As filed with the Securities and Exchange Commission on April 12, 2002
Registration No.333-82626
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3/A
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PRE-EFFECTIVE AMENDMENT NO. 1 TO
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED
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FIBERCORE, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0445729
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
253 WORCESTER ROAD, P.O. BOX 180
CHARLTON, MA 01507
(508) 248-3900
(Address, including zip code; telephone number, including area code of
registrant's principal executive offices)
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DR. MOHD A. ASLAMI
253 WORCESTER ROAD, P.O. BOX 180
CHARLTON, MA 01507
(508) 248-3900
(Name, address, including zip code; telephone number, including area code of
agent for service)
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Copies to:
Malcolm Wattman, Esq.
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
(212) 504-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities to be offered on this Form are being offered pursuant to
dividend or 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, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
=======================================================================================================================
AMOUNT TO
BE PROPOSED MAXIMUM
TITLE OF SHARES TO BE REGISTERED OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF REGISTRATION FEE
REGISTERED (1) (2) (3) SHARE(4) AGGREGATE OFFERING PRICE (5)
- -----------------------------------------------------------------------------------------------------------------------
Common Stock,
par value $0.001
Total 7,145,646 $2.05 $14,648,574 $1,348
=======================================================================================================================
(1) We are registering a total of 7,145,646 shares of our common stock
consisting of:
o 1,108,292 shares of our common stock issued to Crescent
International, Ltd;
o 339,412 shares of our common stock issuable upon exercise of
warrants issued to Gruntal & Co., LLC;
o 5,644,770 shares of our common stock issuable upon conversion and
redemption of convertible securities and exercise of warrants issued
and issuable to Riverview Group, LLC; Laterman & Co. and
Forevergreen Partners (estimated pursuant to our Registration Rights
agreement with the foregoing investors. See "Recent Financing
Agreements" on page 19 of the attached prospectus.)
o 53,172 issuable upon exercise of warrants issued to other investors
(2) Pursuant to Rule 416 of the General Rules and Regulations under the
Securities Act of 1933 (the "Securities Act"), the registration statement
of which this prospectus is a part also registers a currently
indeterminate number of additional shares of our common stock that may be
issued upon the occurrence of dilutive events. The Company has made a good
faith effort to estimate the actual number of shares issuable.
(3) Pursuant to Rule 429 under the Securities Act, the Company has included in
the attached prospectus a total of 6,130,977 shares of the Company's
common stock registered by the Company in its prospectus dated September
29, 2000, allocated as follows (described in more detail in the section
entitled "Selling Stockholders" in the attached prospectus):
o 1,479,578 shares of our common stock issued and issuable to Crescent
International Ltd.;
o 451,399 shares of our common stock issuable to Gruntal & Co. LLC;
and
o 4,200,000 shares of our common stock which the Company may sell from
time to time through underwriters.
(4) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act. The actual offering price per
share for the shares registered hereunder will be the market price at the
time of the sale.
(5) Calculated pursuant to Rule 457(c) under the Securities Act with respect
to the 7,145,646 shares registered hereunder, based upon the average of
the high and low sale price of the common stock of FiberCore, Inc. on
February 11, 2002 (on which the highest price was $2.14 and the lowest
price was $1.96), as reported by the Nasdaq SmallCap Market. Because the
Company removed shares from this registration statement, the fee payable
is reduced and the Company has a credit of $233 in its account.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR DATES
THAT MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE 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 THE DATE THAT THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SECURITIES WHICH ARE THE SUBJECT OF THIS REGISTRATION STATEMENT MAY
NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO
SELL NOR DOES IT SOLICIT AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED APRIL 12, 2002
FIBERCORE, INC.
COMMON STOCK
This prospectus relates to the public offering by FiberCore, Inc. and the
Selling Stockholders of up to a maximum of 13,276,623 shares of the common stock
of FiberCore, Inc., par value $.001 per share, representing approximately 21.5%
of the outstanding shares of FiberCore, Inc.'s common stock on April 10, 2002.
The 9,076,623 shares of our common stock, representing approximately 14.7% of
the outstanding shares of FiberCore, Inc.'s common stock on April 10, 2002,
being offered for resale on behalf of Selling Stockholders consist of:
o 2,587,870 shares of our common stock issued and issuable to Crescent
International, Ltd;
o 790,811 shares of our common stock issuable upon exercise of warrants
issued to Gruntal & Co., LLC;
o 5,644,770 shares of our common stock issuable upon conversion of
convertible securities and exercise of warrants issued and issuable to
Riverview Group, LLC; Laterman & Co. and Forevergreen Partners; and
o 53,172 shares of our common stock issuable to other investors upon
exercise of warrants.
The remaining 4,200,000 shares of our common stock, representing
approximately 6.8% of the outstanding shares of our common stock on April 10,
2002, are being registered for underwritten sales by FiberCore from time to
time. The names of any underwriters or agents will be set forth in the
accompanying prospectus supplement.
The prices at which the Selling Stockholders and we may sell the shares of
our common stock that are part of this offering will be determined by the
prevailing market price for the shares at the time the shares are sold.
The NASDAQ SmallCap symbol for our common stock is FBCE. On April 10,
2002, the last reported sale price for our common stock was $1.02 per share.
This prospectus may not be used to consummate sales of securities unless
it is accompanied by a prospectus supplement.
INVESTING IN THESE SECURITIES INVOLVES SUBSTANTIAL RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR 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.
THIS REGISTRATION STATEMENT ON FORM S-3 OF WHICH THIS REGISTRATION STATEMENT IS
A PART REGISTERS THE RESALE OF 7,145,646 SHARES OF OUR COMMON STOCK, PAR VALUE
$.001 PER SHARE. PURSUANT TO RULE 429 UNDER THE ACT, THIS PROSPECTUS IS A
COMBINED PROSPECTUS WHICH ALSO INCLUDES 6,130,977 REMAINING SHARES COVERED BY
THE REGISTRATION STATEMENT ON FORM S-3 WHICH BECAME EFFFECTIVE ON SEPTEMBER 29,
2000, AS AMENDED, (FILE NO. 333-40406).
THE DATE OF THIS PROSPECTUS IS APRIL 12, 2002.
TABLE OF CONTENTS
THE OFFERING...................................................................5
ABOUT THIS PROSPECTUS..........................................................5
THE COMPANY....................................................................5
OUR BUSINESS...................................................................5
RISK FACTORS...................................................................7
DILUTION......................................................................17
FORWARD-LOOKING INFORMATION...................................................17
WHERE YOU CAN FIND MORE INFORMATION...........................................17
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...............................18
RECENT FINANCING AGREEMENTS...................................................19
USE OF PROCEEDS...............................................................24
SELLING STOCKHOLDERS..........................................................25
PLAN OF DISTRIBUTION..........................................................30
DESCRIPTION OF CAPITAL STOCK..................................................32
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION................34
LEGAL MATTERS.................................................................34
EXPERTS.......................................................................34
INFORMATION NOT REQUIRED IN PROSPECTUS........................................36
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THE OFFERING
In the registration statement of which this prospectus is a part, we are
registering for resale shares of our common stock issued and issuable to
Crescent International Ltd., issuable to Gruntal & Co., LLC, Riverview Group,
LLC, Laterman & Co., Forevergreen Partners, and issuable to Marc Drimer, Guido
Roennefahrt, and Felix Rebholz. See "Selling Stockholders" beginning on page 25.
We are also offering for sale up to 4,200,000 shares of our common stock
from time to time in underwritten offerings, at prices to be determined at the
time of the offerings. Although we have not established a definitive plan to do
so, we are considering engaging in an underwritten offering in the future. We
will file a post-effective amendment to the registration statement of which this
prospectus is a part setting forth the details of the offering and our plan of
distribution if and when we proceed with the underwritten offering.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf registration, we
and the Selling Stockholders may sell the securities covered by this prospectus
in one or more offerings. This prospectus provides you with a general
description of our common stock. Each time we sell securities pursuant to the
registration statement of which this prospectus is a part, we will provide
purchasers with a prospectus supplement that will contain specific information
about the terms of the offering. The prospectus supplement may also add, update
or change information contained in this prospectus. This prospectus, together
with applicable prospectus supplements, will include or incorporate by reference
all material information relating to this offering.
THE COMPANY
We were incorporated as FiberCore Incorporated in Nevada in November 1993,
and commenced commercial operations at that time. In July 1995, we merged with
and into Venturecap, Inc., an inactive Nevada corporation traded on the OTC
Bulletin Board. Following the merger, Venturecap changed its name to FiberCore,
Inc. On November 16, 2000, our common stock became quoted on the Nasdaq SmallCap
Market. Our executive offices are located at 253 Worcester Road, Charlton,
Massachusetts, 01507 and our telephone number is (508) 248-3900. Our World Wide
Web site address is www.FiberCoreUSA.com. The information in our Web site is not
a part of this prospectus and is not incorporated by reference into this
prospectus.
OUR BUSINESS
We are primarily engaged in the business of developing, manufacturing, and
marketing single-mode and multi-mode optical fiber and optical fiber preforms
for the telecommunications and data communications industry. Preforms are the
basic component from which optical fiber is drawn and subsequently cabled. We
have developed a patented preform production process which management believes
to be competitive with other existing production methods in use. Moreover, in
March 2001 we received a patent for a production process utilizing plasma that
we believe will substantially reduce our manufacturing cost of optical fiber and
preform. Our principal operating units are FiberCore Jena GmbH, our wholly-owned
subsidiary in Germany, which primarily produces multi-mode fiber and Xtal
FiberCore Brasil, S.A., a 90% owned Brazilian company formerly known as Xtal
Fibras Opticas, S.A. which we acquired as of June 2000 and primarily produces
single mode fiber.
Our strategy in the fiber optic manufacturing and marketing business is to
become the low-cost supplier of fiber optic preforms and optical fiber, serving
as the primary supplier to independent manufacturers of fiber optic cable and
our joint venture partners, and a secondary supplier to the major vertically
integrated fiber and photonic companies. In addition to Xtal FiberCore Brasil,
S.A., FiberCore, through FiberCore Jena GmbH, operates a manufacturing facility
in Jena, Germany, established in 1986 by Jena Glaswerk (a division of Schott
Glass), which we acquired in July 1994. While our initial marketing efforts were
focused in Western Europe, we are now selling into North and South America,
Africa, the Middle East, and the Asia Pacific regions. By establishing strategic
distribution alliances in developing countries where demand for fiber optic
cable is stronger than in North America, we believe we can accelerate market
penetration, establish long-term customer relationships, and reduce competitive
risk. We believe that customers who will produce fiber from preforms will enjoy
the benefit of our low-cost production methodology and avoid import duties on
the value added in the fiber optic cable manufacturing process.
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In pursuit of our strategy, we have undertaken to form strategic alliances
on a worldwide basis. These strategic alliances include but are not limited to:
long-term supply agreements with our key customers, investment by our key
customers in FiberCore, joint-ventures such as the recently formed FiberCore
Africa joint venture in which we own 60%, and direct investments in related
businesses by us.
Demand for single-mode fiber for use in the long haul market has
significantly weakened and prices have fallen, most notably in the United States
and South America, as telecom carriers reduce capital expenditures. The decline,
however, may be leveling off or easing as published market studies and industry
sources indicate that the demand for single-mode fiber should start to increase
by the end of 2002 or the beginning of 2003 and that the demand for fiber to
supply the metropolitan access and fiber-to-the-home markets, which has already
started to increase, will begin increasing as carriers start to connect the
long-haul fiber to the end-user. For the most part, multi-mode fiber, which
currently accounts for approximately 35% of our revenues and could increase up
to 50% by late 2002 or early 2003, has been less affected by these recent
events, experiencing approximately 15% price declines. Nevertheless, there is no
clear indication as to whether the expected demand will materialize and whether
prices will track the expected increases in demand.
