Continental American Transportation, Inc.
495 Lovers Lane Road
Calhoun, Georgia 30701
November 25, 1996
VIA EDGAR AND OVERNIGHT DELIVERY
Securities and Exchange Commission
450 Fifth Street, N.W.
Stop 7-7
Washington, D.C. 20549
ATTENTION: William L. Tolbert, Jr.
Assistant Director
RE: Continental American Transportation, Inc.
Amendment No. 1 to Registration Statement
on Form S-3
File No. 333-8963
Dear Assistant Director Tolbert:
Pursuant to your letter to Mr. Erik Bailey, Chief Financial Officer of
Continental American Transportation, Inc. (the "Registrant"), dated July 31,
1996, the Registrant hereby requests that Amendment No. 1, filed herewith, to
the Registration Statement filed on Form S-3 via EDGAR on July 26, 1996 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") be ordered effective at 10:00 AM on November 29, 1996.
In connection with Registrant's request for acceleration of the
effective date of the Registration Statement, Registrant hereby acknowledges
the following: The disclosure in the Registration Statement, including the
documents incorporated therein by reference, is the responsibility of the
Registrant. The Registrant represents to the Commission that should the
Commission or the staff acting pursuant to delegated authority, declare the
Registration Statement effective, it does not foreclose the Commission from
taking any action with respect to the Registration Statement and the
Registrant represents that it will not assert this action as a defense in
any proceeding initiated by the Commission or any person under the federal
securities laws of the United States. The Registrant further acknowledges,
that the action of the Commission or the staff, acting pursuant to delegated
authority, in declaring the Registration Statement effective does not relieve
the Registrant from its full responsibility for the adequacy and accuracy of
the disclosures in the Registration Statement.
Very truly yours,
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein, President
By: s/Erik Bailey
Erik Bailey
Chief Financial Officer
By: s/Brian Henninger
Brian Henninger, Secretary
catsec2.s-3
As filed with the Securities and Exchange Commission on November 25, 1996
Registration No. 333-8963
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 to FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
CONTINENTAL AMERICAN TRANSPORTATION, INC.
(Exact name of Registrant as specified in its Charter )
COLORADO 4213 84-1089599
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization)Classification Code Number) Identification No.)
495 Lovers Lane Road
Calhoun, Georgia 30701
(706) 629-8682
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
Erik Bailey, Chief Financial Officer
Continental American Transportation, Inc.
495 Lovers Lane Road
Calhoun, Georgia 30701
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joseph J. Tomasek, Esq.
75-77 North Bridge Street
Somerville, New Jersey 08876
(908)429-0030
Approximate date of commencement of the proposed sale to the public:
From time to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
Calculation of Registration Fee
Title of Each Class Amount to Proposed Proposed Amount of
of Securities to be be Registered Maximum Maximum Registra-
Registered Offering Aggregate tion Fee
Price Per Offering
Share(1) Price
Common Stock (2) 2,368,441 Shares $7.50 $17,763,308 $6,125.00
Common Stock (3) 750,000 Shares $7.50 $ 5,625,000 $1,940.00
(1) Estimated solely for the purposes of calculating the registration
fee pursuant to Rule 457(g)(1), on the basis of the highest price at
which the Warrant(s) may be exercised, i.e., $7.50 per share.
(2) Common Stock reserved for issuance upon exercise of the 20 Warrants,
which have exercise prices ranging from $.25 to $7.50 to purchase
1,810,000 Common Shares which are exercisable from time to time, in
whole or in part. The 20 Warrants are not being registered herein and
are exercisable from time to time, in whole or in part, at any time
during the period from June 28, 1996 through the 12-month period
commencing upon the effective date of this Registration Statement with
respect to 15 Warrants, and from November 28, 1996 through the last day
of the thirty-six (36) month period beginning on the date this
Registration Statement is declared effective by the Securities and
Exchange Commission with respect to 1 Warrant. This number of Common
Shares also includes 400,000 shares of Common Stock reserved for
issuance upon the conversion of 400,000 shares of the Company's 10%
Convertible Preferred Shares, 200,000 of which shares have been
purchased and 200,000 of which shares the Company anticipates placing
in the near future. The 200,000 10% Convertible Preferred Shares which
have been sold may be converted into Common Stock after December 5,
1996. The conversion dates for the remaining 200,000 10% Convertible
Preferred Shares will commence no sooner than the 41st day following
their sale and placement. See "Convertible Shares" below.
(3) Common Stock to be registered on behalf of the Selling Securityholders,
Herr's Motor Express, Inc., Robert R. Herr, Wayne S. Herr
and Charles B. Prater.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
CROSS REFERENCE SHEET
Pursuant to item 501(4) of Regulation S-B
===============================================================================
Amendment No. 1 to Form S-3 Item Prospectus Caption
Number and Heading or Location
-------------------------------- ------------------------------
1. Forepart of the Registration Facing page of Registration Statement;
Statement and Outside Front Cross Reference Sheet; Outside Front
Cover Page of Prospectus Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page of Prospectus;
Cover Pages of Prospectus Outside Back Cover Page of Prospectus;
Prospectus Additional Information; Incorporation
of Certain Documents by Reference
Prospectus Summary; Risk Factors
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges Prospectus Summary; Use of Proceeds
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Prospectus Summary; Selling Security-
holders and Relationship between the
7. Selling Security Holders Company and the Selling Security-
holders; Plan of Distribution
Prospectus Summary;Plan of Distribution
8. Plan of Distribution Prospectus Summary; Description of
Securities
9. Description of Securities to be
Registered Legal Opinions; Experts
10. Interests of Named Experts and
Counsel Additional Information; Incorporation
of certain Documents by Reference;
Prospectus Summary; Selling
Securityholders and Relationship
between the Company and the Selling
Securityholders
Additional Information; Incorporation
of certain Documents by Reference
12. Incorporation of Certain
Information by Reference
Not Applicable
13 Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities
===============================================================================
DATED November 29, 1996
PROSPECTUS
CONTINENTAL AMERICAN TRANSPORTATION, INC.
1,968,441 Common Shares Issuable upon
exercise of 20 Common Stock Purchase Warrants
400,000 Common Shares Issuable upon the conversion
of 400,000 10% Convertible Preferred Shares
750,000 Common Shares
This Prospectus relates to the issuance and the offer and sale by
certain of the securityholders of Continental American Transportation, Inc., a
Colorado Corporation (the "Company" and the "Selling Securityholders",
respectively) of (a) up to 1,968,441 shares of common stock, no par value, (the
"Common Shares") of the Company issuable upon the exercise of twenty (20)
non-redeemable common stock purchase warrants (the "Warrants"), (b) up to
400,000 Common Shares issuable upon the conversion of 400,000 10% Convertible
Preferred Shares, $1.00 par value per share, of the Company (the "Convertible
Shares"), and (c) 750,000 Common Shares held of record by certain Selling
Securityholders, all of whom are named in the "Selling Securityholders and
Relationship between the Company and the Selling Securityholders" section of
this Prospectus. The Warrants are exercisable from time to time, in whole or in
part, at any time during certain periods from June 28, 1996 and November 1,
1996, their respective grant dates, and terminating twelve (12) months following
the effective date of this Registration Statement with respect to 19 of the
Warrants and from November 28, 1996 through the last day of the thirty-six (36)
month period beginning on the date this Registration Statement, of which this
Prospectus forms a part, is declared effective by the Securities and Exchange
Commission with respect to one (1) Warrant.
The Warrants entitle their holders to purchase between six thousand
(6,000) and six hundred thousand (600,000) Common Shares for prices between $.25
and $7.50 per share.
The Convertible Shares entitle their holder to convert such shares into
Common Shares of the Company based upon a conversion rate equal to the ratio of
$1.00 (the par value of a Convertible Share) to the amount represented by
seventy-five (75%) percent of the average closing bid price of the Company's
Common Shares for
any two consecutive trading days immediately prior to conversion. The
conversions of the 200,000 Convertible Shares previously sold may commence on
December 5, 1996, and are convertible in tranches of 25,000 shares, with an
aggreggate conversion limitation of 50,000 Convertible Shares per week.
