIS, MINNESOTA 55426
(612) 930-1700Excelsior Boulevard
Minneapolis, Minnesota 55426-4517
(952) 930-9000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
COPY TO:
ELIZABETH H. COBB, ESQ.
MACKALL, CROUNSE
Copies to:
Eric O. Madson, Esq.
Robins, Kaplan, Miller & MOORE PLC
1400 AT&T TOWER
901 MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55402
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicableCiresi L.L.P.
2800 LaSalle Plaza
800 LaSalle Avenue
Minneapolis, Minnesota 55402-2015
(612) 349-8500
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this registration statement becomes effective.
statement.
If the only securities being registered on this Formform are being offered pursuant to dividend or interest reinvestment plans, please check the following box: |_|
£
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X|
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. |_|
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. |_|
offering: £
If delivery ofthis Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the prospectus is expected to be madeCommission pursuant to Rule 434,
please462(e) under the Securities Act, check the following box. |_|
CALCULATION OF REGISTRATION FEE
===========================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH AMOUNT MAXIMUM MAXIMUM
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
Common stock, without par value ......... 319,355 shares $1.688 $539,071 $164
===========================================================================================================================
(1) In addition,box: £
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box: £
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | £ | Accelerated filer | £ | ||
Non-accelerated filer | £ | (Do not check if a smaller reporting company) | Smaller Reporting Company | x |
CALCULATION OF REGISTRATION FEE
Title of Each Class |
| Amount |
| Proposed |
| Proposed |
| Amount Of |
| |||
Common Stock |
| 915,000 (1)(2) |
| $ | 3.59 | (3) | $ | 3,284.850 |
| $ | 234.21 |
|
(1)All shares offered for resale by the selling shareholders.
(2)Also includes an indeterminate number of shares of our common stock as may be issuable in the event of stock splits, stock dividends or similar transactions in accordance with Rule 416 under the Securities Act of 1933, this
registration statement includes an indeterminate number of additional shares
as may be issuable as a result of stock splits or stock dividends which
occur during this continuous offering.
(2) amended.
(3)Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c),. Such price is based onupon the average of the bidhigh and askedlow prices of our common stock as reported on the NASDAQ NationalCapital Market System on October 31, 1996.
May 3, 2010.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
THE REGISTRANT HEREBY AMENDSINFORMATION IN THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES ASPROSPECTUS IS NOT COMPLETE AND MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTILCHANGED. 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),SELLING SHAREHOLDERS MAY DETERMINE.
SUBJECT TO COMPLETION, DATED MAY 6, 2010.
APPLIANCE RECYCLING CENTERS
OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Selling Shareholders have advisedAMERICA, INC.
915,000 Shares of Common Stock
This prospectus relates to resale by the Company that salesshareholders listed in this prospectus of theup to 915,000 shares of Common Stock offered hereunder by them, or byour common stock that we previously issued to the selling shareholders in private transactions.
The selling shareholders may offer their pledgees, donees,
transferees or other successors in interest, may be madeshares of common stock from time to time onin the NMS, throughopen market, in privately negotiated transactions, in an underwritten offering, or otherwise,a combination of methods. They may offer the shares at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The selling shareholders may engage brokers or dealers who may receive commissions or discounts from the selling shareholders. Any broker-dealer acquiring the common stock from the selling shareholders may sell these securities in normal market-making activities, through other brokers on a principal or agency basis, in negotiated transactions, to its customers or through a combination of methods. See "Plan“Plan of Distribution."
Pursuant to separate registration rights agreements with the Company,Distribution” beginning on page 13. We will bear all of the expenses ofand fees incurred in registering the shares will be paidoffered by this prospectus.
Our common stock is traded on the Company. All selling
expenses incurred byNASDAQ Capital Market under the Selling Shareholders in connection with this offering,
including any fees and commissions payablesymbol “ARCI.” The last reported sale price for our common stock on the NASDAQ Capital Market on May 4, 2010 was $3.78 per share. You are urged to underwriters, brokers, agents or
other persons will be borne by the Selling Shareholders. See "Selling
Shareholders."
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this prospectus in
connection with the offer described in this prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Company or any of the Selling Shareholders. Neither the
delivery of this prospectus nor any sale made under this prospectus shall under
any circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof or since the date of any documents
incorporated herein by reference. This prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities to which it relates, or an offer or solicitation in any state to any
person to whom it is unlawful to make such offer in such state.
TABLEobtain current market quotations for our common stock.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF CONTENTS
Page
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AVAILABLE INFORMATION...................................................... 3
INCORPORATIONRISK. SEE “RISK FACTORS” BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN DOCUMENTS BY REFERENCE ........................... 3
PROSPECTUS SUMMARY......................................................... 4
RISK FACTORS............................................................... 5
THE COMPANY................................................................ 9
General........................................................... 9
Recent Developments............................................... 10
Third Quarter Results............................................. 11
SELLING SHAREHOLDERS....................................................... 13
USE OF PROCEEDS............................................................ 14
PLAN OF DISTRIBUTION....................................................... 14
LEGAL MATTERS.............................................................. 15
EXPERTS .................................................................. 15
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information withRISKS ASSOCIATED WITH INVESTING IN OUR STOCK.
Neither the Securities and Exchange Commission (the "Commission"). Such materialnor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is , 2010.
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Disclosure of Commission Position on Indemnification for Securities Act Liabilities | 15 |
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You should rely only on the information contained in, or incorporated by reference into, this prospectus. We have notauthorized any other person to provide you with different information. The selling shareholders are not offering to sell, nor seeking offers to buy, these securities in any state where the offer or sale is not permitted. The information contained in this prospectus is current as of the date on the front cover, but the information may have changed since that date.
This prospectus and other documents that are and will be incorporated by reference into this prospectus contain statements that involve expectations, plans or intentions, including those relating to our business, financial results, strategies and prospects. These statements are forward looking and involve risks and uncertainties. You can be
inspected and copied at the public reference facilities maintainedidentify these statements by the Commissionfact that they do not relate strictly to historic or current facts or by discussions that involve risks and uncertainties. The forward-looking statements use terms such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “seeks,” “predicts,” “projects,” “strives,” “potential,” “objective,” “may,” “could,” “should,” “would,” “will” or similar expressions relating to future operating or financial performance. Factors that may cause our actual results, performance, financial condition or achievements to differ materially from those expected or implied in any forward-looking statements include but are not limited to:
·the ability of our recently formed joint venture to establish and successfully operate the regional processing center;
·our continued ability to purchase product from Whirlpool, General Electric and Electrolux at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,acceptable prices for sale in our ApplianceSmart Factory Outlets;
·our ability to obtain new contracts and continue existing contracts for appliance recycling and replacement programs with utility companies and other third parties;
·the ability of our individual retail stores to meet planned revenue levels;
·the speed at which our individual retail stores reach profitability, if at all;
·our ability to keep costs and expenses at or below expected levels; and
·the Commission's regional offices at 7 World Trade Center, 13th Floor, New York,
New York 10048continued availability of our current line of credit.
The forward-looking statements are based on our beliefs, assumptions and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copiesexpectations of such material can alsofuture events taking into account the information currently available to us, and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. You should read this prospectus and the documents incorporated by reference into this prospectus completely and with the understanding that our actual future results may be obtained
at prescribed rates by writing to the Public Reference Sectionmaterially different from our current expectations. Our forward-looking statements speak only as of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Common Stockdate of the
Companythis prospectus and we assume no obligation to update such statements.
This summary highlights information contained elsewhere in this prospectus or incorporated by reference into this prospectus. Because it is traded on the Nasdaq National Market System. Reports, proxy
statements and other information concerning the Company may be inspected at the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 10006.
This prospectusa summary, it does not contain all of the information set forththat you should consider before deciding to invest in our securities. You should read this entire prospectus carefully, including the registration statement of which this prospectus is a part and which the Company
has filed with the Commission. For further information with respect to the
Companysection entitled “Risk Factors” and the securities offered hereby, reference is made to the registration
statement, including the exhibits filed or incorporated as a part thereof,
copies of which can be inspected at, or obtained at prescribed rates from, the
Public Reference Section of the Commission at the address set forth above. For
further information, reference is made to the registration statementconsolidated financial statements and its
exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference into this prospectus: (1) the Company'srelated notes included in our Annual Report on Form 10-K for the fiscal year ended December 30, 1995 (File No. 0-19621); (2)
the Company's Proxy Statement for the Annual Meeting of Stockholders held MayJanuary 2, 1996; (3) the Company's Current Report on Form 8-K dated February 15, 1996; (4)
the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March
30, 1996; (5) the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 29, 1996; (6) description of the Company's Common Stock set forth in
the Company's registration statement on Form 8-A2010, filed with the Securities and Exchange Commission (“SEC”) on October 28, 1991 and any amendments thereto or reports filed for the purpose of
updating such description; and (7) all other reports filed by the Company
pursuant to Sections 13, 14 or 15(d) of the Exchange Act since December 30,
1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering hereunder shall be deemed to be incorporated by
referenceMarch 18, 2010. As used in this prospectus, unless context otherwise requires, the words “we,” “us,” “our,” “the Company” and “ARCA” refer to be a part hereof from the date of filing of
such documents. Any statement contained herein or in a document, all or any
portion of which is 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 which 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, except as so modified or superseded,
to constitute a part of this prospectus.