To a certain extent, the global diversification of our revenues and the
lack of dependence on the U.S. telecom long-haul sector had shielded us from
some of the weakness experienced in other sectors to date. However, we have
experienced significant softening in the South American market and have taken
steps to offset this weakness by shifting sales efforts to other markets, by
managing production levels to better match current and expected near-term demand
levels, and by shifting, to the extent possible, production to multi-mode from
single mode fiber. We anticipate that as this trend continues, a higher
percentage of our revenue will be attributable to multi-mode fiber in 2002. One
area that has shown some resiliency has been China, and we have begun shipping
product into China from Brazil. However, prices in China have also been
weakening, as the large fiber manufacturers, including those from Japan and
Korea, reduce inventories amidst a falling Japanese Yen, and there have been
some recent indications that demand may be softening. In view of its sizeable
long-term fiber requirements, China has recently passed laws that will eliminate
the importation of fiber by 2005. Accordingly, as the only fiber manufacturer
that does not manufacture cable and therefore does not compete with our
customers, we have been approached by several Chinese cable manufacturers and
others to enter joint ventures to build facilities in China. At present,
discussions with several groups are in process.
Our multi-mode business, which presently accounts for approximately 35%
percent of our revenue, has been less affected than our single mode business
during the downturn. Offsetting some of the downturn in the long-haul-market is
the expectation of significant growth in the metro and access and
fiber-to-the-home markets. Based on these current market factors, we intend to
manage our business and production mix and levels to fit the present
marketplace, while laying the foundation to increase our competitive advantage
for the next increase in fiber demand. Our strategy also includes mergers with
and acquisitions of companies such as Xtal Fibras Opticas, S.A. We intend to
capitalize on the projected growth by constructing and/or acquiring facilities
to produce optical fiber preforms and optical fiber in areas that offer both
financial benefits and the opportunity to increase market share. We have already
upgraded our existing Jena facility and have completed the construction of a new
facility in Jena. The first phase of the new, fully financed Jena facility began
operations in early 2002, with all equipment scheduled to be operational by
mid-year. Our strategy also includes constructing joint-venture owned facilities
in selected areas. We plan to continually improve the manufacturing processes at
our facilities by implementing our patented technology, by developing new
techniques that lower production costs, and offering new and more competitive
products, thereby enhancing our already low cost producer strategy.
On June 1, 2001 we acquired DCI Data Communications Inc., a privately held
company located in Hyannis, MA by merger into Automated Light Technologies Inc.,
our wholly owned subsidiary. The acquired company designs, installs and
maintains low cost fiber optic networks primarily in the northeast United States
for local area network applications, such as those used in hospitals,
universities, government and commercial buildings. Automated Light Technologies,
Inc. manufactures equipment that monitors and identifies faults in fiber optic
cables, cable protection devices, which are used in outdoor fiber optic cable
installations to provide lightning protection, and electro-optical talk sets,
which are used during fiber optic cable installations and subsequent maintenance
work.
On December 31, 2001, our wholly owned subsidiary, FiberCore U.S.A., Inc.,
executed agreements for a $20,000,000 financing facility with the Retirement
System of Alabama to build a manufacturing plant, estimated at $30,000,000, in
Auburn, Alabama. Under the terms of the transaction, the Retirement System will
receive an 8% secured installment note, payable in equal semi-annual payments of
principal and interest over fifteen years. The installment note will be secured
by property, plant and equipment at the Alabama facility. In addition to tax and
6
other related benefits and incentives, the City of Auburn contributed property
valued at an estimated $1,100,000. Although financing has been secured for the
facility, which is planned to manufacture multi-mode fiber and serve our U.S.
customers, the facility is scheduled to be operational by early 2004. We
anticipate that the commencement of operations at the facility will coincide
with the expected improvement in market conditions. Accordingly, facility
construction is scheduled to begin toward the third quarter of 2002. While we
presently have financing available to cover our $10,000,000 commitment, we
intend to obtain additional financing.
On February 4, 2002, we closed on FiberCore Africa, an optical fiber and
preform manufacturing joint venture with the Industrial Development Corporation
of South Africa and other South African entities. Under the terms of the
326,000,000 South African rand based project (approximately $28,500,000), we
received a 60% interest in exchange for our capital contribution, of
approximately $1,750,000, based on the January 31, 2002 rand to dollar exchange
rate, in cash and $8,500,000 in technology value (contributed by way of a
licensing agreement). In addition, we have options to acquire the remaining 40%
by December 31, 2006. The joint venture also closed simultaneously on
approximately $11,000,000 in project and working capital financing. We expect
the manufacture of single mode fiber at FiberCore Africa to begin in the first
half of 2003. The Company has identified local senior management and key
technical staff members who have agreed to join FiberCore Africa.
RISK FACTORS
Our common stock is highly speculative and are subject to numerous and
substantial risks. Therefore, prospective investors should carefully consider
the following risk factors as well as the information contained elsewhere in
this prospectus.
1.) WE HAVE A HISTORY OF OPERATING LOSSES AND OUR ABILITY TO REMAIN
PROFITABLE AND GENERATE SUFFICIENT PROFITS TO SUSTAIN THE GROWTH OF
OUR BUSINESS IS UNCERTAIN.
We incurred operating losses from our inception in 1993 until the third
quarter of 2000, when we reported net income of $836,000. For the next three
quarters we remained profitable, generating total net income of $8,324,000.
However, in the third and fourth quarters of 2001 we reported a total net loss
of $5,548,000. Accordingly, operating results have been subject to yearly and
quarterly fluctuations and are expected to continue to fluctuate as a result of
a number of factors. These factors include fluctuations in product prices and
resulting gross margins, increased product and price competition, variations in
product costs and the mix of products sold, the size and timing of customer
orders and shipments, the ability to deliver products based on new and
developing technologies, and manufacturing capacity. Significant fluctuations in
operating results could contribute to volatility in the market price of our
common shares. Continued operating losses could decrease the market price of our
common stock, and limit our financing options.. To be profitable we must
successfully overcome the risks disclosed in this prospectus. We continue to be
subject to foreign currency risks and the risk of breach by significant
customers. We may never generate sufficient profits to sustain the growth of our
business. As of December 31, 2001, we had an accumulated deficit of
approximately $19,413,000.
2.) UNLESS THE CURRENT CONDITIONS OF OUR INDUSTRY CHANGE, THE DECLINE IN
PRICES AND THE OVERSUPPLY OF OPTICAL FIBER AND PREFORM WILL REDUCE
OUR ABILITY TO MAINTAIN PROFITABILITY AND TO OBTAIN FINANCING.
We are exposed to industry-wide risk of oversupply affecting the
telecommunications and data communications industry, which are beyond our
control and may affect our operations. To the extent that market supply exceeds
market demand for our products, prices for our products could be expected to
decline. As a result of current oversupply such conditions, prices for our
products have recently declined and may decline further. Decreased growth in
telecommunications in general and in the use of the internet, in particular, in
the United States and Western Europe could reduce demand for our products, which
are used in the transmission of data over the internet, and could result in a
further decline in prices for our products. Furthermore, developing countries,
including China and Malaysia and developing regions, including the Pacific Rim
and Middle East, are large consumers of fiber optics as they build
telecommunications infrastructures. A slowing of growth and modernization in
these countries and regions could decrease the demand for our products and
result in a decline in prices. We may also be burdened by the costs associated
with excess capacity. These factors could prevent us from maintaining
profitability or could result in substantially lower profitability than we have
anticipated.
7
Specifically, at the present time, optical fiber manufacturers are
experiencing a sudden and extensive softening in the demand for their products,
primarily single-mode fiber. While other markets have experienced weakness, this
downturn has been most notably in the U.S. long-haul market, as the major
telecom carriers have significantly reduced capital expenditures. As a result,
there is presently an oversupply of single-mode fiber, which we believe will
likely be absorbed within 6 to 12 months. In response to the overcapacity and
the trimming of inventories, prices for single-mode fiber have fallen
approximately 40% since mid 2001.
Continued softening of markets and reduction of global diversification of
our revenue stream could have a material adverse effect on our business, results
of operations, or financial condition.
3.) IF WE ARE NOT SUCCESSFUL IN OUR EFFORTS TO OBTAIN ADDITIONAL
FINANCING OF APPROXIMATELY $22,000,000 BY DECEMBER 31, 2002, WE MAY
BE UNABLE TO CONTINUE WITH THE EXPANSION AND PRODUCTIVITY PLANS
NECESSARY FOR MAINTAINING PROFITABILITY AND GROWTH.
Failure to obtain the financing contemplated by our business plan could
have a material adverse effect on our business, results of operations, or
financial condition. We estimate that we need to obtain additional financing of
approximately $5,000,000 during the second half of 2002, primarily to fund
planned process improvements at our Xtal facility. In addition, we estimate that
we need financing commitments of approximately $17,000,000 by December 2002 to
fund 2003 planned expenditures for our expansion plans in the United States and
Brazil. This financing is in addition to the current financing received and to
be received from the group of investors consisting of Riverview Group, LLC,
Laterman & Co. and Forevergreen Partners of $6,000,000 and the equity commitment
from Crescent International of $15,000,000 should we elect to draw upon it.
These additional funds will also be used for general corporate purposes,
including cash reserves. The amount of additional financing required assumes the
use of cash generated from operations. Accordingly, if the level of cash
generated from operations in 2002 and 2003 is less than expected, and/or we sell
less than $15,000,000 of shares to Crescent, we will need to obtain additional
financing or slow down and/or reduce the expansion program. Our history of prior
losses could adversely affect our ability to obtain financing.
For 2000, net cash provided by operations was $9,171,000; in 1999, net
cash used in operations was approximately $348,000, down from $1,281,000 for
1998, and $2,650,000 for 1997. For 2001, net cash used in operations was
$3,976,000. Therefore, we may not be able to internally fund potential operating
losses and we cannot fund the planned amount of capital expenditures solely from
our current cash and cash equivalents.
4.) THE PROCEEDS FROM THE EXERCISE OF OPTIONS AND WARRANTS MAY NOT BE
REALIZED IF THE HOLDERS OF THESE SECURITIES DO NOT EXERCISE, OR IF
THE HOLDERS EXERCISE IN A CASHLESS MANNER, RESULTING IN LOWER THAN
ANTICIPATED PROCEEDS FOR WORKING CAPITAL AND GENERAL CORPORATE
PURPOSES.
If the holders of our options and warrants do not exercise them by paying
in cash, we will have lower proceeds for use as working capital and for general
corporate purposes. However, the Company has not assumed any proceeds from the
exercise of options and warrants in its cash planning. Although we would receive
all of the proceeds from the cash exercise of our outstanding warrants and
options, up to approximately $15,000,000, the holders may elect not to exercise
these securities, and/or these holders may, to the extent eligible, use a
"cashless" exercise. Of the $15,000,000, holders have the right to request a
"cashless" exercise on approximately $5,600,000 of securities. In a cashless
exercise, a holder may use all or a portion of the "equity value" of the option
or warrant being exercised, or may surrender shares of common stock issuable
upon exercise of the option or warrants, to exercise the option or warrant
without paying additional money. The equity value of an option or warrant for
this purpose is the difference between the market value of our common stock on
the date of the exercise and the exercise price of the option or warrant. We
intend to utilize the proceeds of the exercise of options and warrants, if any,
for working capital, capacity expansion and general corporate purposes and not
for discharge of debt prior to maturity. The warrants issued to Riverview Group,
LLC, Laterman & Co. and Forevergreen Partners do not provide for a cashless
exercise. However, in the event that the resale of the shares issuable upon
exercise of any warrant issued to Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners is not registered by the first anniversary of the
warrant's issuance, holders of the warrants may exercise the warrants in a
cashless exercise.