The Common Shares are quoted on the Electronic Bulletin Board of the
National Association of Securities Dealers, Inc. under the symbol "COAW". On
November 20, 1996 the closing bid quotation price of the Common Shares was
$1.25.
The Selling Securityholders directly, through agents designated from
time to time or through dealers or underwriters also to be designated, may sell
the securities offered for sale by the Selling Securityholders pursuant to this
Prospectus (all such securities being referred to herein as the "Securities")
from time to time on terms to be determined at the time of sale. To the extent
required, the specific Securities to be sold, the purchase price, the public
offering price, the names of any such agents, dealers or underwriters and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying Prospectus supplement. The distribution of the
Securities of the Selling Securityholders may be effected in one or more
transactions that may take place on the over-the-counter market, including
ordinary broker's transactions, privately negotiated transactions or through
sales to one or more dealers for resale of such securities as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees, commissions or discounts may be paid by
the Selling Securityholders in connection with such sales.
The Selling Securityholders and any broker-dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Securities may be deemed to be "Underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Act"), and any
commissions received by them and any profit on the resale of the Securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Act. See "Plan of Distribution" for certain indemnification
arrangements.
The purchase of the securities offered by this prospectus involves a
substantial degree of risk. Prospective investors should carefully consider the
factors set forth under "Risk Factors."
2
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November 29, 1996
3
AVAILABLE INFORMATION
The Company has filed Amendment No. 1 to its Registration Statement on
Form S-3 (together with all amendments thereto referred to as the "Registration
Statement") under the Act, with the Securities and Exchange Commission (the
"Commission") covering the Common Shares issuable upon the exercise of the
Warrants and certain Common Shares held of record by certain named Selling
Securityholders. This Prospectus does not contain all the information set forth
or incorporated by reference in the Registration Statement and the exhibits and
schedules relating thereto, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Securities offered by this
Prospectus, reference is made to the Registration Statement and the exhibits and
schedules thereto which are on file at the offices of the Commission and may be
obtained upon payment of the fee prescribed by the Commission, or may be
examined without charge at the offices of the Commission. Statements contained
in this Prospectus or in any document incorporated by reference in this
Prospectus as to the contents of any contract or other documents referred to are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement being qualified in all
respects by such reference.
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 periodic reports, proxy statements and other
information with the Commission. The Registration Statement, as well as such
periodic reports, proxy statements and other information, can be inspected and
copied at the public reference facilities maintained by the commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; Suite 1400, Northwest
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661; and 7 World
Trade Center, New York, New York 10048. Copies of such material can also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-18729)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1996;
4
2. The Company's Quarterly Report on Form 10-QSB for the
fiscal quarter ended September 30, 1996;
3. The Company's Form 8-K filed with the Securities and
Exchange Commission via EDGAR on November 19, 1996, concerning the
commencement of a lawsuit against a former Company shareholder; and
4. The description of Common Stock contained in the
Company's Form 10 Registration Statement, filed with the Commission on August 1,
1990.
All documents subsequently filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing thereof. Any statement
contained in a document 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 verbal request of any such
person, a copy of any or all of the documents which have been incorporated
herein by reference, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Requests for
such documents should be directed to Continental American Transportation, Inc.,
495 Lovers Lane Road, Calhoun, Georgia 30701, Attention: Secretary, Telephone
(706)629-8682.
This Prospectus relates to the offer and sale by the Selling
Securityholders of up to 1,968,441 Common Shares issuable upon the exercise of
the 20 Warrants, up to 400,000 Common Shares issuable upon the conversion of the
400,000 Convertible Shares and 750,000 Common Shares held of record by certain
of the Selling Securityholders. Unless otherwise indicated, no effect is given
in this Prospectus to the exercise of stock options to purchase any Common
Shares reserved for issuance under the Company's Stock Option Plan; (the
"Options"). See "Risk Factors-Outstanding Options."
The Company will furnish to holders of its Common Shares annual reports
containing audited financial statements. The Company may also distribute
quarterly reports containing unaudited financial information for the first three
quarters of each fiscal year.
5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the financial statements which have been incorporated by
reference in this Prospectus. As used in this Prospectus, the "Company" refers
to Continental American
Transportation, Inc.
THE COMPANY
The Company and its subsidiaries are principally engaged in the
business of operating a full, non-union truckload carrier fleet throughout the
Continental United States. Since its acquisition of Carpet Transport, Inc.,
effective February 29, 1996, the Company's primary business is focused on
serving the transportation and distribution needs of the carpet manufacturing
industry located in the southeastern corridor of the United States. The Company
utilizes approximately 850 tractors and 1,500 trailers in its transportation
business. In addition, the Company maintains 18 truck terminals throughout the
Country to facilitate distribution of customer shipments and to provide regional
maintenance service for its revenue equipment. The terminals located in Baton
Rouge, Louisiana, Orlando and Tampa, Florida are Company-owned while it leases
the other 15 terminals.
The Company has approximately 1,100 employees, of which approximately
800 are drivers. Most of the Company's personnel work at its corporate
headquarters and main operating facility located in Calhoun, Georgia (the
"Calhoun Operations Center") which is situated 70 miles north of the City of
Atlanta. Owned by the Company, the Calhoun Operations Center provides an
aggregate 122 loading bays and includes separate facilities for tractor, trailer
and tire maintenance; two office buildings house the Company's management,
dispatch and clerical personnel and other structures provide designated areas
for driver recruitment and training, doctor's offices and security.
The Company, through its subsidiary, Chase Brokerage, Inc., also
operates a nationwide freight brokerage business located in its Company-rented
Palatka, Florida facility.
The Company is a Colorado corporation organized in 1983 under the name
MAS Ventures, ltd. The Company's principal executive office is located at 495
Lovers Lane Road, Calhoun, Georgia 30701, telephone number, (706)629-8682.
6
The Offering
Securities Offered
Hereby.......... 1,968,441 Common Shares issuable upon the
---------
exercise of 20 Warrants. Each Warrant is
exercisable from time to time and in
whole or in part to purchase between
6,000 and 600,000 Common Shares at prices
ranging from $.25 to $7.50 per share at
any time, with respect to 19 of the
Warrants, during the periods from their
respective dates of grant, June 28, 1996
and November 1, 1996, and terminating
twelve (12) months following the
effective date of this Registration
Statement, and from November 28, 1996
through the last day of the thirty-six
(36) month period following the effective
date of this Registration Statement with
respect to 1 Warrant (the "Warrant
Exercise Period"). See "Description of
Securities." The 20 Warrants are not
being registered hereunder. See
"Description of Securities".
750,000 Common Shares held of record by
certain Selling Securityholders. See
"Selling Securityholders and Relationship
Between the Company and the Selling
Securityholders".
Common Shares Currently
Outstanding........ 5,014,689 shares
Common Shares Issuable
Upon Exercise of the
Warrants...... 1,968,441 shares.
Common Shares Issuable Upon
Conversion of the
Convertible Shares...... Up to 400,000 Common Shares issuable
upon the conversion of 400,000
Convertible Shares. Commencing December
5, 1996, the 200,000 Convertible Shares
already placed and sold are convertible
commencing December 5, 1996, in tranches
of 25,000 Convertible Shares, at a
conversion rate based upon the ratio of
$1.00 (the par value of the Convertible
Shares) to the amount represented by 75%
7
of the average closing bid price
of the Company's Common Shares for
any two consecutive trading days immediately
prior to conversion.
Estimated proceeds to
the Company If the holders of the 20 Warrants offered
hereby elect to exercise their Warrants,
the estimated gross proceeds to the
Company would be approximately $3,576,259
if exercised during the Warrant Exercise
Period. The expenses of this offering
are estimated to be approximately
$23,565.
Use of Proceeds...... Proceeds from the exercise of the
Warrants offered hereby will be added to
the Company's working capital and will be
used for general corporate purposes.