The Company will provide without charge to each person to whom a copy of
this prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents referred to above or elsewhere
herein which have been incorporated herein by reference (other than certain
exhibits to such documents). Written requests for such copies should be directed
to Kent S. McCoy, APPLIANCE RECYCLING CENTERS OF AMERICA, INC., 7400 Excelsior
Boulevard, Minneapolis, Minnesota 55426. Telephone requests should be directed
to Mr. McCoy at (612) 930-1700.
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE
READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION, INCLUDING THE FINANCIAL
STATEMENTS AND NOTES THERETO, INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
THE COMPANY Appliance Recycling Centers of America, Inc., together with its and all of our operating subsidiaries ("ARCA" orsubsidiaries.
Appliance Recycling Centers of America, Inc.
We are in the "Company"), provides a comprehensive rangebusiness of services for the large-scale collection, reuse and recycling ofselling new major household appliances in an environmentally-sound manner. The Company provides
its customers with integrated processes and programs addressing the solid waste
management, environmental and energy conservation issues involved with appliance
disposal and recycling. The Company generates revenues from fees charged for the
disposal of appliances, the sale of materials generated from processed
appliances (by-product revenues) and the sale of reconditioned appliances through a chain of Company-owned factory outlet stores under the name ApplianceSmart®. We also provide turnkey appliance recycling and replacement services for electric utilities and other sponsors of energy efficiency programs.
We are a leading retailer and recycler of major household appliances and generate revenues from (a) retail stores. See "The Company" herein.
SELLING SHAREHOLDERS
This Prospectus relatessales of appliances at our ApplianceSmart® Factory Outlets, (b) fees charged for collecting and recycling appliances for utilities and other sponsors of energy efficiency programs, (c) fees charged for recycling and replacing old refrigerators with new energy efficient models for low-income housing programs sponsored by electric utilities, and (d) selling byproduct materials from appliances that we recycle, including appliances collected through our ApplianceSmart Factory Outlets.
As of April 30, 2010, we were operating nineteen factory outlet stores under the name ApplianceSmart®: six in the Minneapolis/St. Paul, Minnesota market; one in Rochester, Minnesota; four in the Columbus, Ohio market; six in the Atlanta, Georgia market; and two in the San Antonio, Texas market. We are a major household appliance retailer with two main channels: new, in-the-box product and new, out-of-the-box product, which we call special-buy appliances. These special-buy household appliances, primarily those manufactured by Whirlpool, General Electric and Electrolux, include close-outs, factory overruns, floor samples, returned or exchanged items, and scratch-and-dent units. One example of this type of special-buy product involves manufacturer redesign, in which a current model is updated to include a few new features and is then assigned a new model number. Because the manufacturer ships only the latest models to retailers, a large quantity of the older model remains in the manufacturer’s inventory. Special-buy appliances typically are not integrated into manufacturers’ normal distribution channels and require a different method of management.
We contract with electric utility companies to provide turnkey appliance recycling and replacement services to support their energy conservation efforts. The contracts usually have terms of one to four years, with provisions for renewal at the option of the utility. Under some contracts, we manage all aspects of the program, including advertising. Under other contracts, we provide only specified services, such as collection and recycling. Our contracts with electric utility customers prohibit us from repairing and selling appliances we receive through their programs. Because the intent of the programs is to conserve electricity, we have instituted tracking and auditing procedures to assure our customers that those appliances do not return to use. Since 1989, we have provided services to more than 150 utilities throughout the U.S. and Canada. We currently operate nine Regional Processing Centers (“RPCs”), which are located in Minnesota, California, Texas, Illinois, Colorado, Washington, North Carolina, Pennsylvania and Ontario, Canada. We are actively pursuing opportunities to support energy efficiency programs run by electric utility companies in the U.S. and Canada.
On October 21, 2009, we entered into an Appliance Sales and Recycling Agreement (the “Agreement”) with General Electric Company (“GE”) acting through its GE Consumer & Industrial business. Under the Agreement, GE will sell all of its recyclable appliances generated in the northeastern United States to us, and we will collect, process and recycle such recyclable appliances. The Agreement requires that we will only recycle, and will not sell for re-use or resale, the recyclable appliances purchased from GE. We have established an RPC in Philadelphia at which the recyclable appliances will be processed. The term of the Agreement is for a period of six years from the first date of collection of recyclable appliances.
To establish and operate the Philadelphia RPC, we entered into a Joint Venture Agreement with 4301 Operations, LLC. 4301 Operations, LLC has substantial experience in the recycling of major household appliances and is contributing their existing business to the offeringjoint venture. Under the Joint Venture Agreement, the parties formed a new entity known as ARCA Advanced Processing, LLC (“AAP”); each party is a 50% owner of 319,355 sharesAAP. If additional RPCs are established, AAP will establish the next two RPCs and will have a right of Common
Stockfirst refusal to establish subsequent RPCs. AAP commenced operations in February 2010.
AAP will purchase and install UNTHA Recycling Technology (“URT”) equipment, enhancing the capabilities of the RPC. We are the exclusive distributor of URT equipment for North America. AAP will seek debt financing to purchase the URT equipment.
ARCA® and ApplianceSmart® are our registered trademarks and service marks. This prospectus also contains trademarks and service marks belonging to other entities.
Office Location
Appliance Recycling Centers of America, Inc. was incorporated in Minnesota in 1983, although through our predecessors we commenced the appliance retail and recycling business in 1976. Our principal executive offices are located at 7400 Excelsior Boulevard, Minneapolis, Minnesota 55426 and our telephone number is (952) 930-9000. Our Internet sites are located at www.arcainc.com and www.appliancesmart.com. The information contained in our Internet sites is not a part of this prospectus.
Risks Affecting the Company
Our business is subject to numerous risks as discussed more fully in the section entitled “Risk Factors” immediately following this Summary. In particular, we depend on the continued supply of product from major appliance manufacturers to sell in our ApplianceSmart Factory Outlets and contracts with electric utility companies for replacing and recycling appliances. Our future results will also be affected by certain Selling Shareholders. No shares are being
offered forour ability to execute our growth strategy profitably in new and existing markets, the accounteffect of competition in our industry, the effects of the Company,economy and the Companyeffects of governmental regulation. If our business continues to grow, the growth may place strains on our systems and management team. In addition, if we are not able to access additional capital, our ability to expand our business may be impaired.
The Offering
Total shares outstanding | 5,492,777 shares | |
Common stock covered hereby | 915,000 shares | |
Proceeds from offering | We will not receive any proceeds from the sale of the shares offered pursuant to this prospectus. | |
Trading symbol (NASDAQ Capital Market) | ARCI |
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below with respect to an investment in our shares. If any of the proceedsfollowing risks actually occur, our business, financial condition, operating results or cash provided by operations could be materially harmed. As a result, the trading price of our common stock could decline, and you might lose all or part of your investment. When evaluating an investment in our common stock, you should also refer to the other information contained elsewhere in this prospectus or incorporated by reference into this prospectus, including our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 2, 2010, filed with the SEC on March 18, 2010.
Risks Relating to Our Business
Our strategy of opening new retail stores may result in net losses.
Our growth strategy has included opening new retail stores; however, we have no plans to open additional stores in 2010. We evaluate demographic, economic and financial information in considering a new store location. We look primarily in markets where we currently have operations to benefit from the sale thereof.
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, POTENTIAL
PURCHASERS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN EVALUATING THE
COMPANY, ITS BUSINESS AND THE SHARES OF COMMON STOCK OFFERED HEREBY.
FORWARD LOOKING STATEMENTS. Statements regarding the Company's
operations, performanceadditional operational and results, discussed herein, are forward-looking and
therefore are subject to certain risks and uncertainties, including those
discussed below and factors which may frommarketing efficiencies of scale. New stores take time to time be included in
information incorporated herein by reference. In addition, any forward looking
information regarding the operations of the Company will be subject to the
amount of the write-offs and costs associated with the closing of retail stores
and centers discussed below, whether planned revenue levels are attained by
individual stores, the speed at which Encore stores reach profitability, whether
costs and expenses are realized at higher than expected levels (including
continued costs of conversion of existing recycling centers to support the
appliance resale aspect of the Company's business), the Company's ability to
secure an adequate supply of used appliances for resale, the continued
availability of the Company's current line of credit, and the ability of
Southern California Edison Company to deliver units under its contract with the
Company and the timing of such delivery.
DEPENDENCE ON RETAIL SALES. In response to the decrease in demand for
the Company's services from electric utilities, the Company has increased its
focus on the sale of reconditioned appliances. In 1995, the Company began
operating a chain of retail stores which sell reconditioned appliances under the
name Encore Recycled Appliances ("Encore"). As of September 28, 1996, the
Company operated 26 Encore stores. On October 31, 1996, the Company announced
that it will close 12 of such stores and 3 recycling centers by year end.
See "The Company--Recent Developments."
For the foreseeable future the Company expects to be economically
dependent on revenues from the Encore stores. The Company currently expects that
revenues from these stores will account for approximately 40% of total revenues
for 1996; however, there can be no assurance at this time that sales from such
stores will be recognized at the rates currently anticipated. In addition, the
Company has incurred, and expects to incur, negative cash flow from operations
in 1996 and expects to continue to incur such results in 1997 due primarily to
the costs associated with the expansion of the Encore stores during 1996, as
well as the write-offs and costs associated with the announced store and center
closings. At this time, the Company has determined to defer expansion of its
Encore retail network until after 1997. There can be no assurance than any new
stores will be opened in the future orbecome profitable; we cannot assure you that any individual current or future store will obtainattain or maintain projected profitability. Certain events concerningWe incurred a loss from continuing operations of $3.3 million or $0.73 per share in fiscal 2009 compared to income from continuing operations of $1.9 million or $0.41 per share in fiscal 2008. Also, in fiscal year 2008 we incurred a loss from discontinued operations of $1.5 million or $0.33 per share. We have historically experienced improvement in our retail segment as our stores have become established. Our operating loss from the Encore stores could significantly affectretail segment was $4.2 million in fiscal 2009 compared to operating income of $0.8 million in fiscal 2008. This decline was the Company's resultsresult of opening new factory outlets and an economic slowdown. Our full financial information is set out in the consolidated financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the remainderfiscal year ended January 2, 2010.