8
5.) SHAREHOLDERS MAY SUFFER DILUTION FROM THIS OFFERING AND FROM THE
EXERCISE OF EXISTING OPTIONS, WARRANTS AND CONVERTIBLE NOTES; THE
TERMS UPON WHICH WE WILL BE ABLE TO OBTAIN ADDITIONAL EQUITY CAPITAL
COULD BE ADVERSELY AFFECTED.
Our common stock may become diluted if we sell additional shares of common
stock to Crescent International Ltd. pursuant to our agreements with Crescent,
if warrants and options to purchase our common stock are exercised, and if any
of Riverview Group, LLC, Laterman & Co. and Forevergreen Partners convert our
$5,000,000 of outstanding convertible debt into shares of our common stock.
Pursuant to our agreements with Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners, we will issue $1,000,000 of additional convertible debt
and related warrants upon the effectiveness of the registration statement of
which this prospectus is a part, and could issue up to another $3,000,000 of
convertible debt and related warrants to them by January 15, 2003. Conversion of
this additional indebtedness could result in further dilution, and could have a
downward effect on the market price of our common stock.
As of April 10, 2002, the weighted average exercise price of all of the
Company's outstanding options, warrants and convertible debt (including shares
issuable to the Selling Stockholders upon exercise of warrants and convertible
securities which have been issued and which are issuable upon the effectiveness
of the registration statement of which this prospectus is a part) was $1.892.
In addition, the interests of current holders of our common stock will be
diluted as a result of the offering and the issuance of shares issuable to
officers, directors and affiliates on exercise of options and warrants. At
December 31, prior to the offering, the net tangible book value per share was
$.38. After the offering, including shares that may be issued to officers,
directors and affiliates on exercise of options, and warrants, the net tangible
book value per share will be $.59, resulting in an increase in net tangible book
value per share of $.21. The amount of the immediate dilution to the new
investors from the public offering price of $2.50 per share is $1.29. The
average weighted exercise price for officers, directors and affiliates on the
exercise of options, and warrants would be $.94 per share compared to the
proposed offering price of $2.50 per share. The terms upon which we will be able
to obtain additional equity capital could also be adversely affected.
Immediately after this offering, we will have a number of options, and
warrants and convertible debt outstanding, pursuant to which we are obligated to
issue up to approximately 11,000,000 shares of our common stock, including
shares issuable upon exercise of warrants held by the Selling Stockholders. In
addition, the sale of common stock offered by this prospectus, or merely the
possibility that these sales could occur, could have an adverse effect on the
market price of our common stock.
Conversion or redemption of the convertible notes issued and issuable to
Riverview Group, LLC, Laterman & Co. and Forevergreen Partners could further
dilute our common stock. The conversion price of the outstanding convertible
debt is $2.967. The redemption price is calculated though a market based
formula, and was approximately $1.93 on February 12, 2002. We are required to
register for resale shares issued upon conversion of the convertible debt to the
extent they are not registered under the registration statement of which this
prospectus is a part or future registration statements.
In addition to the dilution resulting from a conversion of our convertible
debt, we could be subject to further dilution upon exercise of warrants to
purchase up to 463,426 held by Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners.
Exercise of the warrants to purchase: 16,558 shares of our common stock
issued to Marc Drimer; 20,057 shares issued to Guido Roennefahrt; and 16,557
shares issued to Felix Rebholz could lead to additional dilution.
Irrespective of whether Crescent exercises warrants, our common stock is
subject to further dilution upon the issuance of an aggregate of up to 6,000,000
shares of our common stock to Crescent that could occur if we require Crescent
to purchase additional shares of our common stock for up to $15,000,000
(assuming a purchase price of $2.50 per share). Our agreements with Crescent
obligate us to register any shares of our common stock that we require Crescent
to purchase. See page 19 of the section entitled "Recent Financing Agreements"
for a more complete description of our agreements with Crescent.
While we have included the possible sale of up to $15,000,000 of shares to
Crescent in our capital plans, we will continuously evaluate capital needs and
sources, and based on prevailing conditions in both the capital markets and the
industry, we will decide whether we will require Crescent to purchase shares of
our common stock.
9
The exercise of warrants held by Gruntal and certain Gruntal employees to
purchase 790,811 shares of our common stock would also subject shareholders of
our common stock to dilution.
The market value of shares of our common stock may also decline if we
register shares of our common stock owned by Tyco Electronics Corporation and
Tyco Sigma Limited, which entities are wholly owned by Tyco International Ltd.,
a company traded on the New York Stock Exchange. In the event our common stock
becomes listed on the Nasdaq National Market, we are required to register for
resale by Tyco Electronics Corporation, under the Securities Act of 1933,
2,765,487 shares of our common stock, issued upon exercise of a warrant held by
Tyco, upon Tyco's demand, but only to the extent that registration will not
impair the rights of Crescent International Ltd. In addition, in the event we
file a registration statement registering shares of our common stock, Tyco may
require us to engage in a "piggyback registration" to include all or part of an
additional 2,765,487 shares of our common stock held by Tyco, in the
registration statement. We have notified Tyco of the current registration
statement of which this prospectus is a part and Tyco has informed us that it
will not require us to include its shares of our common stock in the current
registration statement.
6.) THE SALE OF MATERIAL AMOUNTS OF OUR COMMON STOCK COULD REDUCE THE
PRICE OF OUR COMMON STOCK AND ENCOURAGE SHORT SALES
The introduction of additional shares into the market as a result of the
sale of our common stock by us or the Selling Stockholders may cause the price
of our common stock to decline. If the price of our common stock trades at
levels at which margin trading is permissible under applicable rules, our stock
may be subject to short sales, which could further decrease the price of our
common stock. In a short sale, a trader borrows securities, sells them, and
purchases securities on the market to replace the borrowed securities, at what
the trader hopes will be a lower price than the sale price. Short selling can
have a downward effect on the market price of our common stock.
7.) THE ISSUANCE OF STOCK UPON REDEMPTION OF OUR CONVERTIBLE
SUBORDINATED DEBENTURES MAY SUBSTANTIALLY DILUTE THE INTERESTS OF
OTHER SECURITY HOLDERS
If there is a sharp decline in the price of our common stock, shareholders
could experience substantial dilution resulting from our redemption of
convertible subordinated debentures in common stock. We are registering
5,644,770 shares of common stock issuable under our 5% convertible subordinated
debentures and warrants issued to Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners. See the section entitled "Recent Financing Agreements"
beginning on page 19. Each month, we are required to redeem at least $500,000 of
our 5% convertible subordinated debentures. We may elect to issue shares of our
common stock in lieu of making a cash payment. If we so elect, the redemption
price will be the lesser of $2.967 and 90% of the average of the 12 lowest daily
volume weighted average prices, ignoring the highest and the lowest volume
weighted average prices, of our common stock during the 22 business days
immediately preceding the redemption date. If we fail to make the mandatory
redemptions in cash and if our stock price significantly declines, we could
potentially be obligated to issue up to approximately 20% of our outstanding
common stock in redemption of the debentures, provided that during any rolling
consecutive 60 day period, we are not required to issue an amount of shares that
would result in any holder of our convertible subordinated debentures holding
more than 9.9% of our outstanding common stock.
8.) WE HAVE LIMITED PRODUCTION CAPACITY IN OUR JENA AND XTAL FACILITIES
AND NEED TO EXPAND OUR PRODUCTION FACILITIES AND TO INCREASE
PRODUCTIVITY TO MEET OUR CONTRACTUAL OBLIGATIONS AND TO MAINTAIN
PROFITABILITY.
The failure to expand our capacity could prevent us from maintaining
profitability and from achieving expected market share. Our Jena facility (which
until our June 2000 acquisition of Xtal FiberCore, S.A. was our only facility
for the manufacture of optical fiber and optical fiber preform) is currently
operating at full capacity while we are managing our production volumes at the
Xtal facility to match current demand requirements. At our current capacity, the
Jena facility and the Xtal facility, while meeting current demand, cannot
produce sufficient quantities to satisfy our existing long-term customer orders
and requests for product. However, over the past year, worldwide prices for
single mode fiber have considerably weakened because of several factors,
including a significant reduction in demand resulting from an overbuild of
long-haul fiber optic cable, primarily in North America, and the weakening
Japanese Yen. Given the current market conditions, we are pacing our expansions
to coordinate with anticipated industry turnaround, projected by industry
sources to occur toward the end of 2002 or the beginning of 2003. To meet this
need, we have completed construction of our new manufacturing facility in Jena,
which has been
10
fully financed, within budget. The new plant began operations during the first
quarter of 2002, as planned, with all equipment scheduled to be operational by
mid-year. However, we are susceptible to equipment installation delays or
problems and the risk of an initial decrease in production yields. A second
phase of the expansion of our Jena facility, scheduled to begin production later
in 2002 and in early 2003, has an estimated cost of $25,000,000. The financing
of the expansion for which we have received a financing commitment, and which is
expected to be finalized by June 2002, will be essentially the same as the
financing arrangement completed in early 2001. Our equity contribution is
estimated at $6,000,000, of which approximately $3,500,000 will be required in
2002 and the balance in 2003. Of the $3,500,000 requirement, $1,800,000 has
already been contributed to FiberCore Jena. In addition, we have already
purchased a building adjacent to our new Jena facility that will be used for
production of glass tubes using our recently patented POVD process, which is
expected to increase productivity and improve margins. In December 2001, we
received a financing commitment, for the first phase of the project, an
estimated $7,000,000 for equipment. Approximately $5,000,000 consists of bank
loans and grants from agencies of the German Government, using the same
financing format as our previous German financings. FiberCore has provided the
remaining $2,000,000. We expect the financing to be completed by the middle of
2002 and for implementation to begin toward the end of 2002.
At our Xtal facility, like at our Jena facility, we are adding equipment,
although at a slower pace than initially planned due to the weakened single-mode
fiber market and delays in our ability to obtain local financing. However, we
expect to continue to add equipment that increases manufacturing efficiency.
We expect FiberCore Africa and FiberCore, U.S.A., Inc. our other planned
facilities, to be on-line and providing additional capacity by mid 2003 and by
early 2004, respectively. Other areas of expansion include Thailand, China, and
Malaysia, which are proceeding at a slower pace than our expansion activities in
Germany, Brazil, and the United States until the fiber markets and capital
markets improve and/or suitable financing becomes available. Nevertheless, our
goal remains to manage our expansion so as to keep pace with market conditions.
As with any expansion or new facility, we are exposed to risk associated
with operating inefficiencies that can accompany the start-up of a new or
expanded manufacturing facility and are subject to the risk that adequate
equipment and personnel will not be available to operate the new facility.
Delays or problems in implementing our capacity expansion and/or manufacturing
efficiency plans could have a material adverse effect on our business, results
of operations or financial condition.