There can be no assurance that any
Warrants will be exercised and that any
proceeds will be received by the Company.
All of the proceeds from the sale of
Common Shares offered hereby will be
received by the Selling Securityholders.
The Company will not receive any of the
proceeds from the sale of such Common
Shares.
Selling Securityholders The Warrants and the Common Shares
issuable upon the exercise thereof:
Affililated Services, Inc., Ocean
Marketing Corp., Pyramid Holdings, Inc.,
Universal Solutions, Inc., Global
Financial Group, Inc., Mr. Ken Lucas, Mr.
Craig Scott, Mr. Glenn Kennedy, Mr. Kevin
Miller, Mr. Scott Sieck, Novaya, Vicbor,
Meridian Holdings, Inc., Mr. Arden Brown,
Christie & Company, Mr. Russell J.
Kennedy, Mr. Edward C. Vavreck, Mr.
Thomas J. Cloutier and Explorer Financial
Services, Inc. The Convertible Shares
and the Common Shares issuable upon the
conversion thereof: Seatex AG. In
addition, Herr's Motor Express, Inc., Mr.
Robert R. Herr, Mr. Wayne S. Herr and
Charles B. Prater are selling an
aggregate of 750,000 Common Shares. See
"Selling Securityholders and Relationship
between the Company and the Selling
Securityholders."
NASD Symbol........ "COAW" - Common Shares
8
RISK FACTORS
The purchase of the securities offered hereby involves a substantial
degree of risk. Prospective Investors should carefully consider, among other
matters, the following risks and other factors before making a decision to
purchase the securities being offered hereby.
Recruitment and Retention of Qualified Drivers
Competition to recruit qualified drivers is extremely intense, and the
Company occasionally has experienced difficulty attracting and retaining a
sufficient number of qualified drivers to operate its rapidly expanding fleet.
Although the Company currently retains an adequate number of drivers for its
current business, there is a chronic, industry-wide shortage of qualified
drivers. There can be no assurance that the shortage of qualified drivers will
not affect the Company's operations and profitability in the future. Difficulty
in attracting or retaining qualified drivers would materially adversely affect
the Company's operations and ability to grow.
Business Cycles and Industry-Wide Cost Increases
The Company has little or no control over economic factors such as fuel
prices and taxes, insurance costs, liability claims, interest rate fluctuations,
fluctuation in the resale value of revenue equipment, economic recessions and
customers' shipping demands. Significant increases or rapid fluctuations in fuel
prices, interest rates or increases in insurance costs or liability claims, to
the extent not offset by increases in freight rates, would adversely affect the
Company's operating results, profitability and expansion. Economic recessions or
downturns in customers' business cycles or shipping demands could also have a
materially adverse effect upon the growth and profitability of the Company. If
the resale value of the Company's revenue equipment were to decline, the Company
could be forced to retain some of its equipment longer, with a resulting
increase in operating expenses for maintenance and repairs.
Capital Requirements; Leverage
The Company historically has relied upon debt and operating leases to
finance new revenue equipment, and it has granted its lenders a lien on
substantially all of the Company's assets. If in the future the Company were
unable to borrow sufficient funds, enter into acceptable operating lease
arrangements or raise additional equity, the resulting capital shortage would
adversely affect the Company's growth and profitability. The Company currently
is highly leveraged and has a debt-to-capitalization
9
ratio higher than many of its competitors. As of September 30, 1996, the Company
had a ratio of long-term debt to capitalization of approximately $7.75 to $1.00.
Competition
The trucking industry is extremely competitive and includes regional,
inter-regional and national truckload carriers, none of which dominates the
market. The Company also competes with alternative forms of transportation, such
as railroads, rail-truck intermodel and air-freight intermodal service. This
competition historically has created downward pressure on the truckload
industry's pricing structure. The Company competes with a number of trucking
companies that have greater financial resources, operate more revenue equipment
and transport more freight than the Company.
Dependence on Key Personnel
The Company's success depends in large part upon a number of key
management personnel. The loss of the services of one or more of its management
personnel, in particular Timothy Holstein, the Company's President and Chief
Executive Officer, or Erik Bailey, the Company's Chief Financial Officer, could
have a material adverse effect on the Company.
Government Regulation
Truckload carriers are subject to regulation by various federal and
state agencies, including the Interstate Commerce Commission ("ICC") and the
United States Department of Transportation ("DOT"). These regulatory authorities
exercise broad powers, generally governing activities such as authorization to
engage in motor carrier operations, operational safety, accounting systems,
rates and charges, certain mergers, consolidations and acquisitions as well as
financial reporting. The Company is also subject to regulations promulgated by
the Environmental Protection Agency ("EPA") and similar state agencies with
respect to fuel storage tanks. Although the Company believes that its operatins
are in material compliance with current laws and regulations, there can be no
assurance that current regulatory requirements will not change, that currently
unforeseen environmental incidents will not occur or that contamination or past
noncompliance with environmental laws, will not be discovered on properties on
which the Company has operated.
10
Self-Insured Claims
The Company is self-insured for personal injury, collision and
comprehensive damage and property damage up to a maximum limit of $1,000,000 per
occurrence, and for collision, comprehensive and cargo liability up to a
combined limit of $ 100,000 per occurrence. If the Company were to experience
numerous claims in significant amounts for which it is self-insured, or if
significant increases in insurance costs should occur and could not be offset by
higher freight rates, the Company's results of operations could be materially
adversely affected.
Proceeds of the Offering
The Company will not receive any of the proceeds of the offering of
Securities by the Selling Securityholders. Only the proceeds from the exercise
of the Warrants will be received by the Company. There can be no assurance that
any Warrants will be exercised and that any proceeds will be received by the
Company.
Dividends
The Company has not paid and does not anticipate paying cash dividends
on its Common Shares in the foreseeable future, but it intends to retain its
earnings, if any, for use in its business.
Control of Company to Remain with Existing Stockholders
Timothy Holstein, Erik Bailey and Brian Henninger, the officers and
directors of the Company, collectively own 1,305,718 Company Common Shares,
representing approximately 26% of all the issued and outstanding Company Common
Shares as of November 20, 1996. Assuming they were to act collectively, Messrs.
Holstein, Bailey and Henninger would likely be able to continue to determine the
affairs and policies of the Company.
Shares Eligible for Future Sale
With the exception of the 519,897 Common Shares held by Erik Bailey,
the 739,521 Common Shares held by Timothy Holstein, and the 46,300 Common Shares
held by director and officer Brian Henninger whose total includes options to
purchase 36,000 Common Shares, and approximately 975,358 shares issued in
certain transactions, which are "restricted securities" as that term is defined
under Rule 144 promulgated under the Act, all of the currently outstanding
Common Shares are now eligible or shortly will be eligible for sale in the
public market. The Company is unable to predict the effect that sales made under
Rule 144 or otherwise may have upon the then prevailing market prices of the
Common Shares or Warrants, although such sales may depress such prices. Mr. John
Christie, a former officer and director of the Company, owns approximately
62,440 Common Shares which he will be able to sell on the open market
11
under Rule 144 without volume limitations when and if he is deemed a
"non-affiliate" of the Company as such term is defined under Rule 144: the
Company cannot predict the effect on the then prevailing market prices of the
Common Shares or Warrants if this invididual proceeds to sell his shares.
Outstanding Options and Convertible Securities
The Company has granted options to purchase 36,000 Common Shares
representing the remaining balance of stock options available under the
Company's 1994 Stock Incentive Plan. In addition, the Company has approximately
$1,500,000 in aggregate principal of its 7% Convertible Debentures outstanding
which may be converted into Company Common Shares at the conversion price equal
to the lesser of (i) the average closing bid price of the Common Shares as
reported for the 5 consecutive trading days immediately prior to August 19, 1996
or (ii) 78% of the average closing bid price of the Common Shares as reported
for the 5 consecutive trading days immediately preceding conversion. Also, the
Company has approximately $1,750,000 in aggregate principal amount of its 10%
Convertible Promissory Notes outstanding which may be converted into Company
Common Shares at the conversion price equal to the lesser of (i) 80% of the
market price of the Company's Common Stock on the date of conversion, or (ii)
120% of the market price as of the date of the issuance of the 10% Convertible
Promissory Notes. If the foregoing options are exercised, and/or the foregoing
convertible securities and/or notes are converted, the percentage of Common
Shares held by the stockholders will be reduced accordingly.