Most of 1996 and 1997. These includeour revenues are derived from retail sales. However, we expect recycling revenues as a percentage of total revenues will continue to rise in the speedfuture.
Most of our revenues are derived from retail sales of appliances at which Encore stores reach profitability, whether stores recently opened
are able to attain planned revenue levels, higherour ApplianceSmart Factory Outlet stores. We currently operate nineteen ApplianceSmart Factory Outlet stores. Retail revenues have lower profit margins than expected costs and
expenses (including expenses incurred in connection with the Company's
conversion of existing recycling centers to accommodate the appliance resale
aspects of the Company's business and write-offs and other expenses related to
the store closings), the Company's ability to secure an adequate supply of used
appliances for resale, and the availability of sufficient capital to cover
start-up and other costs until profits from operations are available.
In addition,revenues. While we believe that our future economic results for the Company maywill be heavily dependent upon the Encore stores. Such future results will be impacted not only
by the above factors, but also the ability of the Company to open additionalon our retail stores, we have seen a renewed interest in recycling and replacement programs and are pursuing opportunities with providers of energy efficiency services. In fiscal years 2009 and 2008, approximately 74% and 69%, respectively, of our revenues were from retail sales. We believe that recycling revenues will grow faster than retail revenues as we continue to add new recycling contracts.
We currently purchase product for resale from a limited number of suppliers.
We purchase inventory for resale from three main suppliers. While we believe that our relationships with our vendors are strong, the costs associated therewith.
The Company recordedloss of one of these suppliers could have a significant increasenegative impact on the amount and mix of product that we would be able to offer for sale, which could adversely affect our revenues and profitability.
Our revenues from recycling contracts decreased in its net loss for each2009 due a planned reduction in one of the quarters ended March 30, 1996, June 29, 1996, and September 28, 1996 over
the prior periods, due primarilyour contracts, along with a decrease in scrap metal prices. Future revenues from this source are very difficult to the increased operating expenses and
increased selling, general and administrative expenses associated with the
development of the Company's retail business. The Company currently expects to
report a significantly larger net loss in the fourth quarter of 1996. See also,
"The Company - Recent Developments."
CUSTOMER CONTRACTS. The Company's business had been dependent inproject.
In the past, solelyour business was dependent largely upon itsour ability to obtain new contracts and continue existing contracts for appliance recycling services with utility companies, large
retailers of new appliances, refuse haulers, landfill operators and local
governments.companies. Contracts with these entities generally have initial terms of one to four years, with renewal options and early termination clauses. While thisThe recycling and byproducts portion of our business decreased to 26% from 31% of total revenues for fiscal years 2009 and 2008, respectively. This decrease in fiscal 2009 compared to fiscal 2008 was partially due to a planned reduction in one of our contracts and a decrease in scrap metal prices. Although we have experienced an increase in the Company's business has diminished, the Company isnumber of utility companies requesting bids for upcoming appliance recycling programs, we are still dependent on certain customers for a large portion of itsour revenues. No assurance can be
given that existing contracts will be continued or renewed, that existing
customers will continue to use the Company's services at current levels or that
the Company will be successful in obtaining new contracts.
TwoGenerally, recycling revenues have a higher gross profit than retail revenues.
Three of our major utility customers, Southern California Edison Company, ("Ontario Power Authority and Southern California Edison")
and Northern StatesPublic Power Company,Authority, collectively accounted for approximately 23.5%17% and 14.0%
respectively,23% of the Company's netour total revenues for fiscal 1995. The Company's
contract with Northern States Power Company expired in February 19962009 and was not
renewed. California Edison accounted for approximately 21% of the Company's net
revenues for the first nine months of 1996. On September 12, 1996, the Company
announced that California Edison had signed a contract with the Company to
extend the refrigerator recycling program through 1997, subject to approval of
funding by the California Public Utilities Commission ("CPUC"). The CPUC is
currently expected to act by the end of 1996.2008, respectively. The loss or material reduction of business from California Edison, or any of these major customer,customers could adversely affect the Company'sour net revenues and profitability. See "The Company - Recent
Developments."
As the Company expands its operations into its retail business, it is
anticipatedHowever, we believe we will continue to add new recycling contracts in 2010 and beyond.
We cannot assure you that utilityour existing recycling contracts will continue, existing customers will represent a smaller percentage of its
net revenues. However, there can be no assurance that the Companycontinue to use our services at current levels or we will be ablesuccessful in obtaining new recycling contracts.
Our revenues from recycling contracts are subject to operate its retail stores so as to avoid significant decreases in revenues as
compared to prior years.
SEASONALITY. The Company experiences seasonal fluctuations and are dependent on the utilities’ advertising and promotional activities for contracts in which we do not provide advertising services.
In our business with utility companies, we experience seasonal fluctuations that impact our operating results, withresults. Our recycling revenues are generally higher during the second and third calendar quarters thanand lower in the first and fourth calendar quarters. The lower levelsquarters, due largely to the promotional activity schedules over which we have no control in advertising programs managed by the first and fourth quarters reflect consumer purchasing cycles, which resultutilities. Our staff communicates client-driven advertising activities internally in lower sales of major household appliances during such quarters and corresponding
reductions in the demand for appliance recycling services. Furthermore, utility
companiesan effort to achieve an operational balance. We expect that sponsor appliance turn-in programs generally reduce their
promotional efforts for such programs during the first and fourth calendar
quarters. The Company expects that itwe will continue to experience lower revenuessuch seasonal fluctuations in the first and fourth quarters of future years as compared to the second and
third quarters of such years.
DEPENDENCE UPON KEY MANAGEMENT. recycling revenues. We experience less seasonal fluctuation in our retail business.
The Company's operations are materially
dependent upon the continued services of its present management. The loss of the
services of one or more members of present management, including Edward R.
Cameron, the founder, Chairman of the Board and President of the Company, could
adversely affect the Company's business. The Companyjoint venture we have formed does not have employment
contractsan operating history upon which it can be evaluated. It may never achieve profitable operations.
We have formed a 50/50 joint venture, ARCA Advanced Processing, LLC, to operate the initial RPC under our contract with its present management. The Company maintains key person
insuranceGE. AAP was formed on February 10, 2010, and commenced operations the life of Mr. Cameron in the amount of $1,000,000, a portion of
which has been assigned as collateral for the Company's current line of credit.
CAPITAL REQUIREMENTS. The Company believes its current cash balance and
existing and anticipated lines of credit and equipment financing will be
sufficientsame day. AAP is subject to meet the Company's current plans and working capital needs through
December 1997. The Company's current revolving line of credit, which was entered
into in August 1996 with Spectrum Commercial Services, Inc. in the amount of
$1.5 million, is secured by receivables, inventory and equipmentall of the Company.
In addition,risks associated with a new venture, including the Company anticipates that it will enter into an additional line
of creditpotential for unanticipated expenses, difficulties and delays frequently encountered in connection with the same lender,start-up of new businesses, and the competitive environment in which additional lineAAP will be secured by certain
real estate assets of the Company comprising the Company's headquarters. The
current financing provides that the lender can demand payment in full of the
outstanding balance under this loan at any time. Although the Company believes
it will be able to maintain this line of credit and may be able to obtain
certain additional equipment financing, the Company may need additional equity
or other capital in the future.operate. There can beis no assurance that AAP will achieve profitable operations. Each additional capital from any sourceRPC that may be established in the future will also be subject to the risks associated with a new venture.
AAP’s financial performance will be available when neededdependent on market prices for recovered materials.
AAP’s revenues will be driven by the Company or thatmarket prices for various recovered materials, which include steel, copper, aluminum, other non-ferrous metals, glass, plastic, oil and certain types of refrigerants. Market
prices for such capitalmaterials may vary significantly. If market prices for such materials are less than projected, AAP may be unable to achieve profitable operations.
The volume of appliances under the contract with GE is not guaranteed. The contract with GE is terminable on 60-day notice if a material breach occurs and is not cured.
The operations of AAP and the initial RPC will be availablematerially dependent on terms acceptablethe volume of appliances from GE. However, GE has not guaranteed any specific volume of appliances under the contract. The RPC has the capacity to handle significant volume in addition to the Company or permittedvolume from GE, and AAP intends to seek recyclable appliances from other sources. The contract with GE is for a period of six years from the first date of collection of recyclable appliances from GE’s northeast delivery area, but may be terminated earlier by either party if the termsother party is in material breach of its current linethe contract and does not cure the breach within sixty (60) days after receiving written notice from the other party. A delay in installing the URT system could result in a material breach of credit. See "The Company - Recent
Development."
CAPITAL INVESTMENT. The Company's commitmentthe contract by us.
We may need new capital to providingfully execute our growth strategy.