9.) OUR PLANS TO EXPAND THROUGH ACQUISITIONS COULD LEAD TO SIGNIFICANT
EXPENDITURES AND INTEGRATION COSTS, INCLUDING THE LOSS OF KEY
PERSONNEL, AND COULD STRAIN OUR MANAGEMENT, FINANCIAL, AND
OPERATIONAL RESOURCES.
We are currently undergoing a period of growth, both internally and
through acquisitions, and our expansion could entail significant expenditures
and integration costs that could strain our financial and human resources. If we
are unable to manage growth effectively, our business, financial condition, and
results of operations could be materially and adversely affected. In addition,
our results of operations would be adversely affected if sales do not achieve
growth sufficient to offset increased expenditures associated with expansion.
We may continue to pursue the acquisition of manufacturing facilities for
our core business and for new or complementary businesses, including individual
products or technologies, in an effort to expand capacity, enter new markets and
diversify our sources of revenue. We may not be able to successfully manage
growth through acquisitions. Acquisitions and expansions may require significant
additional expenditures, including integration and absorption costs, before we
are able to obtain any benefits of integration resulting from them. These
expenditures may strain management, financial and operational resources. We may
also lose key personnel from our operations or those of any acquired business.
Our ability to effectively manage our operations and growth requires us to
continue to improve our operational, financial and management controls,
reporting systems, and procedures and to attract and retain sufficient numbers
of talented employees.
Additionally, future acquisitions may also result in potentially dilutive
issuances of equity securities, the incurring of additional debt, the assumption
of known and unknown liabilities, the amortization of expenses related to
intangible assets and the impairment of goodwill, all of which could harm our
business, financial condition and operating results. Acquisitions in foreign
countries may pose additional problems, and we could experience inefficiencies
in conducting our business as we integrate new operations and manage
geographically dispersed operations. We may not succeed in hiring and retaining
qualified management, sales, customer support, and
11
technical personnel to integrate acquired operations, manage future growth
effectively, and accomplish our overall objectives. Competition for qualified
personnel is intense.
10.) WE ARE SUBJECT TO RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS,
INCLUDING POLITICAL AND ECONOMIC CHANGES IN THE COUNTRIES WE OPERATE
IN, WHICH COULD AFFECT OUR PROFITABILITY.
Economic, financial, and political changes could affect the conduct of our
business internationally, particularly at our German, Brazilian, and planned
South African facilities, thereby affecting the profitability of our business.
For example, we could be subject to unexpected changes in legislative or
regulatory requirements and fluctuations in the United States dollar, the
Brazilian real, the euro and other currencies in which we do business including
the South African rand. While we engage in foreign currency hedging
transactions, we do not attempt to eliminate all foreign currency risk from our
business. The business and operations of FiberCore Jena GmbH, Xtal FiberCore
Brasil, S.A., currently, and, in the future, FiberCore Africa are subject to the
changing economic and political conditions prevailing from time to time in
Germany, Brazil, and South Africa respectively. Further, our Malaysian joint
venture has been delayed, primarily because of delays in securing acceptable
local lender financing and from the corporate restructuring of one of the joint
venture partners. There is also the threat of regional conflict. For example,
Middle East Fiber Cable Company, 7% of which is owned by us, is headquartered in
Saudi Arabia and could be affected by local instability.
11.) WE ARE DEPENDENT ON A LIMITED NUMBER OF CUSTOMERS, THE LOSS OF WHOM
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS; WE MAY NOT BE
ABLE TO EXPAND OUR CUSTOMER BASE IN THE NEAR FUTURE.
While our customer concentration level has been steadily improving, we
continue to be dependent on relatively few customers for the majority of our
sales. Accordingly, we must continue to expand our customer base, but we may not
be successful in doing so. We are experiencing significant softening in the
South American market and have taken steps to offset this weakness by shifting
sales to other markets, by managing production levels to better match current
and expected near-term demand levels, and by shifting, to the extent possible,
production to multi-mode from single mode fiber, but we cannot assure the
success of our efforts.
Our dependence on Cabelte Cabos Electros SA, a significant Brazilian
customer, has subjected us to additional risk. During the third quarter of 2001,
Cabelte breached its purchase agreement by failing to make accounts receivable
payments of $3,200,000 and suspending shipments starting in July. Prior to July,
shipments to Cabelte were approximately $10,000,000, or about 19% of our total
sales in 2001. The cumulative effect of the breach, together with a lower demand
from other customers, had a negative impact on cash flow and resulted in an
increase in inventory levels, which caused us to reduce production levels at the
Brazilian facility. We have since reached a resolution with Cabelte. All
accounts receivables have been collected, and we expect shipments to resume in
the second quarter of 2002, but at a slower rate than as provided in the
settlement agreement due to continued weakness in the Brazilian single mode
fiber market. Because there can be no certainty as to the severity and the
duration of the current industry conditions, we are subject to the risk of
additional breaches by this and other customers, particularly in Brazil.
Accordingly, our revenues and operating results have been and are expected to be
materially and adversely affected by reductions in customer orders, which would
similarly affect cash flow.
Our backlog consists of purchase contracts and orders. Several of the
contracts, including the contract described above with Cabelte, contain "take or
pay" provisions and provide for periodic price reviews. While a "take or pay"
provision contractually obligates a customer to pay under the contract whether
or not the customer accepts shipment, we have elected to work with our
customers, on a case by case basis, given market conditions in the industry,
rather than take legal action. While we have increased our backlog volume over
the last several months by adding new orders, the increase has been more than
offset due to the effect of periodic price reviews amidst declining prices.
12
The following table lists the customers that accounted for more than 10%
of our sales for 1999, 2000, and 2001:
Percent of Sales
Customer 2001 2000 1999
-------- ---- ---- ----
Leone AG * * 24%
Pinacl Ltd.** * * 21%
Siemens AG*** * * 10%
Optical Cable Corp. * * 10%
Furukawa Industrial S/A * 11% *
Cabelte Cabos Electros SA 19.% 11% *
* indicates less than 10% for the year
** acquired by Tyco International Ltd. in 2001
*** acquired by Corning in 2001
12.) OUR DEPENDENCE ON THIRD-PARTY SUPPLIERS COULD RESULT IN OUR
INABILITY TO OBTAIN IN A TIMELY MANNER THE NECESSARY MATERIALS FOR
OUR BUSINESS.
Our dependence on third party suppliers, particularly Heraeus Quarz Glas
GmbH & Co. K.G., subjects us to the risk that we may not be able to timely and
efficiently obtain material essential to our business. We rely on outside
parties for the manufacture of our raw materials, including our principal raw
material, glass tubing. Accordingly, we are dependent on the capabilities of
these outside parties for the successful manufacture of their products.
Currently, we purchase over 95% of our required glass tubing from Heraeus. Early
in 2001, we entered into a five year supply contract with Heraeus. The contract
helps to ensure that we have a sufficient supply of glass tubes to meet existing
customer commitments. Under the contract, the supply of glass increases by over
50% in 2002, in-line with our anticipated customer needs. Quantities for years
2003 to 2005 will be set at a later date. To further complement our glass needs,
our patent was approved for using plasma in the manufacture of high-purity
synthetic glass as additional cladding material. We are in the process of
financing the initial production plant using this new technology, and expect
continuing improvements in our gross margins as and when the process is
implemented and further developed.
Xtal FiberCore Brasil, S.A., also has similar dependency on raw materials.
Xtal is highly dependent on Shin Etsu, a Japanese preform manufacturer who would
be a significant competitor if and when we began selling preform to third
parties, for over 50% of its preform requirements. Xtal FiberCore Brasil, S.A.
is in the process of re-negotiating its present contract with this preform
manufacturer, given the weakness in current market environment. At the same
time, Xtal is involved in an arbitration proceeding in Japan with Shin Etsu,
whereby Shin Etsu is alleging that Xtal breached a multi year supply agreement
by failing to take product as provided in the agreement. The amount of the
alleged breach is $4,400,000 worth of preform that Shin Etsu claims we were
obligated to purchase during the last half of 2001. During the arbitration
process, Shin Etsu has continued to ship product and agreed to continue doing
so. In addition, this supplier may not be able to satisfy our future
requirements and/or we may not be able to successfully re-negotiate our contract
and/or reach an acceptable arbitration resolution. As a result, we are planning
to increase our own preform production at Xtal.
Although we believe that the possibility of securing alternative suppliers
as well as our ability for glass manufacturing capability at our facilities in
Germany and Brazil should limit the risk, we may have problems in obtaining
glass tubing or other raw materials in the future. Our failure to obtain
sufficient glass and other raw materials could have a material adverse effect on
our business, results of operations, and financial condition.
13.) WE HAVE SUBSTANTIAL COMPETITION, AND SEVERAL OF OUR COMPETITORS HAVE
SIGNIFICANTLY GREATER RESOURCES THAN WE HAVE, ENABLING THEM TO
PROVIDE MORE COMPETITIVELY PRICED PRODUCTS; THIS COMPETITION COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR PERFORMANCE.
We are subject to intense competition, which could have a negative effect
on our performance. The optical fiber business is highly competitive, and there
are several competitors that have substantially greater resources than we do.
These competitors are providing, or are capable of providing, competitively
priced products that are similar to the products we produce. They may also
introduce new products that could directly compete with our products in all
markets. If these competitors were to aggressively target our market segment, we
could be materially adversely affected.
The competition for our multi-mode fiber products is primarily composed of
Corning, Inc., Alcatel, and Lucent Technologies, Inc./SpecTran Corporation
(owned by Furukawa Electric of Japan) and Plasma Optical Fiber. While we believe
that there is limited competition in the sale of preforms to cable manufacturers
who draw their own fiber, we anticipate that competition will grow. The largest
preform competitor is Shin Etsu. Competition in the single-
13
mode fiber optic market is significantly more extensive than either the preform
or the multi-mode fiber markets. In that market, our primary competitors are
Corning, Inc. and Lucent Technologies, Inc. However, we are not active in the
U.S. single-mode market, which is currently experiencing a significant slow
down.
Our fiber optic products also compete with other existing products,
including products associated with copper wire and wireless communications. Over
the past two decades, optical fiber has successfully competed with copper wire.
Wireless communications depend heavily on a fiber optic backbone. Any
improvements in these competing products or the introduction of new competing
technologies may have a material adverse effect on our marketability and
profitability.
14.) THE OPTICAL FIBER INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGE,
AND OUR FAILURE TO INTRODUCE NEW OR ENHANCED PRODUCTS ON A TIMELY
BASIS COULD PREVENT OUR ABILITY TO ATTAIN OR SUSTAIN PROFITABILITY.
The failure to introduce new or enhanced products on a timely and cost
competitive basis could have a material adverse effect on our business, results
of operations and financial condition. Rapid technological advances and evolving
industry standards characterize optical fiber products. Any failure by us to
anticipate or respond adequately to technological developments or end user
requirements could damage our competitive position in the marketplace and reduce
our revenues and/or profits. Our ability to attain and maintain profitably
depends, in large part, upon our timely access to, or development of,
technological advances and the ability to use those advances to improve existing
products, develop new products and manufacture those products efficiently. We
may not be successful in these endeavors. Failure to adjust to technological
developments could have a material adverse effect on our business, results of
operations, and financial condition.
15.) WE ARE DEPENDENT ON KEY PERSONNEL, THE LOSS OF WHOM COULD AFFECT THE
SUCCESS OF OUR BUSINESS.