Penny Stock Regulations.
If the Common Stock becomes subject to the existing or proposed
regulations on penny stocks, the market liquidity for the Common Stock could be
materially adversely affected by limiting the ability of broker-dealers to sell
the Common Stock and the ability of stockholders to sell their Common Stock in
the secondary market. The Commission recently has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
Nasdaq, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the issuer that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements
12
showing the market value of each penny stock held in the customer's account. The
bid and offer quotations, and the broker-dealer and salesperson compensation
information, must be given to the customer orally or in writing prior to
effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. In addition, the penny stock rules require
that prior to a transaction in a penny stock not otherwise exempt from such
rules, the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the customer and receive the customer's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
security that becomes subject to the penny stock rules. If the Common Stock
becomes subject to the penny stock rules, purchasers in this offering may find
it more difficult to sell such Common Stock.
Securities and Exchange Commission Investigation.
The Company has learned that a former shareholder of the Company filed
a complaint with the Securities and Exchange Commission alleging that the
Company illegally canceled his stock certificate being held in escrow. Following
a thorough internal audit, the Company has responded to this complaint alleging,
among other things, that this individual made a claim to these shares without
providing any proof of consideration or payment for them. On the basis of this
complaint, the Securities and Exchange Commission is conducting a preliminary
investigation into the Company's past stock trading activities. Company
management is fully cooperating with this preliminary investigation and intends
to vigorously defend against this action. Moreover, the Company has commenced a
lawsuit against this former shareholder in federal district court seeking a
declaratory judgment that its actions in cancelling said former shareholder's
shares were legal and justified.
USE OF PROCEEDS
If the holders of the 20 Warrants offered hereby elect to exercise
their Warrants, the estimated gross proceeds to the Company would be
approximately $3,576,259. The expenses of this offering are estimated to be
approximately $23,565.
Proceeds from the exercise of Warrants will be added to the Company's
working capital and will be used to fund the continued growth of the Company and
for general corporate purposes. There can be no assurance that any Warrants will
be exercised and that any proceeds will be received by the Company.
13
All of the proceeds from the sale of Common Shares offered hereby will
be received by the Selling Securityholders. The Company will not receive any of
the proceeds from the sale of such Common Shares.
COMMON SHARE PRICE RANGE
The Common Shares are traded on the Electronic Bulletin Board
of the National Association of Securities Dealers, Inc. under the
trading symbol "COAW".
The following table sets forth the high and low bid prices for the
Common Shares for the period which commenced June 19, 1995, the date the
Company's Common Shares were qualified for trading on the Electronic Bulletin
Board, for the fiscal year end date, June 30, 1995, and for the quarters ended
September 30, 1995, December 31, 1995, March 31, 1996, June 30, 1996, and
September 30, 1996 based on transaction data as reported by NASD:
Common Shares
Fiscal Year Ended High Low
---- ---
June 30, 1995 $ .375 $ .25
September 30, 1995 $12.14 $ .97
December 31, 1995 $ 6.55 $1.58
March 31, 1996 $ 3.87 $2.49
June 30, 1996 $ 4.75 $2.25
September 30, 1996 $ 3.44 $3.31
The closing bid quotation price of the Common Shares on November 20,
1996 was $1.25.
As of November 20, 1996, there were 292 holders of record of the Common
Shares. The Company believes that there were approximately 280 beneficial
shareholders of the Common Shares as of such date.
The Company has paid no cash dividends on its Common Shares since its
inception. Any future declaration of cash dividends will depend upon the
Company's earnings, financial condition, capital requirements and other relevant
factors. The Company does not intend to pay cash dividends in the foreseeable
future, but intends to retain its earnings, if any, for use in its business.
SELLING SECURITYHOLDERS AND RELATIONSHIP BETWEEN THE COMPANY AND
THE SELLING SECURITYHOLDERS
Because the Selling Securityholders may offer all or some part of the
Securities pursuant to this Prospectus and because this offering is not being
underwritten on a firm commitment basis, no
14
estimate can be given as to the amount of securities to be offered for sale by
the Selling Securityholders upon termination of this offering. See "Plan of
Distribution." To the extent legally required, the specific amount of Securities
to be sold by the Selling Securityholders in connection with a particular offer
will be set forth in an accompanying supplement to this Prospectus.
The following table sets forth the amount and type of Securities
offered by this Prospectus which are owned by such Selling Securityholders.
15
===============================================================================
WARRANTS COMMON
(and Common Shares SHARES
issuable upon
exercise of such
NAME Warrants)
Affiliated Services, Inc. 1 0
Ocean Marketing Corp. 1 0
Pyramid Holdings, Inc. 1 0
Universal Solutions, Inc. 1 0
Global Financial Group, Inc. 1 0
Ken Lucas 1 0
Craig Scott 1 0
Glenn Kennedy 1 0
Kevin Miller 1 0
Scott Sieck 1 0
Novaya 1 0
Vicbor 1 0
Meridian Holdings, Inc. 1 0
Arden Brown 1 0
Christie & Company 1 0
Explorer Financial Services, Inc. 1 0
Russell J. Kennedy 1 0
Edward C. Vavreck 1 0
Thomas J. Cloutier 1 0
Seatex AG(1) 0 400,000
Wayne S. Herr 0 50,000
Robert R. Herr 0 50,000
Herr's Motor Express, Inc. 0 150,000
Charles B. Prater 0 500,000
===============================================================================
16
(1) Seatex AG has purchased 200,000 shares of the total series of
400,000 shares of the Company's 10% Convertible Preferred
Stock (the "Convertible Shares"). The Company is registering
a total of 400,000 common shares to cover the conversions of
all 400,000 Convertible Shares in anticipation that Seatex AG,
a Selling Securityholder, will purchase the remaining
authorized 200,000 Convertible Shares in the near future.
17
Based upon information provided by the Selling Securityholders and
except with respect to the 200,000 Convertible Shares yet to be placed with
Seatex AG and the approximate 150,000 Common Shares being registered to
accommodate future conversions thereof, each Selling Securityholder owns that
number of Common Shares or Warrants, as appropriate, indicated in the table
above. The historical relationship between the Selling Securityholders and the
Company is described below.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 20,000,000 Common Shares, no par
value, of which 5,014,689 shares were issued and outstanding as of November 20,
1996.
After this offering, there will be 5,014,689 Common Shares outstanding,
assuming no exercise of Options or Warrants or conversions of Convertible
Shares.
Holders of Common Shares are entitled to dividends when, as and if
declared by the Board of Directors out of funds legally available therefor.
However, the Company does not anticipate paying dividends on its Common Shares
in the foreseeable future, but intends to retain its earnings, if any, for use
in its business.
Holders of Common Shares are entitled to cast one vote for each share
held at all stockholder meetings for all purposes, including the election of
directors. The holders of a majority of the Common Shares issued and outstanding
and entitled to vote,constitute a quorum at all meetings of stockholders and the
vote of the holders of a majority of Common Shares present at such a meeting
will decide any question brought before each meeting, except for certain actions
such as amendments to the Company's certificate of incorporation, mergers or
dissolutions which require the vote of the holders of a majority of the
outstanding Common Shares.
Upon liquidation or dissolution, the holder of each outstanding Common
Share will be entitled to share equally in the assets of the Company legally
available for distribution to such stockholder after the payment of all debts
and other liabilities and after distribution to preferred stockholders legally
entitled thereto.
No holder of Common Shares has a preemptive or preferential
right to purchase or subscribe for any part of any unissued or any
additional authorized stock or any securities of the Company
convertible into shares of its stock. The outstanding Common
18
Shares are, and the shares offered hereby will be fully paid and nonassessable.