Our growth strategy involves securing and maintaining contracts to provide comprehensive, integrated appliance recycling services and developing a chain of retail stores, although no additional stores are planned for 2010. This commitment will require a significant continuing investment in capital equipment and leasehold improvements and could require additional investment in real estate. The
announced closing
Our total capital requirements will depend, among the other things discussed in this prospectus or in documents incorporated by reference into this prospectus, on the number of RPCs and the three recycling centersnumber and certainsize of retail stores as well as
any nonrenewaloperating during 2010. Currently, we have nineteen retail stores and nine RPCs in operation. If our revenues are lower than anticipated, our expenses are higher than anticipated or our current line of credit cannot be maintained, we will require additional capital to finance our operations. In addition, we may need to provide additional capital to AAP to establish and fund its operation. Even if we are able to maintain our current line of credit, we may need additional equity or other terminationcapital in the future. Sources of additional financing, if needed in the future, may include further debt financing or the sale of equity (including the issuance of preferred stock) or other securities. We cannot assure you that any additional sources of financing or new capital will be available to us, available on acceptable terms or permitted by the terms of our current debt. In addition, if we sell additional equity to raise funds, all outstanding shares of common stock will be diluted.
A decline in general economic conditions has led to reduced consumer demand for our products and has had an adverse effect on our liquidity and profitability.
Since purchases of our merchandise are dependent upon discretionary spending by our retail customers, our financial performance is sensitive to changes in overall economic conditions that affect consumer spending. Consumer spending habits are affected by, among other things, prevailing economic conditions, levels of employment, salaries and wage rates, gasoline prices, consumer confidence, and consumer perception of economic conditions. A slowdown in the United States economy and uncertainty as to the economic outlook reduced discretionary spending or caused a contract with a major customer,shift in consumer discretionary spending to other products during fiscal year 2009. These factors may likely cause us to delay or slow our expansion plans, may result in reduced sales and potentially result in excess inventories in 2010. This may, in turn, lead to increased merchandise markdowns and related costs associated with higher levels of inventory that could adversely affect our liquidity and profitability in 2010.
Our market share may be adversely impacted at any time by a losssignificant number of a substantial portion of such capital investment if the
Company is unable to continue utilizing such equipment in its operations or to
sell the equipment or real estate at a reasonable value. In addition, because
thecompetitors.
Competition for our retail stores are generally leased,comes primarily from retailers of new and special-buy appliances. Each of our locations will compete not only with local and national chains of new-appliance retailers, many of whom have been in business longer than we have and who may have significantly greater financial resources, but will also be required to compete with numerous independently owned retailers of used appliances. A number of our retail operations have been opened within the closing ofpast 24 months; therefore, we cannot assure you that we will be able to compete effectively in any retail store may
result in a loss of capital investments in leasehold improvements, which loss
could be significant.
COMPETITION. such market.
Many factors, including existing and proposed governmental regulation, may affect competition in the waste managementappliance recycling and environmental
services industry. Recyclingreplacement side of appliances in conformity with recent legislative
and regulatory requirements is a relatively new industry. The Companyour business. We generally competescompete with two or three companies which are based in the geographic area to be served, under the contract and whichthey generally offer some of the services provided by the Company. The Company expects itswe provide. We expect our primary competition for contracts with existing or new customers to come from entrepreneurs entering the appliance recycling business, energy management consultants, current recycling companies, major waste hauling companies, scrap metal processors and used
appliancenew- and used-appliance dealers. In addition, some of our customers, such as utility companies, and local
governments may operate appliance recycling programs internally rather than contracting with the Companyus or other third parties. There can be no assuranceWe cannot assure you that the Companywe will be able to compete profitably in any of itsour chosen markets.
Competition for the Company's retail stores comes from new
Changes in governmental regulations relating to our recycling business could increase our costs of operations and adversely affect our business.
Our appliance retailers and other reconditioned and used appliance retailers. Each separate
location will compete not only with local and national chains of new appliance
retailers, many of whom have been in business longer than the Company and who
may have significantly greater assets than the Company, but will also be
required to compete with numerous independently owned retailers of used and
reconditioned appliances. The Company's retail operationsrecycling centers are currently in a
start-up mode; therefore, there can be no assurance that the Company will be
able to compete effectively in any such market.
GOVERNMENT REGULATION. The business of recycling appliances is subject to certain governmentalvarious federal, state and local laws, and regulations and is becoming increasingly
regulated.licensing requirements related to providing turnkey services for energy efficiency programs. These requirements may vary by market location and include, for example, laws concerning the management of hazardous materials and regulations include landfill disposal restrictions,the 1990 Amendments to the Clean Air Act, which require us to recapture CFC refrigerants from appliances to prevent their release into the atmosphere.
We have registered our centers with the EPA as hazardous waste management requirements and air quality standards, as well as
special permit and license conditions for the recycling of appliances. Company
management believes that further government regulation in this area could have a
positive effect on the Company's business; however, there can be no assurance
what course future regulation could have. Under some circumstances, however,
further regulation could materially increase the costs of the Company's
operationsgenerators and have an adverse effect on the Company's business. In addition, asobtained required licenses from appropriate state and local authorities. We have agreements with approved and licensed hazardous waste companies for transportation and recycling or disposal of hazardous materials generated through our recycling processes. As is the case with all companies handling hazardous materials, under some circumstances the Companywe may be subject to contingent liability. In late 1992, Congress adoptedWe believe we are in compliance with all government regulations regarding the Federal Energy Policy Acthandling of 1992hazardous materials, and we have environmental insurance to encourage energy efficiency. Requirements under this act will, among other
things, establish mandatory energy performance standards that will affectmitigate the manufacture and saleimpact of major household appliances. Such programs are also
expectedany potential contingent liability.
Our lender has the right to encourage energy efficiency to meet future demands. Another
component of this act allows for deregulationdemand payment in full of the nation's energy providers,
including the electric utility industry. The ultimate impactborrowings under our line of deregulation on
the electric utility industry is yet unknown; therefore, there can be no
assurance that the Company willcredit at any time. If it were to do so, we would not be able to continue certain of its currentpursue our growth strategy and our operations in a deregulated environment.
CONTROL BY EXISTING MANAGEMENT. The officerswould be severely limited unless and directors of the
Company own beneficially approximately 29% of the Company's outstanding shares
of Common Stock (excluding shares issuable upon exercise of options). Because of
such ownership, management may be able to control the affairs of the Company,
including the election of the entire Board of Directors.
SHARES ELIGIBLE FOR FUTURE SALE. The Company had 4,546,917 shares of
Common Stock outstanding as of September 28, 1996. The shares offered hereby,
which represent approximately 7% of such outstanding shares, are now freely
transferable without further restriction or registration under the Securities
Act of 1933, as amended (the "Act"). Of the currently outstanding shares,
1,210,754 shares are held by Edward R. Cameron, the founder, Chairman of the
Board and President of the Company, and 110,817 shares are held by other
officers and directors of the Company. Such shares are eligible for sale
pursuant to Rule 144 promulgated under the Act. The provisions of Rule 144
currently restrict the volume of sales by any single affiliate of the Company,
such as the officers and directors, to approximately 45,000 shares each within
any three-month period. Sales of substantial amounts of Common Stock into the
public market could adversely affect the then prevailing market price.
THE COMPANY
GENERAL
Appliance Recycling Centers of America, Inc., together with its operating
subsidiaries ("ARCA" or the "Company"), provides a comprehensive range of
services for the large-scale collection, reuse and recycling of major household
appliances inuntil new financing was obtained.
We have an environmentally-sound manner. The Company provides its
customers with integrated processes and programs addressing the solid waste
management, environmental and energy conservation issues involved with appliance
disposal and recycling. The Company generates revenues from fees charged for the
disposal of appliances, the sale of materials generated from processed
appliances (by-product revenues) and the sale of reconditioned appliances
through a chain of Company-owned retail stores.
In the late 1980s, in response to stricter environmental protection
laws, the Company developed and marketed programs to process and dispose of
unwanted appliances in an environmentally-sound manner. These programs were
offered to new appliance retailers, waste management companies and the general
public. In 1989, the Company expanded its appliance recycling concept to the
electric utility industry.
From 1989 to 1994, the Company focused its resources on the expansion
of its business with electric utility companies. During this time period the
Company opened 9 centers throughout the U.S. and Canada, primarily serving
seventeen electric utility customers. The Company's electric utility business
has been negatively impacted by the potential electric utility industry
deregulation. The potential of deregulation has caused electric utilities to
decrease their sponsorship of energy conservation programs like the one the
Company offers. As a result of the decrease in utility customers, the Company
incurred a loss at December 1995 on impaired equipment and leaseholds associated
with its utility business. In response to decreases in revenue from contracts
with electric utility programs, the Company closed four recycling centers during
the first six months of 1996. As of September 28, 1996, the Company operated 7
such centers. On October 31, 1996, the Company announced its plans to close 3
centers by year end. See "Recent Developments Announced Closing of Centers and
Retail Stores" below.
In response to the decrease in demand for services from electric
utilities, the Company increased its marketing of services to appliance
retailers, waste management companies and property management companies. The
Company also increased its focus on the sale of reconditioned appliances. In
1995, under the name Encore Recycled Appliances, the Company began operating a
chain of Company-owned retail stores, offering reconditioned appliances to
value-conscious individuals and property management companies. As of September
28, 1996, the Company operated 26 such retail locations. On October 31, 1996,
the Company announced its plans to close 12 stores by year end. No new stores
are currently expected to be opened until after 1997. The Company currently
anticipates that approximately 40% of the Company's revenue for 1996 will be
derived from sales at Encore retail stores. See also, "Recent Developments
Announced Closing of Centers and Retail Stores" below.
The Company was incorporated under the laws of the State of Minnesota
in 1983, although through its predecessors it commenced the appliance recycling
business in 1976. The Company's principal executive offices are located at 7400
Excelsior Boulevard, Minneapolis, Minnesota 55426-4517. Its telephone number is
(612) 930-1700.