The loss of any of our key executives could have a material adverse effect
on our business. We do not have employment agreements with any of our executive
officers or key person life insurance on any officers or directors.
Our success depends, to a significant extent, upon the performance of our
key executive officers and key technical employees. Our future success will also
depend in large part upon our ability to attract and retain additional highly
skilled managerial, technical and marketing personnel. Because of recent and
rapid growth in the fiber optic industry, the demand for skilled personnel has
increased and the supply of qualified and experienced personnel may not
sufficiently rise to meet demand. In addition, we are a relatively small company
and our recruitment efforts must compete with those of larger and more
well-known competitors in our industry. We may not be successful in attracting
and retaining the necessary highly skilled personnel.
16.) WE ARE CONTROLLED BY A FEW INDIVIDUALS WHO COULD CONTROL OR STRONGLY
AFFECT THE VOTES OF SHAREHOLDERS FOR OUR DIRECTORS.
Several persons each own, on a fully diluted basis, over 5% of our common
stock and could influence the company's decisions. Dr. Mohd Aslami, our
President and Chief Executive Officer, beneficially owns 13.18%, Charles De
Luca, our Secretary, beneficially owns 8.64%, and Tyco International Ltd.,
through its wholly owned subsidiaries Tyco Electronics Corporation and Tyco
Sigma Ltd. owns 16.03%. These persons and Tyco International Ltd., acting alone
or together, could control or strongly affect the votes of shareholders for
directors of FiberCore. Although Tyco Electronics Corporation has entered into
an agreement restricting itself from exercising control over the election of
directors, and us generally, until May 2002, after the expiration of that
agreement, or upon amendment of that agreement, Tyco's ability to singly or
jointly become more involved in our corporate governance would be unrestricted.
In addition, Tyco International Group S.A. or TIGSA, an affiliate of Tyco
International Ltd., could gain control of our board of directors. TIGSA
guaranteed our obligations to Fleet National Bank under a $10,000,000 credit
facility between Fleet and us, dated as of December 20, 2000. Pursuant to the
Guarantor Indemnification Agreement between TIGSA, Dr. Mohd Aslami, Charles De
Luca, Steven Phillips (each a member of our board of directors), and us, dated
as of December 26, 2000, we issued one share of Series A Preferred Stock to
TIGSA. The certificate of designations governing the Series A Preferred Stock
enables TIGSA to effectively take control of our board of directors if there is
an event of default under the Guarantor Indemnification Agreement. Events of
default include our failure to timely pay TIGSA guarantee fees; our failure to
timely repay TIGSA if TIGSA is required to perform under its guaranty of our
obligations to Fleet; our failure to comply with specific covenants; the sale by
any
14
of Dr. Mohd Aslami, Charles De Luca or Steven Phillips during any 12 month
period after December 26, 2001 (until termination of the Guarantor
Indemnification Agreement) of more than 10% of the total number of shares each
owned or had the option to obtain during the 12 month period; our admission that
we or any of our subsidiaries cannot pay our debts as they become due; our
making an assignment for the benefit of any of our creditors; the commencement
of bankruptcy proceedings against us or our subsidiaries or the appointment of a
receiver or trustee over a substantial part of our or any of our subsidiaries'
assets, which have not been discharged within 60 days; or the acceleration of
our indebtedness or the indebtedness of any of our subsidiaries for borrowed
money in an outstanding principal amount of $2,500,000.
17.) OUR PATENTS AND PROPRIETARY RIGHTS COULD BE CHALLENGED, AND OUR
FAILURE TO PROTECT THEM COULD AFFECT OUR ABILITY TO COMPETE
EFFECTIVELY WITH OUR COMPETITORS.
If we fail to adequately protect our intellectual property, we could
experience a material adverse effect on our business, results of operations, and
financial condition. The steps taken by us to protect our intellectual property
may not be adequate to prevent misappropriation of our intellectual property and
others may develop competitive technologies or products. Furthermore, other
companies may independently develop products that are similar or superior to our
products or technologies, duplicate any of our technologies, or design around
the patents issued us. In addition, the validity and enforceability of a patent
can be challenged after its issuance. While we do not believe that our patents
infringe upon the patents or other proprietary rights of any other party and we
are unaware of any claim of patent infringement, other parties may claim that
our patents and manufacturing processes infringe upon their patents or other
proprietary rights. We may not be successful in defending against any claims of
infringement. Moreover, the expense of defending against those claims could be
substantial.
18.) WE HAVE NOT PAID DIVIDENDS AND DO NOT PLAN TO PAY DIVIDENDS IN THE
FORESEEABLE FUTURE.
We have never paid cash dividends on our common stock and we do not
anticipate paying any cash dividends in the foreseeable future. We intend to use
any future earnings to finance the growth and development of our business.
19.) WE HAVE GUARANTEED THE DEBTS OF OTHER COMPANIES AND WE COULD BE
LIABLE FOR DEBTS OVER WHICH WE HAVE NO CONTROL.
We could be liable for debts owed by third parties over whom we have no
control. Automated Light Technologies, Inc. is the primary guarantor of
approximately $200,000 in loan obligations of Allied Controls, Inc., a former
subsidiary of Automated Light Technologies, Inc., to the Department of Economic
Development for the State of Connecticut. The loan, which is due in 2006,
provides for monthly principal payments of $3,500 and interest at 1% per annum.
As of the date of this prospectus, Allied Controls, Inc. is current in its
payments to the Department of Economic Development.
In addition, we are a co-guarantor with other joint venture partners for
credit facilities provided by banks to Middle East Fiber Cables Co., a Saudi
Arabian joint venture. The assets of the joint ventures collateralize the credit
facilities. As of April 1, 2002, we were contingently liable with respect to
these loans in the amount of approximately $140,000.
20.) OUR COMMON STOCK IS TRADED ON A LIMITED MARKET AND IT HAS BEEN
SUBJECT TO FREQUENT SIGNIFICANT PRICE FLUCTUATIONS.
Our common stock is quoted on the Nasdaq SmallCap Market, and has been
subject to frequent significant price fluctuations. Furthermore, we must
continue to meet certain maintenance requirements in order for such securities
to continue to be listed on the Nasdaq SmallCap Market. If our securities are
delisted from the Nasdaq SmallCap market, investors' interest in our securities
could be reduced. Delisting could materially and adversely affect the trading
market and prices for our securities. A delisting could also trigger an event of
default under the terms of the convertible debt issued to Riverview Group, LLC,
Laterman & Co. and Forevergreen Partners, which, if unremedied, could trigger a
cross default on our credit agreement with Fleet National Bank. Events of
default could result in acceleration of the maturity of our debt to Riverview
Group, LLC, Laterman & Co. and Forevergreen Partners or Fleet, as the case may
be.
In addition, if our securities were to be delisted from the Nasdaq
SmallCap Market, and if the Company's net tangible assets do not exceed
$2,000,000, and if the Company's Common Stock is trading for less than $5.00 per
15
share, then the Company's Common Stock would be considered a "penny stock" under
federal securities law. Additional regulatory requirements apply to trading by
broker-dealers of penny stocks that could result in the loss of an effective
trading market for our securities.
Additionally, the trading prices of stocks traded on the Nasdaq SmallCap
Market have a tendency to be more volatile than the prices of stocks traded on
national exchanges. Our common stock has been subject to frequent significant
price fluctuations, due in part to speculative activity.
21.) OUR COMMON STOCK PRICE IS VOLATILE AND IT IS POSSIBLE THAT THE PRICE
OF OUR COMMON STOCK WILL DECLINE IN THE FUTURE.
The market for our common stock has been subject to wide fluctuations and
it is possible that the price of our common stock will decline in the future. We
believe these fluctuations are in response to variations in our anticipated or
actual results of operations, speculation and market conditions which may be
unrelated to our operating performance.
As of April 10, 2002, our officers and directors held 16,299,586 shares
and Tyco International Ltd. held 11,628,224 shares of the 61,589,533 shares of
common stock outstanding. If all of the common stock included in this offering
is sold, 13,276,623 additional shares of common stock will be registered under
the Securities Act, subject to the requirement of maintaining a current
prospectus for these additional securities. It is possible that the price of our
common stock will decline after the offering described in this prospectus is
priced into the market.
The following table reflects the high and low closing prices for our
common stock for the last three years:
PERIOD HIGH LOW
2002
1st quarter $2.98 $1.41
2001
4th quarter $3.14 $2.06
3rd quarter $6.35 $2.25
2nd quarter $7.09 $3.75
1st quarter $8.63 $3.56
2000
4th quarter $7.16 $2.19
3rd quarter $9.31 $4.41
2nd quarter $7.00 $2.81
1st quarter $11.00 $1.72
1999
4th quarter $2.13 $0.39
3rd quarter $0.69 $0.22
2nd quarter $0.36 $0.16
1st quarter $0.50 $0.13
While the significant fluctuation in the price for our common stock during
2000-2001 roughly tracks market trends in our industry and similar market
fluctuation in the future could negatively affect the stability of our stock
price, other companies within the industry have experienced price declines of as
much as 90%.
22.) WE ARE SUBJECT TO ENVIRONMENTAL REGULATIONS WORLDWIDE AND FAILURE TO
COMPLY WITH THESE REGULATIONS MAY RESULT IN FINES AND THE SUSPENSION
OF OUR OPERATIONS.
Our company is subject to environmental protection laws in both Jena,
Germany and Campinas, Brazil concerning the use, storage, and disposal of any
toxic and hazardous materials. Any failure to comply with these regulations may
result in the issuance of fines and the suspension of operations. Neither
FiberCore Jena GmbH nor Xtal FiberCore Brasil, S.A. has been cited in the past
for any environmental violations. Algar, S. A. has agreed to remedy any existing
violations associated with Xtal Fibras Opticas, S.A. at the time of our
acquisition of Xtal
16
FiberCore Brasil, S.A. and to indemnify us for any losses caused by any existing
violation until it is remedied. This indemnification is subject to the risk that
Algar may fail to perform due to illiquidity or other reasons. Algar's
indemnification is secured by their 10% shareholder interest in Xtal Fibras
Opticas, S.A. If we fail to meet environmental standards and comply with
applicable law, we could experience a material adverse effect on our business,
results of operations, or financial condition.
23.) WE ARE RESTRICTED FROM RELOCATING, SELLING OR LEASING TO OTHER
ENTITIES OUR JENA MANUFACTURING OPERATIONS AND WE MUST MAINTAIN A
MINIMUM LEVEL OF EMPLOYMENT OR WE MIGHT BE SUBJECT TO REPAYING
GRANTS RECEIVED FROM THE GERMAN GOVERNMENT.
We are subject to certain operating restrictions and requirements at our
facilities in Jena, Germany as a result of the financial grants provided to us
by German governmental entities. If we relocate, sell or lease the Jena facility
or equipment to others, or fail to maintain a minimum level of jobs of 157
employees after the current expansion is completed, we could be required to
repay 7,000,000 euros, the full amount of the grants received. We presently have
189 employees in Jena, and anticipate that we will hire approximately 110
additional employees when the new facility at Jena is fully operational. A
required prepayment of the grants could have a material adverse effect on our
business, results of operations, or financial condition.