Warrants
The Warrants were issued in consideration of past services rendered to
the Company by the Selling Securityholders and two (2) Warrants pursuant to the
terms of agreements by and between the Company and the Selling Securityholders,
dated February 22, 1996 and June 28, 1996; the 750,000 Company Common Shares are
being registered herein pursuant to the terms of two agreements, dated February
29, 1996 and August 22, 1995, respectively, by and between the Company and the
Selling Securityholders. For a complete description of the terms of these
Agreements, reference is made to Exhibit 4(d) to the Registration Statement of
which this Prospectus forms a part. See "Additional Information" and
"Incorporation of Certain Documents by Reference." Generally, each Warrant
entitles the registered holder to purchase from the Company from between 6,000
to 600,000 Common Shares at exercise prices of between $.25 and $7.50 per share
during the period commencing upon their respective grant dates, June 28, 1996
and November 1, 1996, and continuing for the twelve month period following the
effective date of the Registration Statement with respect to 19 of the Warrants,
and for 1 Warrant, from November 28, 1996 through the last day of the thirty-six
(36) month period beginning on the effective date of this Registration
Statement, of which this Prospectus forms a part.
Convertible Shares
The Company authorized the issuance of up to 400,000 shares of 10%
Convertible Preferred Stock, par value $1.00 per share (the "Convertible
Shares"), in preparation of the placement of the Convertible Shares with Seatex
AG, a Swiss based corporation, pursuant to the exemption from the registration
requirements of the Securities Act of 1933, as amended, provided by Regulation S
promulgated thereunder. On October 25, 1996, Seatex AG purchased 200,000
Convertible Shares which are convertible commencing December 5, 1996 into
Company Common Shares in tranches of 25,000 shares at a conversion rate based
upon the ratio of $1.00 (the par value of the Convertible Shares) to the amount
equal to seventy-five (75%) percent of the average closing bid price of the
Common Shares of the Company over two (2) consecutive trading days prior to
conversion. No more than 50,000 Convertible Shares may be converted during any
seven day period. For example, if the average closing bid price of the Company's
Common Shares over two (2) consecutive trading days prior to conversion is
$2.00, then 25,000 Convertible Shares would be convertible into 16,666 Common
Shares. The Company is registering 200,000 Common Shares to accommodate the
conversion of the 200,000 Convertible Shares already placed with Seatex AG; the
Company is registering an additional 200,000 Common Shares to accommodate the
conversion of the remaining 200,000 Convertible Shares which it anticipates
placing also with Seatex AG
19
in the near future.
Directors' Liability
As authorized by the Colorado Corporation Law (the "CCL"), the
Company's Articles of Incorporation (the "Company Certificate") provides that no
director or officer of the Company shall be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a director
except in the event such director or officer is adjudged in the subject action,
suit or proceeding to be liable for (i) gross negligence (ii) or willful
misconduct. The effect of the provisions in the Company Certificate is to
eliminate the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director except in the
situations described in clauses (i) and (ii) above. This provision does not
limit nor eliminate the rights of the Company or of any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of director's duty of care.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Shares and Warrants is
United Stock Transfer, located at 13275 East Fremont
Place, Suite 302, Englewood, Colorado 80112.
PLAN OF DISTRIBUTION
The Company
Twenty (20) Warrants were issued by the Company to the Selling
Securityholders as of June 28, 1996 and November 1, 1996, respectively. Between
6,000 and 600,000 Common Shares are issuable by the Company upon the exercise of
each of the 20 Warrants for an aggregate of 1,968,441 Common Shares. On October
25, 1996, 200,000 Convertible Shares were sold by the Company to Seatex AG and
the Company is registering 200,000 Common Shares to accommodate the conversions
anticipated which may commence on December 5, 1996. See "The Convertible Shares"
above. The Company is registering an additional 200,000 Common Shares to
accommodate the future conversions of the remaining and unsold 200,000
Convertible Shares which the Company anticipates placing also with Seatex AG in
the near future. No persons have been engaged to solicit or will be compensated
for soliciting, the exercise of the Warrants, or the conversion of the
Convertible Shares.
The Selling Securityholders
Any or all of the Securities may be sold from time to time to
purchasers directly by the Selling Securityholders. Alternatively, the Selling
Securityholders may from time to time offer the
20
Securities through underwriters, dealers or agents who may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Selling Securityholders and/or the purchasers of Securities for whom they may
act as agents. The Selling Securityholders and any such underwriters, dealers or
agents that participate in the distribution of Securities may be deemed to be
underwriters under the Act, and any profit on the sale of the Securities by them
and any discounts, commissions or concessions received by them may be deemed to
be underwriting discounts and commissions under the Act. The Securities may be
sold from time to time 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 distribution of securities by the Selling Securityholders
may be effected in one or more transactions that may take place on the
over-the-counter market, including ordinary broker's transactions, at
privately-negotiated prices. Usual and customary or specifically negotiated
brokerage fees, discounts and commissions may be paid by the Selling
Securityholders in connection with such sales of securities.
At the time a particular offer of Securities is made, to the extent
required, a supplement to this Prospectus will be distributed (or, if required,
a post-effective amendment to the Registration Statement of which this
Prospectus is a part will be filed) which will identify and set forth the
aggregate amount of Securities being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, the purchase
price paid by any underwriter for Securities purchased from the Selling
Securityholders, any discounts, commissions and other items constituting
compensation from the Selling Securityholders and/or the Company and any
discounts, commissions or concessions allowed or disallowed or paid to dealers,
including the proposed selling price to the public. In addition, an underwritten
offering will require clearance by the National Association of Securities
Dealers of the underwriter's compensation arrangements. The Company will not
receive any of the proceeds from the sale by the Selling Securityholders of the
Securities offered hereby. All of the filing fees and or the expenses of this
Registration Statement will be borne in full by the Company, other than any fees
or expenses of counsel to the Selling Securityholders and underwriting fees,
discounts and commissions relating to this offering.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Securities may not simultaneously engage
in market making activities with respect to the Securities for a period of two
business days prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Securityholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation Rules 10b-6 and 10b-7, which provisions
may limit the timing of purchases and
21
sales of the Securities by the Selling Securityholders.
In order to comply with certain states' securities laws, if applicable,
the Securities will be sold in such jurisdiction only through registered or
licensed brokers or dealers. In certain states the Securities may not be sold
unless the Securities have been registered or qualified for sale in such state,
or unless an exemption from registration or qualification is available and is
obtained.
LEGAL OPINIONS
The legality of the Warrants and the Common Shares issuable upon
exercise of the Warrants has been passed upon for the Company by Joseph J.
Tomasek, Esq., Somerville, New Jersey.
EXPERTS
The financial statements incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-KSB for the year ended June 30,
1996, have been audited by Rosenberg Rich Baker Berman & Company, independent
auditors, as stated in their reports, which are incorporated hereby by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
22
No dealer, salesman or any other person has been authorized to give any
information or to make an representation other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation or an offer to
buy, by any person in any jurisdiction in which it is unlawful for such person
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any offer, solicitation or sale made hereunder shall, under any circumstances,
create any implication that the information herein is correct as of any time
subsequent to the date of this Prospectus.
TABLE OF CONTENTS
Page
Available Information ............ 4
Incorporation of Certain Documents
by Reference.................... 4
Prospectus Summary................ 6
Risk Factors...................... 9
Use of Proceeds................... 13
Common Share Price Range.......... 14
Selling Securityholders and
Relationship between the
Company and the Selling
Securityholders.................. 14
Description of Securities.......... 18
Plan of Distribution............... 20
Legal Opinions..................... 22
Experts............................ 22
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
1,968,441 Common Shares issuable
Upon Exercise of 16 Common
Stock Purchase Warrants
400,000 Common Shares Issuable
Upon the Conversion of
400,000 10% Convertible
Preferred Shares
750,000 Common Shares
P R O S P E C T U S
November 29, 1996
23
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses relative to this
offering, all of which are to be borne by the Registrant. Expenses
other than filing fees are estimated.