RECENT DEVELOPMENTS
ANNOUNCED CLOSING OF CENTERS AND RETAIL STORES. On October 31, 1996,
the Company announced that it intended to withdraw from three under-performing
markets during the fourth quarter of 1996. The Company currently anticipates
closing 12 Encore retail stores and three recycling centers. The Company is
closing all of its Encore stores and centers in the Washington, D.C./Baltimore,
Hartford, Connecticut and Oakland, California markets. In addition, the Company
is closing its retail outlets in Southern California, but will continue to
operate its Los Angeles recycling center. Write-offs and other significant
expenses related to this action are expected to cause the Company to report a
significantly larger than planned net loss in the fourth quarter of 1996. In
addition, such financial results will be subject, among other things, to the
results of operations at the remaining retail stores, as well as the volume of
units delivered under the California Edison contract.
CONTRACT WITH CALIFORNIA EDISON. In mid-September 1996, the Company and
California Edison entered into a contract to extend the refrigerator recycling
program with the Company through 1997, subject to approval of funding for 1997
by the CPUC. California Edison submitted its request October 1, 1996 and the
CPUC is currently expected to act by mid-November 1996, after a period for
public comment. The Company has participated in that program through its Los
Angeles recycling center since 1993. Under the terms of the new contract,
California Edison has specified minimum refrigerator recycling volumes of
approximately 25,000 units in 1996 and approximately 30,000 units in 1997, which
are expected by the Company to generate revenues of approximately $3$18.0 million in
1996 and $3.5 million in 1997. Through the third quarter of 1996, the Company
had realized approximately $2.1 in revenues pursuant to this agreement.
California Edison also agreed in the contract to take certain actions necessary
to collect 50,000 units; however, the realization of such volumes is subject to,
among other things, the receipt by California Edison of approval for additional
funding from the CPUC, customer acceptance, proper advertising, and cost
effectiveness; therefore, there can be no assurance that any such amounts will
be realized. The program is subject to cancellation by the CPUC if certain cost
effectiveness ratios are not met by the California Edison.
CURRENT LINE OF CREDIT; CAPITAL REQUIREMENTS. In August 1996, the
Company entered into a new line of credit, with Spectrum Commercial Services,
Inc. Such line of credit is secured bybased on the receivables, inventory, equipment and
other assets of the Company and a portion is guaranteed by the President of the
Company. The line is currently $1.5 million, of which approximately $1.2 million
is currently drawn. The line of credit provides forloan amendment dated February 5, 2008, with a stated maturity date of August 30, 1999, andDecember 31, 2010. The line of credit also provides that the lender may demand payment in full of the entire outstanding balance of the loan at any time. Except for the one property we own, substantially all assets have been pledged to secure payments under the line. The loan provides for a rate
of interest equal to 4 percentage points over the prime lending rate per annum,
but never less than 10% per annum (the current rate is 12-1/4%), and minimum
monthly interest payments of $7,500 regardless of the outstanding principal
balance. Upon an event of default, the interest may increase by 5% per annum.
The loan alsoline requires that the Companywe meet certain financial covenants, provides payment penalties for noncompliance contains certainand prepayment,
penalties, provides for annual fees for administration of the loan and for
maintenance of the line of credit, limits the amount of other debt the Companywe can incur, and limits the amount of spending on fixed assets.assets, and limits payments of dividends. On March 1, 2010, borrowings of $10.6 million were outstanding under the line of credit, and we had unused borrowing capacity of $0.8 million. As of the date
hereof, the Company isJanuary 2, 2010, we were not in compliance with certain financial covenants underand received a waiver from our lender. On March 10, 2010, the currentinterest rate on the line increased to 6.75% (the greater of credit. The Company is currently negotiating a revision of
these covenants.prime plus 3.50 percentage points or 6.75%). In addition, the Company anticipates that it will increase this
line by approximately $650,000 during the fourth quarter, such additional amount
is expected2010, we plan to be on terms substantially similar to the Company's current linerenegotiate and will be secured by real estate owned by the Company comprising its
headquarters.
The Company currently anticipates that its current cash balance,
existing and anticipated equipment financing, and currentextend our line of credit although there is no assurance the line will be sufficientextended.
We may not be able to finance itsoperate successfully if we lose key personnel, are unable to hire qualified personnel or experience turnover of our management team.
We believe our operations are materially dependent upon the continued services of our present management. The loss of services of one or more members of present management, including Edward R. (Jack) Cameron, our founder, Chairman of the Board and capital expenditures through December
1997. The Company's total capital requirements will dependcurrent CEO, could adversely affect our business. We do not have employment contracts with present management. We maintain key person life insurance on the number of
recycling centers operated and the number and size of retail stores operating
during the fiscal year. Currently, the Company has 7 centers and 26 stores in
operation and expects to close 3 centers and 12 stores by year end. If revenues
are lower than anticipated, or expenses, including expenses associated with
store closings, are higher than anticipated, the Company may require additional
capital to finance operations and expansion. Sources of additional financing, if
neededMr. Cameron in the future, may include further debt financing oramount of $1.0 million.
We have been engaged as a plaintiff in litigation surrounding intellectual property issues and have had a claim of infringement in a second law suit dismissed.
In December 2004, we filed suit in the saleU.S. District Court for the Central District of equity
or other securities. There can be no assuranceCalifornia alleging that such additional sourcesJACO Environmental, Inc. (“JACO”) and one of financing will be available or available on terms satisfactoryour former consultants fraudulently obtained U.S. Patent No. 6,732,416 in May 2004 covering appliance recycling methods and systems which were originally developed by us beginning in 1987 and used in serving more than forty-five electric utility appliance recycling programs up to the Companytime the suit was filed. We sought an injunction to prevent JACO from claiming that it obtained a valid patent on appliance recycling processes that we believe is based on methods and processes we invented. In addition, we asked the Court to find that the patent obtained by JACO is unenforceable due to inequitable conduct before the United States Patent Office. We also asked the Court for unspecified damages related to charges that JACO, in using the patent to promote its services, engaged in unfair competition and false and misleading advertising under federal and California statutes. The defendants in the case did not assert any counterclaims against ARCA.
In September 2005, we received a legally binding document in which JACO stated it would not sue us or permitted byany of our customers for violating the Company's current lender.
ACQUISITIONS. On March 26, 1996,JACO patent.
In January 2009, the Company announced it signedCourt granted JACO a letter of intent to acquire the assets of Appliance Distributors of Texas, Inc.,
a reconditioned appliance retailer and recycler based in Austin, Texas, subject
to the Company's due diligence and negotiation of definitive agreements. The
Company has decided not to go forward with this acquisition.
SALE OF EQUITY. In May 1996, the Company raised $700,000 from the
private sale of 200,000 shares of Common Stock at $3.50 per share. The proceeds
of such sale were used by the Company primarily to repay an outstanding bank
loan secured by certain capital equipment of the Company, and also for working
capital. Pursuant to the terms of the purchase agreementsummary judgment with respect to theseARCA’s claims of unfair competition and false and misleading advertising. The ruling was made by the same judge who had earlier denied summary judgment to the defendants. Even though the Court’s ruling had no impact on ARCA’s method of recycling or ability to conduct existing and future business, we filed an appeal with the Ninth Circuit Court of Appeals in California in February 2009 seeking to have the court set aside the summary judgment. Our appeal was argued before the Ninth Circuit Court of Appeals on April 9, 2010, and on May 4, 2010, the Court entered an order affirming the summary judgment granted to JACO.
On October 24, 2006, JACO and SEG Umwelt-Service/Basis of Mettlach, Germany (SEG) filed a patent infringement lawsuit in Federal Court in San Francisco against us. The suit claimed that we had been using refrigerator recycling systems and processes covered by two U.S. patents issued to SEG and exclusively licensed to JACO. JACO and SEG sought an undisclosed amount in damages, in addition to an injunction barring us from continuing to use and market the systems and processes upon which we allegedly infringed. This suit was subsequently dismissed following a transfer of the case to Los Angeles upon the motion of ARCA.
Risks Relating to Our Common Stock
If an active trading market for our common stock does not develop, the value and liquidity of your investment in our common stock could be adversely affected.
The trading volumes in our common stock on the NASDAQ Capital Market are highly variable. At any given time, there may be only a limited market for any shares of Common Stock,common stock that you purchase. Sales of substantial amounts of common stock into the Company agreedpublic market at the same time could adversely affect the market price of our common stock.
Our principal shareholders own a large percentage of our voting stock, which will allow them to registercontrol substantially all matters requiring shareholder approval.
Currently, Jack Cameron, Chairman and Chief Executive Officer, beneficially owns approximately 6.4% of our common stock. Our officers and directors together beneficially hold approximately 8.8% of our common stock. Perkins Capital Management, Inc. and Medallion Capital, Inc. beneficially own approximately 14.4% and 9.0%, respectively, of our outstanding common stock. Because of such shares for re-sale
byownership, the purchaser. These shares are among those being offered for sale pursuantCompany’s management and principal shareholders may be able to this Prospectus.
THIRD QUARTER RESULTSsignificantly affect its corporate decisions, including the election of the Board of Directors.
USE OF OPERATIONS
For the quarter ended September 28, 1996, the Company reported a net
loss of $745,000 or $.16 per share, compared to net income of $81,000 or $.02
per share for the third quarter of 1995. Net revenues for the current quarter
were $4,201,000, a decline of 7%PROCEEDS
We will not receive any proceeds from the year-earlier period, primarily as a
result of further declines in the Company's traditional utility-related business
in comparison to the year-earlier period.