DILUTION
The interests of current holders of our common stock will be diluted as a
result of the offering and the issuance of shares issuable to officers,
directors and affiliates upon the exercise of options, warrants and the
conversion of debt by such persons. At December 31, 2001 , prior to the
offering, the net tangible book value per share was $0.38. After the offering,
including shares that may be issued to officers, directors and affiliates upon
the exercise of options, warrants and the conversion of convertible debt, the
net tangible book value per share will be $0.59, resulting in an increase in the
net tangible book value per share of $0.21. The average weighted exercise price
for officers, directors and affiliates upon the exercise of options, warrants
and the conversion of convertible debt would be $0.94 per share compared to a
public offering price of $2.50 per share. The foregoing calculation does not
take into account the up to 4,200,000 shares of our common stock that we may
offer because we anticipate that the offering of those shares, if and when it
occurs, will be at the market and not have a dilutive effect.
FORWARD-LOOKING INFORMATION
This prospectus contains or incorporates forward-looking statements within
the meaning of the securities laws about recent events, business prospects and
product development which involve substantial risks and uncertainties. You can
identify these forward-looking statements by our use of the words "believes,"
"anticipates," "plans," "expects," "may," "will," "would," "could," "intends,"
"estimates" and similar expressions. We cannot assure that we will actually
achieve these plans, intentions or expectations. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the
forward-looking statements we make. We have included important factors in the
cautionary statements in this prospectus, particularly under the heading "Risk
Factors," that we believe could cause our actual results to differ materially
from the forward-looking statements that we make. The forward-looking statements
do not reflect the potential impact of any future acquisitions, mergers or
dispositions. We do not assume any obligation to update or revise any
forward-looking statement we make as a result of new information, future events
or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and other reports, proxy statements and other
documents with the Securities and Exchange Commission. You may read and copy any
document we file at the SEC's public reference room at Judiciary Plaza Building,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You should call
1-800-SEC-0330 for more information on the public reference room. Our SEC
filings are also available to you on the SEC's Internet site at
http://www.sec.gov.
This prospectus is part of a registration statement and does not contain
all of the information included in the registration statement. Whenever a
reference is made in this prospectus to any contract or other document of ours,
you should refer to the exhibits that are a part of the registration statement
or the prospectus supplement for a copy of the referenced contract or document.
17
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this prospectus
information that we file with the SEC in other documents. This means that we can
disclose important information to you by referring to other documents that
contain that information. The information incorporated by reference is an
important part of this prospectus, and information that we file with the SEC in
the future and incorporate by reference will automatically update and may
supersede the information contained in this prospectus. We incorporate by
reference the following documents:
o The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on December 5, 1996,
including any amendments or reports filed for the purpose of
updating our common stock description; and
o Our Annual Report on Form 10-K filed on April 1, 2002.
All documents that FiberCore will file with the SEC under the provisions
of Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
after the date of this prospectus and prior to the termination of any offering
of securities under this prospectus shall be deemed to be incorporated by
reference, and to be a part of this prospectus from the date such documents are
filed.
Each of these documents is available from the SEC's web site and at the
public reference rooms described above. You may also orally or in writing
request a copy of these documents, including exhibits, at no cost, by
contacting: Mr. Robert P. Lobban, Chief Financial Officer, FiberCore, Inc., 253
Worcester Road, P.O. Box 180, Charlton, Massachusetts 01501, telephone number
(508) 248-3900.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information.
We are not making an offer of the securities covered by this prospectus in
any state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of those documents.
RECENT FINANCING AGREEMENTS
AGREEMENTS WITH CRESCENT INTERNATIONAL LTD.
ORIGINAL CRESCENT FINANCING
On June 9, 2000, we entered into an agreement that allowed us to issue and
sell, and require Crescent International Ltd. to purchase upon our request,
equity and debt securities for consideration of up to $30,000,000
18
(minus applicable fees and expenses). Pursuant to the agreement, we issued to
Crescent $7.5 million in convertible debt which was later converted into
2,847,311 shares of our common stock, and 1,200,274 shares of our common stock
for proceeds of $3.5 million. The agreement enabled us to require Crescent to
purchase additional shares of our common stock for up to $19 million. In
connection with the transaction, we also issued to Crescent warrants, expiring
June 8, 2005, to purchase up to 500,000 shares of our common stock at an
exercise price of $4.374 per share. The agreement required us to register the
resale of the foregoing shares, and we so registered the resale in our
registration statement which became effective on September 29, 2000.
On August 20, 2001, we terminated our ability to require Crescent to
purchase shares under our June, 2000 agreement with Crescent and entered into a
new stock purchase agreement with Crescent. Specifically, the new stock purchase
agreement enables us to require Crescent to purchase shares of our common stock
for up to $19,000,000 (including the shares discussed below).
Pursuant to the stock purchase agreement, we issued to Crescent
o 661,625 shares of our common stock, issued to Crescent on August 22,
2001, for consideration of $3,000,000; and
o an additional 446,667 shares of our common stock, issued to Crescent
on October 26, 2001, for consideration of $1,000,000.
The net proceeds received by us from the foregoing issuance of our common
stock after adjustment for fees and amounts held were $3,880,000.
Under the stock purchase agreement with Crescent International Ltd., we
can obtain, subject to applicable fees and expenses and the terms and conditions
of the agreement, an additional $15,000,000 by selling shares of our common
stock to Crescent at various points in time, until December 31, 2002, unless our
Stock Purchase Agreement with Crescent is earlier terminated according to the
agreement's terms. Our agreement with Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners prohibits us from selling common stock to Crescent until
three months following the date on which the registration statement of which
this prospectus is part becomes effective. In addition, we may not require
Crescent to purchase shares of our common stock unless the resale of those
shares is registered pursuant to an effective registration statement.
Crescent has the right to assign its obligation to purchase shares of our
common stock to affiliates of Crescent with our consent, which we may not
unreasonably withhold. However, Crescent has informed us that it has no current
or future plans to assign its obligations.
TERMS OF ADDITIONAL SALES TO CRESCENT
Specifically, with regard to sale of shares of our common stock to
Crescent International Ltd., we can from time to time at our option and subject
to the limitations described in this prospectus and in the stock purchase
agreement, issue and sell shares of our common stock once every 20 trading days.
The aggregate maximum consideration that we may receive at, and the purchase
price applicable to, each sale to Crescent is determined as follows:
With respect to all sales of common stock to Crescent pursuant to the
stock purchase agreement made until Crescent has paid us additional
aggregate consideration of $6,000,000 for shares of our common stock:
o the maximum consideration would be equal to the lesser of: (i)
$2,500,000, and (ii) 7.5% of the total trading volume of our common
stock during the 20 trading day period immediately preceding the
date of our notice requiring Crescent to purchase, multiplied by the
applicable purchase price;
o the per share purchase price for our common stock would be equal to
the lesser of: (i) 90% of the volume weighted average price of our
common stock on the trading day immediately preceding the date of
our notice requiring Crescent to purchase, and (ii) 90% of the
average of the daily volume weighted averages for each of the 20
trading days immediately preceding the date of the notice.
With respect to the remaining $9,000,000 of common stock we may sell
Crescent pursuant to the stock purchase agreement:
19
o the maximum consideration would be equal to the lesser of: (i) twice
the average of the daily volume weighted average price multiplied by
the day's trading volume of our common stock during the 22 days
preceding the date of our notice requiring Crescent to purchase, and
(ii) $3,500,000;
o the per share purchase price would be equal to 93% of the average of
the three lowest consecutive daily volume weighted average priced
during the 22 trading day period preceding the date of our notice
requiring Crescent to purchase.
The closing market price for shares of our common stock on August 20,
2001, the day we entered into the agreement with Crescent, was $4.50 per share.
TERMINATION OF CRESCENT INTERNATIONAL LTD.'S OBLIGATIONS
Crescent International Ltd.'s commitment to provide the aforementioned
funds expires on December 31, 2002. We have the right to terminate the agreement
under which Crescent must purchase additional equity at any time upon 30 days'
written notice. Crescent has the right to terminate the agreement in the event
that we fail to perform specified obligations under that agreement.
LIQUIDATED DAMAGES
Crescent has waived liquidated damages of approximately $160,000 up to
April 20, 2002 which would otherwise have been payable pursuant to the stock
purchase agreement for failure to obtain timely registration.
Absent a further waiver from Crescent, we would be required to pay
Crescent liquidated damages if we fail to obtain the effectiveness of any
registration statement when required. The amount of liquidated damages is equal
to 2% of the aggregate purchase price paid by Crescent for securities that
should have been registered, for each calendar month and for each portion of a
calendar month, pro rata, after the date on which registration should have taken
place, until the registration statement of which this prospectus is a part
becomes effective. The aggregate purchase price of the securities we are
required to register on behalf of Crescent as of April 10, 2002, was $4,000,000.
In the event we would fail to maintain any required registration statement
effective for a period of time ending 180 days after the termination of
Crescent's obligation to purchase shares of our common stock, plus one day for
each day that we have failed to obtain or maintain effectiveness of the
registration statement, we would be required to pay Crescent liquidated damages
equal to 2% of the aggregate purchase price paid by Crescent for each calendar
month and for each portion of a calendar month, pro rata.
If we provide material non-public information to Crescent, Crescent is
contractually and legally prohibited from disposing of our common stock. If
within 120 days of Crescent's receipt of the information, the information has
not been disclosed to the public, we are required to pay Crescent liquidated
damages equal to 3% of the aggregate purchase price paid by Crescent for
securities that we are required to register for each calendar month and for each
portion of a calendar month, pro rata until the information becomes public.
RIGHT OF FIRST REFUSAL
Crescent International Ltd. has the right of first refusal on any proposed
sale by us of our securities in a private placement transaction exempt from
registration under the Securities Act of 1933, subject to certain terms and
conditions. We timely notified Crescent of our proposed sale of convertible
subordinated debentures and related warrants to Riverview Group, LLC, Laterman &
Co. and Forevergreen Partners, and Crescent notified us that it would not
exercise its right of first refusal with respect to such sale.
10% LIMITATION WITH RESPECT TO CRESCENT INTERNATIONAL LTD.
Under the terms of the transaction with Crescent International Ltd., the
number of shares to be purchased by Crescent or to be obtained upon exercise of
warrants held by Crescent cannot exceed the number of shares that, when combined
with all other shares of common stock and securities then owned by Crescent,
would result in Crescent owning more than 9.9% of our outstanding common stock
at any given point of time.
20
TERMINATION OF AGREEMENTS WITH GRUNTAL
On April 14, 2000, we entered into an agreement with Gruntal & Co., LLC
requiring Gruntal to work with us and our management to obtain financing,
prepare documents describing our business for use with prospective investors,
and provide us with assistance in entering into transactions.
Gruntal received fee compensation and warrants to purchase shares of our
common stock in connection with assistance provided in entering into agreements
with Crescent. Upon our requiring Crescent to purchase additional shares of our
common stock, we were obligated to issue additional warrants to Gruntal to
purchase a number of shares of our common stock equal to 6% of the aggregate
number of shares issued to Crescent. On December 29, 2000, we terminated the
April 14, 2000 agreement and entered into a new, one year agreement with
Gruntal, pursuant to which, among other things, we agreed to pay Gruntal
$500,000 and to issue a five year warrant for 100,000 shares, at an exercise
price of $5.00. Of the $500,000, $250,000 was paid on January 5, 2001 and
installments of $125,000 each were paid on March 31, 2001 and June 30, 2001. On
July 25, 2001, we agreed to extend certain provisions of the December 29, 2000
agreement, in return for services to be performed by Gruntal.
On February 7, 2002, in consideration of a $200,000 payment we made to
Gruntal, Gruntal released us from all our obligations under prior agreements
with Gruntal.
AGREEMENT WITH MERRILL LYNCH & CO.