Filing Fee - Securities and Exchange Commission . $ 8,065.00
Filing Fee - NASD . . . . . . . . . . . . . . . . $ 0
Accounting Fees and Expenses: . . . . . . . . . . $ 1,000.00
Legal Fees and Expenses . . . . . . . . . . . . . $ 7,500.00
Printing Fees . . . . . . . . . . . . . . . . . . $ 2,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . $ 5,000.00
----------
Total Expenses . . . . . . . . . . . . . . . . . $23,565.00
==========
Item 15. Indemnification of Directors and Officers
As authorized by the Colorado Corporation law (the "CCL"), the
Company's Articles of Incorporation (the "Company Certificate") provides that no
director or officer of the Company shall be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a director
except in the event such director or officer is adjudged in the subject action,
suit or proceeding to be liable for (i) gross negligence (ii) or willful
misconduct. The effect of the provisions in the Company Certificate is to
eliminate the rights of the Company and its stockholders (through stockholders'
derivative suits on behalf of the Company) to recover monetary damages against a
director for breach of the fiduciary duty of care as a director except in the
situations described in clauses (i) and (ii) above. This provision does not
limit nor eliminate the rights of the Company or of any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of director's duty of care.
24
Item 16. Exhibits Page
4(a)* Specimen of Common Stock Certificate.
4(b)* Specimen of Warrant certificate.
4(d)* Agreement, dated as of February 22, 1996,
by and between Continental American
Transportation, Inc. and Meridian Holdings,
Inc.; Agreement to Modify Purchase
Agreements and Security Agreement, dated
August 22, 1995, by and between Continental
American Transportation, Inc., Herr's Motor
Express, Inc., Robert R. Herr, Wayne S. Herr,
Timothy Holstein and Erik Bailey, and
Consulting Agreement, dated June 28, 1996,
by and between Continental American
Transportation, Inc. and Explorer Financial
Services, Inc.
4(e) Specimen of 10% Convertible Preferred Stock
Certificate 30
5 Opinion of Joseph J. Tomasek, Esq. 38
23(a) Consent of Joseph J. Tomasek, Esq.
(contained in the opinion of counsel
filed as Exhibit 5 hereto).
23(b) Consent of Rosenberg Rich Baker
Berman & Company. 40
24 Power of Attorney (included in Part II
of this Registration Statement).
* previiously filed.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or
events which, individually or together, represent a fundamental
change in the information in the Registration Statement; and
25
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total value of securities offered would not exceed that which
was registered and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of Prospectus filed with the
Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
Registration Statement.
(iii) To include any additional or changed
material information on the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (1)(i) and 1(ii) do not
apply if the Registration Statement is on Form S-3, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
4. That, for purposes of determining any liability under the
Securities Act of 1933, treat the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of Prospectus filed by Registrant under Rule
424(b)(1) under the Securities Act of 1933 as part of this Registration
Statement as of the time the Commission declared it effective.
5. That, for purposes of determining any liability under the
Securities Act of 1933, treat each post-effective amendment that contains a form
of prospectus as a new Registration Statement for the securities offered in the
Registration Statement, and that offering of the securities at that time shall
be deemed to be the initial bona fide offering thereof.
26
6. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
persons of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to such Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Calhoun, State of Georgia,
on this 25th day of November, 1996.
CONTINENTAL AMERICAN TRANSPORTATION, INC.
By: s/Timothy Holstein
Timothy Holstein
Chairman of the Board,
President and Chief Executive officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Timothy Holstein, Erik Bailey and Brian Henninger and each of them, his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents of any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this Registration Statement has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Title Date
s/Timothy Holstein
Timothy Holstein Chairman of the Board,
President, Chief Executive
Officer and Director November 25, 1996
s/Erik Bailey
Erik Bailey Vice President,
Chief Financial Officer November 25, 1996
and Director
s/Brian Henninger
Brian Henninger Secretary and
Director November 25, 1996
catfms-3.AM1 updated 11/21/96
28
EXHIBIT INDEX
Exhibit Sequential
Number Exhibit Description Page Number
4(a)* Specimen of Common Stock Certificate.
4(b)* Specimen of Warrant certificate.
4(d)* Agreement, dated as of February 22, 1996,
by and between Continental American
Transportation, Inc. and Meridian Holdings,
Inc.; Agreement to Modify Purchase
Agreements and Security Agreement, dated
August 22, 1995, by and between Continental
American Transportation, Inc., Herr's Motor
Express, Inc., Robert R. Herr, Wayne S. Herr,
Timothy Holstein and Erik Bailey, and
Consulting Agreement, dated June 28, 1996,
by and between Continental American
Transportation, Inc. and Explorer Financial
Services, Inc.
4(e) Specimen of 10% Convertible Preferred
Stock Certificate 30
5 Opinion of Joseph J. Tomasek, Esq. 38
23(a) Consent of Joseph J. Tomasek, Esq.
(contained in the opinion of counsel
filed as Exhibit 5 hereto).
23(b) Consent of Rosenberg Rich Baker
Berman & Company. 40
24 Power of Attorney (included in Part II
of this Registration Statement).
* previously filed.
catfms-3.am1
29
Exhibit 4(e)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO OR
FOR THE ACCOUNT OF BENEFIT OF U.S. PERSONS UNLESS THE SECURITIES ARE REGISTERED
UNDER THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT IS AVAILABLE. IT IS THE RESPONSIBILITY OF THE INVESTOR
PURCHASING THESE SECURITIES TO SATISFY ITSELF AS TO FULL OBSERVANCE OF THE LAWS
OF ANY RELEVANT TERRITORY OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY SUCH
PURCHASE, INCLUDING OBTAINING ANY REQUIRED GOVERNMENTAL OR OTHER CONSENTS AND
OBSERVING ANY OTHER APPLICABLE REQUIREMENTS. THE SECURITIES REPRESENTED HEREBY
ARE ALSO SUBJECT TO AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT UPON SATISFACTION OF CERTAIN TERMS AND CONDITIONS
SET FORTH HEREIN AND IN A CERTAIN REGULATION S OFFSHORE SECURITIES SUBSCRIPTION
AGREEMENT DATED AS OF OCTOBER , 1996 BETWEEN THE COMPANY AND THE HOLDER NAMED
THEREIN.
Certificate No. 1 25,000 Shares
CONTINENTAL AMERICAN TRANSPORTATION, INC.
10% CONVERTIBLE PREFERRED STOCK
This certifies that is the owner of twenty-five thousand (25,000)
shares of fully paid, nonassessable shares of a duly authorized issue of 400,000
shares of preferred stock, $1.00 par value per share, of Continental American
Transportation, Inc., a corporation duly organized and existing under the laws
of the State of Colorado (the "Company"), designated as its 10% Convertible
Preferred Shares (the "Convertible Shares"), transferable on the books of the
Company by the Holder in person or by duly authorized attorney upon surrender of
this Certificate properly endorsed provided, however, that the Company's
obligation to any transferee of this Certificate arises only if such transfer,
sale or other disposition is made in accordance with the terms and conditions of
Regulation S promulgated under the Securities Act; the Company has issued the
total 400,000 Convertible Shares in sixteen (16) certificates, each representing
25,000 Convertible Shares. The date upon which the Company received payment for
the 25,000 Convertible Shares hereof is deemed the "Date of Funding" herein. The
Convertible Shares shall have the express rights, powers, preferences,
limitations and restrictions set forth in this Certificate as follows:
(1) Voting. Except as required by the Business Corporation Act
of Colorado, the holders of the Convertible Shares shall not be entitled to any
voting rights for corporate purposes.