For the first nine months of 1996, the Company's net loss totaled
$4,243,000 or $.96 per share, compared to earnings of $104,000 or $.02 per share
for the same period last year. Net revenues were $10,533,000, down from
$12,221,000 in the first nine months of 1995.
Sales of reconditioned appliances rose 23% from second quarter 1996 to
$1,666,000 and accounted for 40% of third quarter revenues. Appliance recycling
fees rose 31% from second quarter 1996 to $1,834,000 and accounted for 44% of
third quarter revenues, reflecting fees from California Edison's demand-side
energy conservation program. Sales of scrap metal byproducts from recycling
operations accounted for 16% of the third quarter revenues, virtually unchanged
from the second quarter of 1996.
On October 16, 1996, the Company announced its results for the third
quarter ended September 28, 1996, as set forth on the following page.
The selling shareholders will pay any expenses incurred by the selling shareholders for brokerage, accounting, tax or legal services or any other expenses incurred by the selling shareholders in disposing of the shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the shares covered by this prospectus, including all registration and filing fees and fees and expenses of our counsel and our accountants.
The shares of common stock covered by this prospectus are 915,000 shares of our common stock that we previously issued to the selling shareholders in private transactions. The 915,000 shares covered by this prospectus represent approximately 16.7% of our outstanding shares of common stock as of April 26, 2010.
The following table sets forth the names of the selling shareholders, the aggregate number of shares of common stock beneficially owned by each selling shareholder as of April 26, 2010, the number of shares that may be offered pursuant to this prospectus, and the number of shares to be owned by each selling shareholder after the sale of the common stock under this prospectus. The selling shareholders may sell all, some or none of the shares of common stock they are offering, and may sell shares of our common stock otherwise than pursuant to this prospectus. The table below assumes that each selling shareholder sells all of the shares offered by it in offerings pursuant to this prospectus, and does not acquire any additional shares. We are unable to determine the exact number of Common Stock offered hereby mayshares that will actually be sold or when or if these sales will occur. When we refer to the selling shareholders in this prospectus, we mean
the individuals and entities listed in the table below, as well as their donees, pledgees, transferees or other successors-in-interest.
Unless otherwise stated below in the footnotes, to our knowledge, no selling shareholder nor any affiliate of such shareholder (i) has held any position or office with, been employed by or otherwise has had any material relationship with us or our affiliates during the three years prior to the date of this prospectus; or (ii) is a broker-dealer or an affiliate of a broker-dealer. Based on information provided to us, none of the selling shareholders that are affiliates of broker-dealers, if any, purchased shares of our common stock outside the ordinary course of business or, at the time of their acquisition of shares of our common stock, had any agreements, understandings or arrangements with any other persons, directly or indirectly, to dispose of the shares.
Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment control with respect to all shares of our common stock shown as beneficially owned by them. We may amend or supplement this prospectus from time to time in the future to purchasers directlyupdate or change this list and shares which may be resold.
|
| Shares of Common Stock |
| Number of Shares |
| Shares of Common Stock |
| ||||
Name of Selling Shareholder |
| Number |
| Percentage |
| Number |
| Number |
| Percentage |
|
|
|
|
|
|
|
|
|
|
|
|
|
Berenholz Capital Growth LLC (3) |
| 67,800 |
| 1.2 | % | 50,000 |
| 17,800 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. Cahr |
| 65,000 |
| 1.2 | % | 65,000 |
| 0 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Myron Cohn & Martin Cohn, JT TEN (4) |
| 83,210 |
| 1.5 | % | 50,000 |
| 33,210 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel Greenberg (5) |
| 61,500 |
| 1.1 | % | 40,000 |
| 21,500 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
William M. Hitchcock |
| 50,000 |
| * |
| 50,000 |
| 0 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Strategies Fund LP (6) |
| 50,000 |
| * |
| 50,000 |
| 0 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Levy Harkins & Co., Inc. Profit Sharing Plan (7) |
| 33,034 |
| * |
| 25,000 |
| 8,034 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Edwin A. Levy |
| 107,992 |
| 2.0 | % | 50,000 |
| 57,992 |
| 1.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
John W. Pagnucco |
| 165,847 |
| 3.0 | % | 50,000 |
| 115,847 |
| 2.1 | % |
|
|
|
|
|
|
|
|
|
|
|
|
Pyramid Partners, L.P. (8) |
| 300,000 |
| 5.5 | % | 50,000 |
| 250,000 |
| 4.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
Sandra F. Pessin (9) |
| 492,940 |
| 9.0 | % | 200,000 |
| 292,940 |
| 5.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
St. Albans Global Management, LLLP (10) |
| 170,000 |
| 3.1 | % | 170,000 |
| 0 |
| * |
|
|
|
|
|
|
|
|
|
|
|
|
|
Barry Neal Wish |
| 65,000 |
| 1.2 | % | 65,000 |
| 0 |
| * |
|
*Less than one percent.
(1)Beneficial ownership is determined under Section 13(d) of the Securities Exchange Act of 1934 and generally includes voting or investment power with respect to securities and includes any securities that grant the selling shareholder the right to acquire common stock within 60 days of April 26, 2010. There were 5,492,777 shares of common stock outstanding as of April 26, 2010.
(2)Assumes the sale of all shares of common stock offered by this prospectus.
(3)Harris Berenholz is the managing member and sole owner of Berenholz Capital Growth LLC and exercises voting and investment powers with respect to these shares.
(4)Myron Cohn is an associated person of Stifel, Nicolaus & Co., Inc., a broker dealer. Myron Cohn and Martin Cohn are brothers. Their beneficial ownership includes 13,210 shares owned by Myron Cohn, 20,000 shares owned by Martin Cohn, and 50,000 shares (the shares offered by this prospectus) owned as joint tenants. Myron Cohn and Martin Cohn each disclaim beneficial ownership of the shares held by the Selling Shareholders.
Alternatively,other.
(5)Mr. Greenberg’s shares are held in a revocable trust established by Mr. Greenberg. Mr. Greenberg is the Selling Shareholderstrustee and exercises voting and investment powers with respect to these shares.
(6)Matthew Shefler is the managing member of Investment Strategies Fund LP and in such capacity exercises voting and investment powers with respect to the shares held by this selling shareholder. Mr. Shefler disclaims beneficial ownership of the shares owned by Investment Strategies Fund LP except to the extent of his pecuniary interest in such shares.
(7)Michael Harkins is the trustee of the Levy Harkins & Co. Profit Sharing Plan and in such capacity exercises voting and investment powers with respect to the shares held by this selling shareholder. Mr. Harkins disclaims beneficial ownership of the shares owned by the Levy Harkins & Co. Profit Sharing Plan except to the extent of his pecuniary interest in such shares.
(8)Perkins Capital Management, Inc., a registered investment advisor, exercises voting and investment authority over the shares held by Pyramid Partners, LP. Perkins Capital Management, Inc. disclaims beneficial ownership of such shares.
(9)Ms. Pessin’s beneficial ownership includes 201,800 shares of common stock held by her husband, Norman H. Pessin. Ms. Pessin does not exercise voting or investment powers with respect to the shares held by Mr. Pessin and disclaims beneficial ownership of such shares. None of the shares held by Mr. Pessin are being offered by this propectus.
(10)Paul A. Novelly II is the general partner of St. Albans Global Management LLLP and exercises voting and investment powers with respect to the shares held by this selling shareholder. Mr. Novelly disclaims beneficial ownership of the shares owned by St. Albans Global Management LLLP except to the extent of his pecuniary interest in such shares.
The registration statement to which this prospectus relates is being filed pursuant to agreements we entered into with the selling shareholders, whereby we agreed to file a registration statement to cover the shares of our common stock acquired by the selling shareholders. We have agreed to keep the registration statement effective, subject to applicable rules and regulations, until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold without restriction pursuant to Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”).
We are registering the shares of common stock offered for sale by this prospectus on behalf of the selling shareholders. The selling shareholders and any of their donees, pledgees, transferees or other successors-in-interest may, from time to time, offersell any or all of their shares of common stock on the Common
Stock through underwriters, dealersNASDAQ Capital Market or agents, who may receive compensationany other stock exchange, market or trading facility on which the shares are traded or in the form of discounts, concessions or commissions from the Selling Shareholders
and/or the purchasers of Common Stock for whom they may act or to whom they may
sell as principal, or both (which compensation as to particular underwriter,
broker or agentprivate transactions. These sales may be in excess of customary commissions). If applicable,at fixed or negotiated prices. A selling shareholder may use any one or more supplemental prospectusesof the following methods when selling shares:
·ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
·block trades in which the broker-dealer will be filedattempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
·purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
·privately negotiated transactions;
·settlement of short sales entered into after the date of this prospectus;
·transactions in which broker-dealers agree with the selling shareholders to sell a specified number of such shares at a stipulated price per share;
·through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
·a combination of any such methods of sale; or
·any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under Rule 424144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling shareholders may arrange for other brokers-dealers to describeparticipate in sales. Broker-dealers may receive commissions or discounts from the selling shareholders (or, if any material arrangementsbroker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. Each selling shareholder does not expect these commissions and discounts relating to its sales of shares offered hereunder when such arrangements are enteredto exceed what is customary in the types of transactions involved.