In January of 2001, we engaged Merrill Lynch & Co. to act as our financial
adviser in connection with any proposed combination transaction or other
corporate transaction. In July 2001, we entered into an investment banking fee
arrangement, pursuant to which, we have paid Merrill $390,000 in fees as
placement agent for the $5,000,000 of 5% convertible subordinated debentures
sold on January 15, 2002 and the $1,000,000 to be sold upon the effectiveness of
this registration to Riverview Group, LLC, Laterman & Co. and Forevergreen
Partners.
AGREEMENTS WITH RIVERVIEW GROUP, LLC, LATERMAN & CO. AND FOREVERGREEN PARTNERS
On January 15, 2002, we entered into a purchase agreement with a group of
investors consisting of Riverview Group, LLC, Laterman & Co. and Forevergreen
Partners, pursuant to which we sold $5,000,000 of 5% convertible subordinated
debentures to the investors. The purchase agreement provides for our issuance to
the investors of an additional $1,000,000 of 5% convertible subordinated
debentures upon the effectiveness of the registration statement of which this
prospectus is a part. We also issued warrants to the investors and are required
to issue additional warrants in connection with a sale of additional convertible
subordinated debentures to the investors. Our agreements with the investors
require us to register the shares of our common stock issuable upon conversion
of the convertible subordinated debentures or exercise of the warrants sold to
the investors.
The purchase agreement also allows the investors to purchase at their
option, up to an additional $3,000,000 of convertible subordinated debentures
(to the extent that we have not required the investors to purchase convertible
subordinated debentures pursuant to the provision described in the next
sentence) at any time before January 15, 2003, if the average of the volume
weighted average trading prices for the 5 trading days prior to the investors'
notice to us requiring us to sell them additional debentures is greater than
$2.6973. In addition, at any time before January 15, 2003, we may require the
investors to purchase up to $3,000,000 of convertible subordinated debentures
(to the extent the investors have not purchased convertible debentures at their
option pursuant to the provision described in the preceding sentence) if the
average of the volume weighted average trading prices for the 5 trading days
prior to our providing the investors with notice requiring them to purchase
additional debentures is greater than $4.4505. The terms of these additional,
convertible subordinated debentures would be substantially the same as the terms
of the other subordinated debentures sold pursuant to our purchase agreement
with the investors (described below), except that the conversion price would be
determined by a market formula applied at the time of sale.
The convertible subordinated debentures bear interest at a fixed rate of
5% per annum, payable in semi-annual installments. The convertible subordinated
debentures issued on January 15, 2002 will mature on January 15, 2004. All other
convertible subordinated debentures issued pursuant to the purchase agreement
will mature two years from their date of issue.
The convertible subordinated debentures issued on January 15, 2002 may be
converted in whole or in part at any time but not more frequently than four
times per calendar month at the option of the holders into shares of our common
stock at a conversion price of $2.967. The closing price of our common stock on
January 15, 2002 was
21
$2.59. All other convertible subordinated debentures issuable pursuant to the
purchase agreement, including the debentures issuable upon the effectiveness of
the registration statement of which this prospectus is a part, would have a
conversion price equal to 110% of the average of the of the volume weighted
average trading prices for the 5 trading days immediately preceding the issuance
of the convertible subordinated debentures to be converted.
Our agreements with Riverview Group, LLC, Laterman & Co. and Forevergreen
Partners require us to perform mandatory redemptions of $500,000 per month of
the principal amount of the convertible subordinated debentures outstanding,
commencing on April 1, 2002. Once the registration of which this prospectus is a
part becomes effective, we may upon timely notice elect to pay all or part of
the monthly redemption in shares of our common stock. The number of shares
payable if we so elect would be equal to the portion of the redemption we elect
to pay in stock divided by 90% of a price calculated by selecting the 12 lowest
volume weighted average for our common stock during the 22 trading days prior to
redemption, disregarding the highest and the lowest volume weighted average
prices, and averaging the remaining 10. In the event we elect to pay all or part
of the $500,000 monthly principle redemption in shares of our common stock, the
holders of the convertible subordinated debentures may, at their election,
increase the principal amount of the convertible subordinated debentures we pay
in stock by up to 100% or reduce the amount by up to 50%. In the event the
holders so reduce the amount of principal we repay, the reduced portion will
become payable at the maturity of the debentures, unless redeemed earlier. The
Company was prepared to make the required mandatory prepayment on April 1, 2002,
but after discussions with the holders of the convertible subordinated
debentures, the Company and the holders agreed that the Company would make the
payment on or prior to the end of business on April 17, 2002. Such payment would
be without penalty or default, if timely made on April 17, 2002, provided that
the registration statement of which this prospectus is a part becomes effective
on or before June 1, 2002.
Provided that a registration statement registering the resale of the
shares issuable upon conversion of our outstanding convertible subordinated
debentures is effective, we may, at our option redeem all or part of the
outstanding balance on the convertible subordinated debentures in cash at face
value at any time before maturity, if we consummate a public offering of shares
of our common stock at an offering price that exceeds $4.405, or if the volume
weighted average price of our common stock exceeds $4.405 for a period of 20
consecutive trading days, and continues to exceed $4.405 during the period
(which must be at least 10 trading days) between the time we notify the holders
of our intent to so redeem and the time we actually redeem.
Events of Default under the debentures include our uncured failure to pay
principal or interest, our failure to timely issues shares of our common stock
to the investors where required, the assumption by a court or government agency
of custody or control of all or substantially all of our assets, the failure of
the registration statement of which this prospectus is a part to become
effective by June 1, 2002, the commencement of a bankruptcy case against us or
any of our subsidiaries, our default on the payment of indebtedness exceeding
$250,000 in the aggregate, or if our common stock is delisted from the Nasdaq
SmallCap Market and is not relisted on a comparable principal market. If an
Event of Default occurs, the investors may require us to redeem the outstanding
debentures at the greater of a 115% of the aggregate principal amount of
debentures outstanding and the market value of the shares that would be issuable
upon conversion.
WARRANTS ISSUED AND ISSUABLE TO RIVERVIEW GROUP, LLC, LATERMAN & CO. AND
FOREVERGREEN PARTNERS
On January 15, 2002, pursuant to our purchase agreement with the
investors, we issued warrants to purchase up to a total of 463,426 shares of our
common stock to Riverview Group, LLC, Laterman & Co. and Forevergreen Partners,
the investors who purchased our convertible subordinated debentures. The
warrants expire on January 15, 2006.
When issuing an additional $1,000,000 of convertible subordinated
debentures upon the effectiveness of the registration statement of which this
prospectus is a part, we are required to issue to the investors warrants to
purchase a number of shares of our common stock equal to $250,000 divided by the
average of the volume weighted average price for shares of our common stock on
each of the five trading days prior to our sale of the $1,000,000 of convertible
subordinated debentures, and the exercise price of the warrant would be equal to
such average. The warrants will expire on the fourth anniversary of their
issuance.
If and when we issue up to $3,000,000 of convertible subordinated
debentures to the investors before January 15, 2003 pursuant to the purchase
agreement as described above, upon each issuance we will be required to issue to
the investors warrants to purchase a number of shares of our common stock equal
to 25% of the principal amount of the convertible subordinated debentures being
sold, divided by the average of the volume weighted average price as reported by
Bloomberg L.P. for our common stock on each of the five trading days prior to
our sale of the
22
convertible subordinated debentures, and the exercise price of the warrant would
be equal to such average. The warrants would expire on the fourth anniversary of
their issuance.
The warrants issued to the investors provide for a cashless exercise only
in the event that the registration statement registering the resale of the
shares issuable upon exercise of the warrant have not been registered within one
year following the date the applicable warrant is issued.
ANTI DILUTION PROVISIONS IN SECURITIES ISSUED AND ISSUABLE TO RIVERVIEW
GROUP, LLC, LATERMAN & CO. AND FOREVERGREEN PARTNERS
All the warrants issued and issuable pursuant to the purchase agreement
contain volume weighted anti-dilution provisions. Accordingly, if we were to
sell shares of our common stock at a price lower than the exercise price of a
warrant or the conversion price of a convertible subordinated debenture issued
to the investors, we would be required to decrease the exercise price of the
warrant, or conversion price of the convertible subordinated debenture, as the
case may be, pursuant to a formula that takes into account the number of shares
we issue at a price below the original exercise price or conversion price.
REGISTRATION RIGHTS
We are required to register a number of shares of our common stock equal
to 200% of the shares of common stock that would be issuable if we were to
redeem the debentures issued on January 15, 2002 and issuable upon the
effectiveness of the registration statement of which this prospectus is a part,
at the mandatory redemption price (the price that governs our monthly
redemptions paid in shares of our common stock described above), as well as the
shares issuable upon exercise of warrants issued and issuable to Riverview
Group, LLC, Laterman & Co. and Forevergreen Partners.
LIQUIDATED DAMAGES
Our original agreements with the investors could have required us to pay
liquidated damages if we fail to timely file or obtain the effectiveness of the
registration statement of which this prospectus is a part by April 15, 2002, if
we fail to deliver shares certificates in a timely manner, and in other
circumstances described in our agreements with the investors and in the
convertible subordinated debentures. Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners have agreed to waive liquidated damages that the Company
would have accrued if the registration statement of which this prospectus is a
part does not become effective by April 15, 2002, provided that the registration
statement becomes effective by June 1, 2002, and the Company makes the mandatory
redemption, otherwise due on April 1, 2002, by the end of business on April 17,
2002.
The foregoing summary is subject to various other terms and conditions set
forth in our agreements with the investors and in the convertible subordinated
debentures.
SHAREHOLDERS AGREEMENT
In connection with our entering into the purchase agreement, three members
of our Board of Directors, Mohd Aslami, Charles De Luca, and Steven Phillips,
executed a voting agreement prohibiting each of them from selling more than
100,000 shares of our common stock personally owned by them at a price below
$2.967 until the registration statement of which this prospectus is a part
becomes effective.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of our common
stock being offered by the Selling Stockholders under this prospectus. We may
receive proceeds of up to $2,187,000 upon a full exercise of the incentive
warrant, issued to Crescent on June 9, 2000, to purchase up to 500,000 shares of
our common stock, although Crescent may perform a cashless exercise which would
not result in our receiving any proceeds from the exercise of the warrant.
Similarly, we may receive proceeds of up to $2,836,499(1) upon Gruntal's full
exercise of
- ----------
(1) Specifically, we could receive up to
o $1,171,800 upon the purchase of 300,000 shares of our common stock
at an exercise price of $3.906 per share;
23
warrants to purchase up to 790,811 shares of our common stock, although Gruntal
may perform a cashless exercise which would not result in our receiving any
proceeds. In addition, we may receive proceeds of up to $201,849 upon the full
exercise of warrants issued to Messrs. Drimer, Rebholz and Roennefahrt. Upon
full exercise of warrants held by Riverview Group, LLC, Laterman & Co. and
Forevergreen Partners to purchase in the aggregate up to 463,426 shares of our
common stock, we would receive $1,500,017.(2) Upon full exercise of warrants
issuable to Riverview Group, LLC, Laterman & Co. and Forevergreen Partners to
purchase in the aggregate up to 125,000 shares of our common stock, we would
receive $300,000.(3) If we fail to obtain the effectiveness of the registration
statement of which this prospectus is a part before January 15, 2003, Riverview
Group, LLC, Laterman & Co. and Forevergreen Partners may, under certain
conditions, perform a cashless exercise which would not result in our receiving
any proceeds from the exercise of the warrants. We intend to utilize the
proceeds of the exercise of the foregoing warrants, if any, for working capital
and general corporate purposes.