30
(2) Dividends. The registered holder of the Convertible Shares
shall be entitled to receive cumulative dividends on the par value thereof at
the rate of ten (10%) percent per annum (the "Dividend Rate"), payable monthly,
commencing on the th day of November, 1997, and continuing on the th day of
every consecutive month thereafter, on any Convertible Shares that have not been
either converted or redeemed as of such date and as hereinafter provided, as and
when declared by the Board of Directors out of funds of the Company legally
available therefor pursuant to the Business Corporation Act of the State of
Colorado. The Dividend Rate shall accrue on the Liquidation Price (as
hereinafter defined) of each share of the Convertible Shares. The dividends on
the Convertible Shares, payable in cash, shall be cumulative, so that if the
Company fails in any fiscal year to pay such dividends on all of the issued and
outstanding Convertible Shares, such deficiency in the dividends shall be fully
paid, but without interest, before any cash dividends shall be paid on or set
apart for the Common Stock.
(3) Priority. The Convertible Shares shall, with respect to
dividend rights, rights on liquidation, winding up, dissolution and rights upon
redemption, rank prior to all classes and series of Common Stock.
(4) Cancellation. The Convertible Shares which have been
issued and reacquired in any manner, including shares purchased, exchanged or
redeemed, shall be canceled on the books of the Company and shall not be
considered outstanding for any purpose.
(5) Liquidation. In the event of any liquidation, dissolution,
or winding up of the affairs of the Company, whether voluntary or otherwise,
after payment or provision for payment of the debts and other liabilities of the
Company, the holders of the Convertible Shares shall be entitled to receive, out
of the remaining net assets of the Company, the amount of Twenty-Five Thousand
($25,000) Dollars for each Certificate representing 25,000 shares of such
Convertible Shares (the "Liquidation Price") held of record by such holder,
payable in cash or in shares of stock, securities or other consideration, the
value of which stock, securities or other consideration, shall be fixed by the
Board of Directors, plus the amount of all dividends in arrears on each such
Convertible Share up to the date fixed for distribution, before any distribution
shall be made to the holders of the Common Stock of the Company, and the entire
remaining net assets of the Corporation after such preferential distribution to
the holders of the Convertible Shares shall be distributed to the holders of the
Common Stock of the Company, pro rata as described above.
(6) Conversion. All, but not less than all of the 25,000
Convertible Shares represented by this Certificate may, at the option of the
holder hereof, be converted into Common Shares of the Company, no par value (the
"Common Shares" or "Common Stock"), at any time commencing on December , 1996,
and ending upon any such conversion or redemption as described below (the
"Conversion Period"), subject to the following terms and conditions:
31
a. The Holder of this Certificate hereby agrees to the conditions
governing the convertibility of the Convertible Shares represented by this
Certificate as set forth below. This Certificate permits the Holder to convert
the Convertible Shares represented in this Certificate, to wit 25,000
Convertible Shares, at any time during the Conversion Period subject, however,
to the limitation that the Holder, who is the Holder of all of the duly
authorized and issued 400,000 Convertible Shares, may only convert the
Convertible Shares in lots of 25,000 and limits such conversions to a total of
50,000 Convertible Shares during any seven (7) day period.
b. The Convertible Shares represented in this Certificate shall be
convertible based upon their par value,i.e., $1.00 par value per share, into
Common Shares at a conversion price for each Common Share equal to Seventy-Five
(75%) percent of the average closing bid price of the Company's Common Stock (as
reported by the OTC Bulletin Board or the Philadelphia Stock Exchange, as the
case may be) for any two (2) consecutive trading days immediately prior to the
Conversion Date, as hereinafter defined (the "Conversion Price"). Such
Conversion price shall be effectuated by surrendering this Certificate to be
converted to the Company with the form of Notice of Conversion attached hereto
as Exhibit 1, executed by the Holder of this Certificate evidencing such
Holder's intention to convert this Certificate. No fractional shares of the
Common Stock or scrip representing fractional shares will be issued on
conversion, but the number of shares of Common Stock issuable shall be rounded
to the nearest whole share. The date on which Notice of Conversion and this
Certificate is received by the Company shall be deemed and referred to herein as
the "Conversion Date". In lieu of physical delivery of certificates representing
the shares of Common Stock issuable upon the conversion of this Certificate of
the Holder, the Company shall issue and register, within five (5) business days
after delivery to the Company of such Notice of Conversion, the number of shares
of Common Stock to which the Holder shall be entitled, in such street or nominee
names as may be directed by the Holder in the Notice of Conversion. The Company
shall use its best efforts to ensure that the shares of Common Stock are at all
times Depository Trust Corporation eligible. In addition to any other remedies
which may be available to the Holder, in the event that the Company fails for
any reason to effect delivery of such shares of Common Stock within such five
(5) business day period, the Holder will be entitled to revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion.
c. The Conversion Price and number of shares of Common Stock issuable
upon conversion shall be subject to adjustment from time to time as provided in
this Subsection C.
(i) In the event the Company should at any time or from time to
time after the date of this Certificate fix a record date for the effectuation
of a split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares
32
of Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without payment of
any consideration by such holder for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend, distribution, split or subdivision if no record date
is fixed) the Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of this Certificate
shall be increased in proportion to such increase in the aggregate number of
shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.
(ii) If the number of shares of Common Stock outstanding at any
time after the date of this Certificate is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of this Certificate
shall be decreased in proportion to such decrease in outstanding shares.
d. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of this Certificate, such number of its shares of
Common Stock as shall from time to time deemed to be sufficient to effect the
conversion of all of the 400,000 Convertible Shares issued.
(7) Cumulative Dividends. Unpaid cumulative dividends due on
the Convertible Shares shall be deemed to be a debt obligation of the Company.
During such time as there exists unpaid cumulative dividends due on the
Convertible Shares, no reclassification of the shares of the Company shall be
valid unless the holders of a majority of all the Convertible Shares approve,
and provision is made for the payment of the aggregate unpaid cumulative
dividends then in arrears.
(8) Redemption. (i) At any time commencing on or after
December , 1996, the Company shall have the right to redeem all or any portion
of its Convertible Shares issued and outstanding, in increments of 25,000
shares, held by such holder by paying to the holder the par value thereof, to
wit, $1.00 per share, plus twenty-five (25%) percent thereof, calculated on an
annualized basis, together with the amount of any accrued and unpaid dividends,
if any, as may have accumulated thereon at the time of redemption (the
"Redemption Price").
(ii) At least ten (10) days but not more than thirty (30) days prior
to the date fixed by the Board of Directors of the Corporation for the
redemption of the Convertible Shares pursuant to subsection (i) above, a written
notice shall be mailed to the Holder of record of the Convertible Shares to be
redeemed, at the address of such holder as shown on the records of the Company
notifying such Holder of the election of the Company to redeem such shares (the
"Notice of Redemption"), stating that the Company has exercised its
33
right to redeem the Convertible Shares (hereinafter the date of the mailing of
the Notice by the Company to the holder(s) shall be referred to as the
"Redemption Date"), and calling upon such Holder to surrender to the Company at
the place designated in such notice such Holder's certificate or certificates
representing the number of shares of the Convertible Shares specified in such
Notice of Redemption. On or after the Redemption Date, each Holder of the
Convertible Shares to be redeemed shall present and surrender such Holder's
certificate or certificates for such shares to the Company at the place
designated in such notice and thereupon the Redemption Price of such shares
shall be paid to or to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. From and after the Redemption Date (unless
default shall be made by the Company in payment of the Redemption Price), all
dividends on the Convertible Shares to be redeemed shall cease to accrue, such
shares shall no longer be convertible into Common Shares and all rights of the
Holders thereof as stockholders of the Company, except the right to receive the
Redemption Price thereof upon the surrender of certificates representing the
same, without interest thereon, and except to the extent such Holder is the
record owner of Common Shares, shall cease and terminate and such shares shall
not thereafter be transferred (except with the consent of the Company) on the
books of the Company and such shares shall not be deemed to be outstanding for
any purpose whatsoever.
(iii) The Company may apply toward the purchase or redemption
of the Convertible Shares as herein provided any part of its surplus funds or an
amount of its stated capital which shall not be greater than the stated capital
represented by the shares purchased or redeemed, but under no circumstances
shall the Company utilize any other funds or any further part of its stated
capital toward the purchase or redemption of such stock. The purchase or
redemption of any such stock shall not be made where the effect of any such
purchase or redemption and application of stated capital thereto shall be to
reduce the net assets of the Company below the stated capital remaining after
giving effect to the cancellation of such shares, or if the Company is insolvent
or would thereby be made insolvent.