In connection with the sale of our common stock or interests therein, the selling shareholders may enter into by anyhedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Selling
Shareholderscommon stock in the course of hedging the positions they assume. The selling shareholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The selling shareholders and any of the underwriters, brokersbroker-dealers or agents that participateare involved in selling the sale of shares. The Selling Shareholders and any such underwriters, dealers
or agents that participate in the distribution of Common Stockshares may be deemed to be underwriters under“underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the saleresale of the Common Stock by them and any discounts, commissions or concessions receivedshares purchased by them may be deemed to be underwriting commissions or discounts and commissions under the Securities Act. AsEach selling shareholder has informed us that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the common stock.
We are required to pay certain fees and expenses incurred by us incident to the registration of the date hereof, there are no specialshares. We have agreed to indemnify the selling arrangements
between any underwriters, brokers, agents or other personshareholders against certain losses, claims, damages and any Selling
Shareholder.
Atliabilities, including liabilities under the time a particular offerSecurities Act.
Because selling shareholders may be deemed to be “underwriters” within the meaning of Common Stock is made,the Securities Act, they will be subject to the extent
required, a supplement toprospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus will be distributed which will set
forthqualify for sale pursuant to Rule 144 under the aggregate principal amount of Common Stock being offered and the terms
of the offering, including the name or names of the particular Selling
Shareholders, any underwriters, dealers or agents, any discounts, commissions
and other items constituting compensation from the Selling Shareholders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
including the proposed selling price to the public.
The Common StockSecurities Act may be sold from time to timeunder Rule 144 rather than under this prospectus. There is no underwriter or coordinating broker acting in one or more
transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. The Company will
not receive any of the proceeds from the sale by the Selling Shareholders of the
Common Stock offered hereby.
The Common Stock was originally issued in private transactions, was
outstanding prior to the effective date of this offering, and has been
registered hereby for resale by the Selling Shareholders pursuant to separate
registration rights agreementsconnection with the Selling Shareholders. See "Selling
Shareholders."
The Company has agreed, under certain circumstances, to use its best
efforts to keep the registration statement of which the Prospectus forms a part,
effective until the earlier of two years from the effective date or the time at
which all shares offered hereby have been sold by the Selling Shareholders.
LEGAL MATTERS
Certain matters with respect to the legality of the issuance andproposed sale of the shares offered herebyby the selling shareholders.
Under applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale shares may not simultaneously engage in market making activities with respect to our common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling shareholders will be passedsubject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of our common stock by the selling shareholders or any other person. We will make copies of this prospectus available to the selling shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
Robins, Kaplan, Miller & Ciresi L.L.P., Minneapolis, Minnesota, will pass upon the validity of the shares of common stock offered by this prospectus and other legal matters for us.
The consolidated financial statements as of January 2, 2010 and January 3, 2009, and the consolidated statements of operations, shareholders’ equity and comprehensive loss, and cash flows for the Companyfiscal years then ended, have been incorporated herein by Mackall,
Crounse & Moore, PLC, Minneapolis, Minnesota. Denis E. Grande, Secretaryreference in reliance upon the report of Baker Tilly Virchow Krause, LLP, an independent registered public accounting firm, as incorporated by reference herein, given their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our bylaws provide for indemnification of our directors and officers to the fullest extent permitted by law. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or controlling persons of the Company is a partnerpursuant to our Articles of Incorporation, bylaws and the Minnesota Business Corporation Act, the Company has been informed that in Mackall Crounse & Moore, PLC, and membersthe opinion of the firm
own an aggregate of 2,000 sharesSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file electronically with the Securities and Exchange Commission our annual reports on Form 10-K, quarterly interim reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Company's Common Stock.
EXPERTS
The financial statementsSecurities Exchange Act of 1934 (the “Exchange Act”). We make available on or through our website, free of charge, copies of these reports as soon as reasonably practicable after we electronically file or furnish them to the SEC. Our website can be found at www.arcainc.com.�� You may also request a copy of these filings, at no cost, by writing or telephoning us. Any requests should be directed to:
Appliance Recycling Centers of America, Inc.
Attention: Peter P. Hausback, Chief Financial Officer
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426-4517
(952) 930-9000
You may read and copy any document we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including Appliance Recycling Centers of American, Inc. The SEC’s Internet site can be found at www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” in this prospectus the information contained in other documents filed separately with the SEC. This means that we can disclose important information to you by referring you to other documents filed with the SEC that contain such information. The information incorporated by reference is an important part of this prospectus. Information disclosed in documents that we file later with the SEC will automatically add to, update and change information previously disclosed. If there is additional information in a later filed document or a conflict or inconsistency between information in this prospectus or a prospectus supplement and information incorporated by reference from a later filed document, you should rely on the information in the Company'slater dated document.
We are incorporating by reference into this prospectus the documents listed below:
·our Annual Report on Form 10-K for the fiscal year ended December 30, 1995, have been audited by McGladrey & Pullen, LLP,
independent auditors, as set forth in their report included therein and
incorporated herein by reference. Such financial statements are, and audited
financial statementsJanuary 2, 2010;
·our Proxy Statement for our 2010 Annual Meeting of Shareholders scheduled to be includedheld on May 13, 2010;
·our Current Report on Form 8-K filed on April 8, 2010;
·the description of our common stock contained in subsequently filed documents will be,
incorporated herein in reliance upon the reports of McGladrey & Pullen, LLP,
pertaining to such financial statements (to the extent covered by consentsour registration statement on Form S-2 (Registration No. 333-123005) filed with the SecuritiesSEC on February 25, 2005 (as amended by Amendment No. 1 filed on April 15, 2005, Amendment No. 2 filed on April 19, 2005, and Amendment No. 3 filed on April 21, 2005), including any amendments or reports filed for the purpose of updating such description in which there is described the terms, rights and provisions applicable to our common stock;
·all documents that we file under Section 13(a), 13(c), 14 or 15(d) of the Exchange Commission) givenAct after the date of the initial filing of the Registration Statement and prior to the effectiveness of the Registration Statement; and
·all documents that we file under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus and before the termination of any offering of securities under this prospectus.
We do not incorporate by reference any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K in any future filings, unless specifically stated otherwise in such filings. Any statement contained in a document incorporated by reference in this prospectus shall be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus, any prospectus supplement or in any other subsequently filed document which is incorporated by reference modifies or supersedes such statement.
Our SEC file number for the documents incorporated by reference in this prospectus is 000-19621.
We will provide to each person, including any beneficial owner, to whom a prospectus is delivered, without charge upon written or oral request, a copy of any or all of the authoritydocuments that are incorporated by reference into this prospectus but not delivered with the prospectus, including exhibits which are specifically incorporated by reference into such documents. Requests should be directed to:
Appliance Recycling Centers of such
firm as experts in accounting and auditing.
America, Inc.
Attention: Peter P. Hausback, Chief Financial Officer
7400 Excelsior Boulevard
Minneapolis, Minnesota 55426-4517
(952) 930-9000
915,000 Shares
APPLIANCE RECYCLING CENTERS
OF AMERICA, INC.
Common Stock
PROSPECTUS
, 2010
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14.Other Expenses of Issuance and Distribution.
The table below sets forth the estimated expenses (except the SEC registration
fee, which is an actual expense)Distribution
Expenses in connection with the offersale and saledistribution of the shares of Common Stockour common stock being registered hereunder (except any underwriting discounts and commissions and expenses incurred by the selling shareholders for brokerage, accounting, tax or legal services or any other expenses incurred by the selling shareholders in disposing of the registrant covered by this registration statement.
SEC registration fee ............................. $ 230
Legal fees and expenses .......................... 2,000
Accounting fees and expenses ..................... 1,000
Miscellaneous expenses ........................... 570
------
Total ........................................ $3,800
======shares) are set forth below. All of the above feesamounts shown are being paid byestimated except the Company.
Securities and Exchange Commission registration fee.
SEC registration fee |
| $ | 234.21 |
|
Legal fees and expenses |
| 15,000.00 |
| |
Accounting fees and expenses |
| 5,000.00 |
| |
Printing and engraving expenses |
| 1,000.00 |
| |
Transfer agent fees and expenses |
| 1,000.00 |
| |
Miscellaneous expenses |
| 2,765.79 |
| |
Total |
| $ | 25,000.00 |
|
Item 15.Indemnification of Directors and Officers.
Article 5Officers
Section 302A.521, subd. 2, of the Company's Bylaws providesMinnesota Statutes requires that the Company shallwe indemnify its officers and directors in accordance with, anda person made or threatened to the extent
provided by, Minnesota law. Under Minnesota law,be made a corporation shall, unless
prohibited or limited by its articles of incorporation or bylaws, indemnify its
current and former officers, directors, employees and agents against expenses
(including attorneys' fees), judgments, penalties, fines and amounts paid in
settlement and which were incurred in connection with actions, suits or
proceedings in which such persons are partiesparty to a proceeding by reason of the fact that they
areformer or were an officer, director, employee or agentpresent official capacity of the corporation,person with respect to our company, against judgments, penalties, fines, including, without limitation, excise taxes assessed against the person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorneys’ fees and disbursements, incurred by the person in connection with the proceeding with respect to the same acts or omissions if theysuch person (i) havehas not been indemnified by another organization;organization or employee benefit plan for the same judgments, penalties or fines, (ii) acted in good faith;faith, (iii) received no improper personal benefit;benefit, and statutory procedure has been followed in the case of any conflict of interest by a director, (iv) in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful;unlawful, and (v) in the case of acts or omissions occurring in the person’s performance in the official capacity of director or, for a person not a director, in the official capacity of officer, board committee member or employee, reasonably believed that the conduct was in the best interests of our company, or, in the corporation.case of performance by one of our directors, officers or employees involving service as a director, officer, partner, trustee, employee or agent of another organization or employee benefit plan, reasonably believed that the conduct was not opposed to the best interests of our company. In addition, Section 302A.521, subd. 3, requires payment by us, upon written request, of reasonable expenses in advance of final disposition of the proceeding in certain instances. A decision as to required indemnification is to be made by a disinterested majority of our board of directors present at a meeting at which a disinterested quorum is present, or by a designated committee of the board, by special legal counsel, by the shareholders or by a court.
Our bylaws provide that we shall indemnify each of our directors, officers and employees to the fullest extent permissible by Minnesota corporate lawStatute, as detailed above. We also provides thatmaintain a corporation maydirector and officer liability insurance policy to cover us, our directors and our officers against certain liabilities.
In addition, the securities purchase and maintain insurance on behalf of its officers, directors, employees
and agentsagreements we entered into with the selling shareholders obligate us to indemnify such shareholders against any loss, claim, damage or liability which may be asserted against,arising out of or incurred by,
such personsbased on any untrue statement, or alleged untrue statement, of any material fact contained in their capacitiesthis registration statement (including the prospectus, financial statements and schedules, and all other documents filed as officers, directors, employees and agents
againsta part
thereof), or any liability which may be asserted against,omission, or incurred by, such
persons in their capacities as officers, directors, employees or agentsalleged omission, of the
corporation, whether or not the corporation would have beena material fact required to indemnifybe stated or necessary to make the person against the liability under the provisions of such section.
Unless prohibited in a corporation's articles or bylaws, Minnesota
Statutes ss.302A.521 requires indemnification of officers, directors, employees
and agents, under certain circumstances, against judgments, penalties, fines,
settlements and reasonable expenses (including attorney's fees and
disbursements) incurred by such person in connection with a threatened or
pending proceeding with respect to the acts or omissions of such person in his
official capacity. The general effect of Minnesota Statutes ss.302A.521 is to
reimburse (or pay on behalf of) directors and officers of the Registrant any
personal liability that may be imposed for certain acts performed in their
capacity as directors and officers of the Registrant, except where such persons
havestatements contained herein not acted in good faith.
The Bylaws of the Registrant provide for such indemnification to the
maximum extent permitted by Minnesota Statutes. The Company has purchased
insurance covering the liability of its directors and officers, within the
limits and subject to the limitations of the policies, against certain expenses
in connection with the defense of, and certain liabilities which might be
imposed as a result of, actions, suits or proceedings to which they are parties
by reason of being or having been such directors or officers.
The agreement between the Company and certain Selling Shareholders,
listed as Exhibit 2.2 hereto provides for the indemnification of the Company by
certain Selling Shareholders against certain liabilities, including liabilities
under the Securities Act.
misleading.
Item 16. Exhibits.
2.2 Agreement and Plan of Reorganization dated January 2, 1996, between the
Company, ARCA Maryland, Inc., Universal Appliance Company, Inc. and
Universal Recycling, Inc. (Note 1)
3.1 Restated Articles of Incorporation of Appliance Recycling Centers of
America, Inc. (Note 2)
3.2 Restated Articles of Incorporation as amended June 3, 1993. (Note 3)
3.3 Bylaws of Appliance Recycling Centers of America, Inc. (Note 2)
4.1 Specimen of Common Stock Certificate (Note 4)
5 Opinion and Consent of Mackall, Crounse & Moore, PLC (filed herewith)
23.1 Consent of Mackall, Crounse & Moore (included in Exhibit 5)
23.2 Consent of McGladrey & Pullen, LLP, Independent Auditors (filed
herewith)
24 Power of Attorney (included on signature page)
NOTE 1. Exhibits
Exhibit | ||
No. | Description | |
5.1* | Opinion of Robins, Kaplan, Miller & Ciresi L.L.P. | |
23.1* | Consent of Baker Tilly Virchow Krause, LLP. | |
23.2* | Consent of Robins, Kaplan, Miller & Ciresi L.L.P. (included in Exhibit 5.1 hereto). | |
24.1* | Power of Attorney (included in signature page to this registration statement). |
*Filed as an exhibit to the registrant's Annual Report on Form
10-K for the year ended December 30, 1995, and incorporated herein by
reference.
NOTE 2. Filed as an exhibit to the registrant's registration statement
on Form S-18 (Reg. No. 33- 43182C) and incorporated herein by
reference.
NOTE 3. Filed as an exhibit to the registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993, and incorporated herein
by reference.
NOTE 4. Filed as an exhibit to the registrant's registration statement
on Form S-1 (Reg. No. 33- 58938) filed on March 2, 1993, and
incorporated herein by reference.
herewith.
Item 17. Undertakings.
Undertakings
(a)The undersigned registrant hereby undertakes:
(1) Toto file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) Toto include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) Toto reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate,together, represent a fundamental change in the information set forth in the registration statement; and
(iii) Toto 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;
PROVIDED, HOWEVER,
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished toby the Commission by registrant pursuant to Sectionsection 13 or Sectionsection 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of this registration statement;
(2) That,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 FIDEbona fide offering thereof.
thereof; and
(3) Toto 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.
(b)The undersigned registrant hereby undertakes that, for the purposes of determining any liability under the Securities Act of 1933, each filing of the registrant'sregistrant’s annual report pursuant to Sectionsection 13(a) or Sectionsection 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in thethis registration statement shall be deemed to be a new registration statement relating to the securities offeredoffering therein, and the offering of such securities at that time shall be deemed to be thean initial BONA FIDEbona fide offering thereof.
(c)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 provisions described under Item 15 above, 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 Securities 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 Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrantRegistrant certifies that itis has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration
statementRegistration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on November 4, 1996.
APPLIANCE RECYCLING CENTERS OF
AMERICA, INC.
By: /s/ EDWARD R. CAMERON
Edward R. Cameron
May 6, 2010.
APPLIANCE RECYCLING CENTERS | ||
OF AMERICA, INC. | ||
By | /s/ Edward R. (Jack) Cameron | |
Edward R. (Jack) Cameron | ||
President, | ||
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each
Each person whose signature appears below constitutes and appoints EdwardEDWARD R. Cameron,(JACK) CAMERON and PETER P. HAUSBACK, and each of them, his or her true and lawful attorney-in-factattorneys-in-fact and agent,agents, each acting alone, with full powerspower of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration
statement,the Registration Statement on Form S-3 and to file the same, with all exhibits thereto, and other documents in connection therewith, with the SecuritiesSEC, granting unto said attorneys-in-fact and Exchange Commission, granting
onto said attorney-in-fact and agent,agents, each acting alone, full power and authority to do and perform each and every act and thing requisite orand necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-factattorneys-in-fact and agent,agents, each acting alone, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue thereof.
hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statementRegistration Statement has been signed on November 4, 1996, by the following persons in the capacities indicated.
Signature Title
/s/ EDWARD R. CAMERON Chairman of the Board, President
- -------------------------------------
Edward R. Cameron
/s/ KENT S. MCCOY Vice President of Finance, Treasurer
- ------------------------------------- (Principal Accounting Officer)
Kent S. McCoy
/s/ GEORGE B. BONNIWELL Director
- -------------------------------------
George B. Bonniwell
/s/ DUANE S. CARLSON Director
- -------------------------------------
Duane S. Carlson
/s/ HARRY W. SPELL Director
- -------------------------------------
Harry W. Spell
INDEX TO EXHIBITS
Exhibit
- -------
2.2 Agreement and Plan of Reorganization dated January 2, 1996, between the
Company, ARCA Maryland, Inc., Universal Appliance Company, Inc. and
Universal Recycling, Inc. (Note 1)
3.1 Restated Articles of Incorporation of Appliance Recycling Centers of
America, Inc. (Note 2)
3.2 Restated Articles of Incorporation as amended June 3, 1993. (Note 3)
3.3 Bylaws of Appliance Recycling Centers of America, Inc. (Note 2)
4.1 Specimen of Common Stock Certificate (Note 4)
5 Opinion and Consent of Mackall, Crounse & Moore, PLC (filed herewith)
23.1 Consent of Mackall, Crounse & Moore (included in Exhibit 5)
23.2 Consent of McGladrey & Pullen, LLP, Independent Auditors (filed
herewith)
24 Power of Attorney (includedindicated on signature page)
NOTE 1. Filed as an exhibit to the registrant's Annual Report on Form
10-K for the year ended December 30, 1995, and incorporated herein by
reference.
NOTE 2. Filed as an exhibit to the registrant's registration statement
on Form S-18 (Reg. No. 33- 43182C) and incorporated herein by
reference.
NOTE 3. Filed as an exhibit to the registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993, and incorporated herein
by reference.
NOTE 4. Filed as an exhibit to the registrant's registration statement
on Form S-1 (Reg. No. 33- 58938) filed on March 2, 1993, and
incorporated herein by reference.
May 6, 2010.
Signature | Title | |
/s/ Edward R. (Jack) Cameron | Chairman of the Board, President | |
Edward R. (Jack) Cameron | and Chief Executive Officer | |
/s/ Peter P. Hausback | Executive Vice President, Chief Financial | |
Peter P. Hausback | Officer and Principal Accounting Officer | |
/s/ Duane S. Carlson | Director | |
Duane S. Carlson | ||
/s/ Thomas F. Hunt, Jr. | Director | |
Thomas F. Hunt, Jr. | ||
/s/ Glynnis A. Jones | Director | |
Glynnis A. Jones | ||
/s/ Morgan J. Wolf | Director | |
Morgan J. Wolf |