(9) Transfer to Comply with The Securities Act of 1933. (a)
The Convertible Shares represented by this Certificate and the Common Shares or
any other security issued or issuable upon the conversion of this Certificate
may not be offered or sold in the United States or to U.S. persons unless such
securities are registered under the Securities Act of 1933, as amended, or an
exemption from the registration requirements of said Act is available.
(b) The Holder agrees that prior to the disposition of Convertible Shares
represented by this Certificate, the Holder shall give written notice to the
Company, expressing his intention as to such disposition. Promptly upon
receiving such notice, the Company shall present copies thereof to its counsel.
If, in the opinion of such counsel, the proposed disposition does not require
registration of Convertible Shares represented by this Certificate under the
Securities Act of 1933, as then in force, or any similar federal or state
statute then in force, the Company shall, as promptly as practicable, notify the
Holder of such opinion, whereupon the Holder shall be entitled to dispose of
Convertible Shares represented by this Certificate, all in accordance with the
terms of the notice delivered by the Holder to the Company.
34
(10) Registration of Securities. (a) As provided in the
Securities Subscription Agreement and restated herein, the Company agrees to
file a registration statement with the United States Securities and Exchange
Commission (the "Registration Statement") to register the Common Shares into
which the Convertible Shares represented by this Certificate may be converted
within forty-five (45) days of the Closing Date or Date of Funding as such terms
are described herein and in the Regulation S Offshore Securities Subscription
Agreement, dated October , 1996, between the Company and the Holder hereof. In
addition, the Company will undertake to comply with the various states
securities laws and regulations with respect to the registration of said Common
Shares. Holder acknowledges that the Company may be required to file
post-effective amendment(s) to the Registration Statement following the date the
Registration Statement is declared effective. The Company shall utilize its best
efforts to file any post-effective amendments to the Registration Statement on a
timely basis.
(b) Subject to Section (10)(a) above, at all times following registration of
the Common Shares and continuing until the conversion in full of the Convertible
Shares and their sale by the Holder hereof following the conversion, the Company
shall maintain and be current on all filings with the U.S. Securities and
Exchange Commission, appropriate state securities departments and, as may be
required, with the National Association of Securities Dealers, Inc. and/or
national or regional stock exchanges necessary to allow the Common Shares to be
freely tradable in the public market.
(11) Notice. Any notice to be given or to be served upon any
party in connection with this Certificate must be in writing, and such notice as
well as the Notice of Conversion accompanied by this Certificate in the event
the Holder intends to proceed with such conversion as more fully described
herein, shall be sent by Federal Express or an equivalent carrier, charges
prepaid and addressed to the following address:
If to the Company, to:
Continental American Transportation, Inc.
495 Lovers Lane Road
Calhoun, Georgia 30701
Attention: Timothy Holstein, President
Telephone: (706)629-8682
If to the Holder to:
35
(12) Incorporation by Reference. All of the terms and
provisions of a certain Regulation S Offshore Securities Subscription Agreement,
dated October , 1996, by and between the Holder hereof and the Company are
incorporated herein by reference.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
signed by its duly authorized officers and sealed with the seal of the Company
this day of October, 1996.
CONTINENTAL AMERICAN
TRANSPORTATION, INC.
Corporate Seal or
Facsimile ________________________
President
________________________
Secretary
seatx10%.blk
36
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Convertible
Shares represented by Certificate No.________ into Common Shares)
The undersigned hereby irrevocably elects to convert the Convertible Shares
represented by Certificate No._______ representing 25,000 Convertible Shares
into shares of Common Stock of Continental American Transportation, Inc. (the
"Company") according to the conditions hereof, as of the date this Notice of
Conversion and accompanying Certificate are received by the Company.
______________________
Signature
______________________
Name of Holder
Address:
* The original Certificate and a manually signed original of this Notice
of Conversion must be received by the Company in order to fix and
establish the Conversion Date.
seatx10%.blk
37
Exhibit 5 LAW OFFICES OF
JOSEPH J. TOMASEK
ATTORNEY AT LAW
75-77 North Bridge Street
Somerville, New Jersey 08876
November 21, 1996
Board of Directors
Continental American Transportation, Inc.
1822 Spruce Street
Philadelphia, Pennsylvania 19103
Gentlemen:
I have acted as special counsel to Continental American Transportation,
Inc. (the "Company") in connection with Amendment No. 1 to the Registration
Statement on filed on Form S-3 with the Securities and Exchange Commission (the
"Registration Statement"), pertaining to the registration of up to 3,118,441
shares of the Company's Common Stock, no par value, comprised of: (a) 1,968,441
Common Shares which are purchasable upon the exercise of 20 non-redeemable
Common Stock Purchase Warrants being offered by certain Warrantholders of the
Company (the "Warrants"); (b) 400,000 Common Shares which are issuable, subject
to certain conditions as described in the Registration Statement, upon the
conversion of the Company's 400,000 shares of its 10% Convertible Preferred
Stock, $1.00 par value per share, and; (c) 750,000 Common Shares which are being
registered on behalf of certain Selling Securityholders identified in the
Registration Statement (the"Common Shares").
In that connection, I have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of this
opinion, including the following: (a) the Restated Articles of Incorporation and
Bylaws of the Company, as amended and (b) resolutions adopted by the Board of
Directors of the Company at meetings held on June 28 and November 20, 1996,
respectively.
For purposes of this opinion, I have assumed the authenticity of all
documents submitted to me as originals and the conformity to the originals of
all documents submitted to me as copies. I have also assumed the genuiness of
the signatures of persons signing all documents in connection with which this
opinion is rendered, the authority of such persons signing on behalf of the
parties thereto other than the Company, and the due authorization, execution and
delivery of all documents by the parties thereto other than the Company.
38
Board of Directors
Continental American
Transportation, Inc.
November 21, 1996
Page -2-
Based on the foregoing, I am of the opinion that:
(1) The Company is a corporation validity existing and in good standing
under the laws of the State of Colorado.
(2) When, as and if Amendment No. 1 (intended to be filed by the
Company on November 25, 1996 via EDGAR with the Securities and Exchange
Commission) to the Registration Statement previously filed on Form S-3 with the
Securities and Exchange Commission (the "SEC") via EDGAR on July 26, 1996, by
the Company becomes effective pursuant to the provisions of the Securities Act
of 1933, as amended, and subject to compliance with applicable state securities
laws, the Common Shares will be duly authorized and validly issued.
I hereby consent to the filing of this opinion as exhibit 5 to
Amendment No. 1 to the Registration Statement, and to the reference to me under
the section entitled "Legal Opinions" in the Registration Statement.
Very truly yours,
s/Joseph J. Tomasek
Joseph J. Tomasek, Esq.
cat-attn.s-3
39
Exhibit 23(b) Rosenberg Rich Baker Berman & Company
380 Foothill Road
Bridgewater, New Jersey 08807
Independent Auditors' Consent
To the Board of Directors and Stockholders of
Continental American Transportation, Inc. and Subsidiaries
We consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement of Continental American Transportation, Inc. and
Subsidiaries (the "Company") on Form S-3, to be filed with the Securities and
Exchange Commission on November 25, 1996 (the "Registration Statement") of (1)
our report dated October 11, 1996, appearing in the Annual Report on Form 10-KSB
of the Company for the year ended June 30, 1996; (2) our reports dated March 1,
1996 appearing in Amendment No. 2 to the Company's Current Report on Form 8-K
filed with the Securities and Exchange Commission on June 17, 1996, and; (3) to
the reference to us under the heading "Experts" in the Prospectus, which is part
of the Registration Statement.
ROSENBERG RICH BAKER BERMAN & COMPANY
s/Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
November 21, 1996
audcons2.s-3
40