Holders of our securities have the right to request a "cashless" exercise
on approximately $5,600,000 of securities. In a cashless exercise, a holder may
use all or a portion of the "equity value" of the option or warrant being
exercised, or may surrender shares of common stock issuable upon exercise of the
option or warrants, to exercise the option or warrant without paying additional
money. The equity value of an option or warrant for this purpose is the
difference between the market value of our common stock on the date of the
exercise and the exercise price of the option or warrant.
Of the estimated $10,000,000(4) of proceeds, net of expenses, that we
would receive in the event we sold from sale of the up to 4,200,000 shares
registered for primary sale by us, we plan to use approximately $8,000,000 for
production and process improvement equipment, and $2,000,000 for working capital
and other corporate purposes.
We estimate that we need to obtain additional financing of approximately
$5,000,000 during the second half of 2002, primarily to fund planned process
improvements at our Xtal facility. In addition, we estimate that we need
financing commitments of approximately $17,000,000 by December 2002 to fund 2003
expenditures for our expansion plans in the United States and Brazil. This
financing is in addition to the current financing received and to be received
from the group of investors consisting of Riverview Group, LLC, Laterman & Co.
and Forevergreen Partners of $6,000,000 and the equity commitment from Crescent
International of $15,000,000 should we elect to draw on it. These additional
funds will also be used for general corporate purposes, including cash reserves.
The amount of additional financing required assumes the use of cash generated
from operations. Accordingly, if the level of cash generated from operations in
2002 and 2003 is less than expected, and/or we sell less than $15,000,000 of
shares to Crescent, we will need to obtain additional financing or slow down
and/or reduce the expansion program.
We may, however, change the allocation of these proceeds in response to
developments or changes that affect our business or industry. The lack of
improvement in industry dynamics, including primarily customer demand and price,
development of better technology, and/or a reduction in the ability to finance
the capacity and productivity expansion plans would probably prompt us to modify
our allocation of the proceeds of this offering. Depending upon the specific
event, funding for the projects would be scaled down, eliminated, or combined.
In addition, if borrowing opportunities on terms anticipated by us decrease for
whatever reason, we would have to raise funds by selling additional equity.
While we are committed to increasing productivity and expanding capacity, these
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o $ 131,220 upon the purchase of 30,000 shares of our common stock at
an exercise price of $4.374 per share;
o $354,000 upon the purchase of 121,399 shares of our common stock at
an exercise price of $2.916 per share;
o $319,701 upon the purchase of 125,654 shares of our common stock at
an exercise price of $2.5443 per share
o $119,946 upon the purchase of 47,260 shares of our common stock at
an exercise price of $2.538 per share
o $500,000 upon the purchase of 100,000 shares of our common stock at
an exercise price of $5.00 per share
o $179,832 upon the purchase of 39,698 shares of our common stock at
an exercise price of $4.53 per share; and
o $60,000 upon the purchase of 26,800 shares of our common stock at an
exercise price of $2.2388 per share.
(2) The warrants enable Riverview Group, LLC, Laterman & Co. and Forevergreen
Partners to purchase up to 463,426 shares of our common stock for a per share
purchase price of $3.2368.
(3) Assuming an exercise price of $2.40, based on a good faith estimate of the
applicable volume weighted average price used to calculate the exercise price
being $2.00. The exercise price is equal to 120% of the applicable volume
weighted average price.
(4) Assuming an offering price of $2.50 and expenses of $500,000.
24
undertakings will be implemented in a manner that keeps pace with both
prevailing capital market and industry conditions.
Pending use of the net proceeds for the above purposes, we plan to invest
these funds in short-term, investment grade, interest-bearing securities.
SELLING STOCKHOLDERS
Note: * indicates shares previously registered for resale in our
registration statement dated September 29, 2000, which is amended by the
registration statement of which this prospectus is a part.
CRESCENT INTERNATIONAL LTD.
Crescent International Ltd., a Selling Stockholder, acquired 2,087,870
shares of our common stock and may acquire an additional 500,000 shares of our
common stock being offered by Crescent in the following ways:
o through our issuance of 979,578 shares of our common stock to
Crescent pursuant to our agreements with Crescent dated June 9,
2000, (which agreement was replaced by our agreements with Crescent
dated August 20, 2001),(5)*
o upon exercise of a warrant issued on June 9, 2000, expiring June 8,
2005, to purchase 500,000 shares of our common stock at an exercise
price of $4.374 per share;*
o through our issuance of 661,625 shares of our common stock on August
22, 2001; and
o through our issuance of 446,667 shares of our common stock on
October 26, 2001.
Crescent has informed us that Mel Craw and Maxi Brezzi, respectively
Managing Director and Director of Crescent's investment advisor, GreenLight
(Switzerland) SA, have voting and investment control over our securities held by
Crescent. On February 12, 2002, Crescent and its investment advisor filed a Form
13G disclosing voting and investment control over such securities.
GRUNTAL & CO., LLC
We have issued warrants to Gruntal & Co., LLC to purchase up to 796,298
shares of our common stock, of which 790,811 shares remain unexercised.
Specifically, we issued warrants to Gruntal:
o on April 14, 2000, expiring April 13, 2005, to purchase 300,000
shares of our common stock at an exercise price of $3.906 per share;
*
o on June 9, 2000, expiring June 8, 2005, to purchase 30,000 shares of
our common stock at an exercise price of $4.374 per share; *
o on June 9, 2000, expiring June 8, 2005, to purchase 72,016 shares of
our common stock at an exercise price of $2.916 per share; *
o on June 26, 2000, expiring June 25, 2005, to purchase 54,870 shares
of our common stock at an exercise price of $2.916 per share, of
which 49,383 shares remain unexercised; *
o on December 29, 2000, expiring December 28, 2005, to purchase 47,260
shares of our common stock at an exercise price of $2.538 per share;
o on December 29, 2000, expiring December 28, 2005, to purchase
100,000 shares of our common stock at an exercise price of $5.00 per
share;
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(5) The 979,578 shares constitute all of the shares remaining from: our issuance
of 1,200,274 shares of our common stock to Crescent on June 9, 2000 and 685,871
shares of our common stock on June 26, 2000, and shares Crescent received when
Crescent converted all of the convertible debt we issued to Crescent.
25
o on January 11, 2001, expiring January 10, 2006, to purchase 125,654
shares of our common stock at an exercise price of $2.5443 per
share;
o on August 22, 2001, expiring August 21, 2006, to purchase 39,698
shares of our common stock at an exercise price of $4.53 per share;
and
o on October 25, 2001, expiring October 24, 2006, to purchase 26,800
shares of our common stock at an exercise price of $2.2388 per
share.
Gruntal & Co., LLC, a Selling Stockholder, may acquire the shares of our
common stock being registered for resale by Gruntal by the registration
statement of which this prospectus is a part, upon the exercise of warrants to
purchase up to 790,811 shares of our common stock.
Gruntal & Co., LLC is a broker dealer and therefore is considered an
underwriter with respect to the offering of the foregoing shares.
Gruntal & Co., LLC has informed us that Joseph Battipaglia, Executive Vice
President of Gruntal, has sole dispositive power over the securities issued to
Gruntal.
RIVERVIEW GROUP, LLC
Riverview Group, LLC may acquire up to 2,158,894 shares of our common
stock through our mandatory redemption(6) or 1,404,336 on conversion of the
$4,166,666 aggregate principal amount of convertible subordinated debentures
held by Riverview Group, LLC, and up to 386,188 shares of our common stock upon
exercise of warrants issued to Riverview Group, LLC. The warrants expire on
January 15, 2006, have an exercise price of $3.2368.
Riverview Group, LLC has informed us that Robert Williams, the Chief
Financial Officer of Riverview, has sole dispositive power over our securities
sold to Riverview.
LATERMAN & CO.
Laterman & Co. may acquire up to 215,889 shares of our common stock
through our mandatory redemption(7) or 140,444 shares upon the conversion of the
$416,667 aggregate principal amount of convertible subordinated debentures held
by Laterman & Co., and up to 38,619 shares of our common stock upon exercise of
warrants issued to Laterman & Co. The warrants expire on January 15, 2006, have
an exercise price of $3.2368.
Laterman & Co. has informed us that Bernard Laterman, the Managing Partner
of Laterman & Co., has sole dispositive power over our securities sold to
Laterman & Co.
FOREVERGREEN PARTNERS
Forevergreen Partners may acquire up to 190,108 shares of our common stock
through our mandatory redemption(8) or 140,444 shares upon the conversion of the
$416,667 aggregate principal amount of convertible subordinated debentures held
by Forevergreen Partners, and up to 38,619 shares of our common stock upon
exercise of warrants issued to Forevergreen Partners. The warrants expire on
January 15, 2006, have an exercise price of $3.2368.
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(6) The calculation assumes a mandatory redemption price of $1.93 (estimated in
good faith), which was the mandatory conversion price on February 11, 2002. The
conversion price of $2.967 is fixed.
(7) The calculation assumes a mandatory redemption price of $1.93 (estimated in
good faith), which was the mandatory conversion price on February 11, 2002. The
conversion price of $2.967 is fixed.
(8) The calculation assumes a mandatory redemption price of $1.93 (estimated in
good faith), which was the mandatory conversion price on February 11, 2002. The
conversion price of $2.967 is fixed.
26
Forevergreen Partners has informed us that Bernard Laterman, the Managing
Partner of Forevergreen Partners, has sole dispositive power over our securities
sold to Forevergreen Partners
We are registering the resale of 4,703,976 shares of our common stock by
Riverview, 470,397 shares by Laterman & Co. and 470,397 shares by Forevergreen
Partners because our agreements require us to register the resale of 200% of the
number of shares issuable upon our mandatory redemption of the convertible
subordinated debentures (the price that governs our monthly redemptions paid in
shares of our common stock described in the section entitled "Recent Financing
Agreements") (using the lower of the mandatory redemption price on January 15,
2002 and the date the registration of which this prospectus is a part is filed),
and 100% of the shares issuable upon exercise of warrants, issued and issuable
upon the effectiveness of the registration statement of which this prospectus is
a part. The mandatory redemption price for all the debentures, and the number of
warrants issuable in conjunction with the debentures to be issued upon the
effectiveness of the registration statement of which this prospectus is a part,
depend on a market based formula and cannot be presently determined. For
purposes of this prospectus, we have made a good faith estimate using the
assumptions in the preceding paragraphs, but have included a number of shares we
believe sufficient to enable redemption of the debentures into, and exercise of
warrants to purchase, registered shares of our common stock.
MARC DRIMER
In consideration of assistance provided in a private sale of our common
stock, we issued the following warrants to Marc Drimer to purchase a total of
16,558 shares of our common stock. Specifically:
o on May 16, 2000, expiring May 15, 2005, to purchase 15,000 shares of
our common stock at an exercise price of $3.20 per share;
o on September 14, 2000, expiring September 13, 2005, to purchase
1,000 shares of our common stock at an exercise price of $7.179 per
share;
o on September 18, 2000, expiring September 17, 2005, to purchase 558
shares of our common stock at an exercise price of $7.179 per share.
GUIDO ROENNEFAHRT
In consideration of assistance provided in a private sale of our common
stock, we have issued the following warrants to Guido Roennefahrt to purchase a
total of 20,057 shares of our common stock. Specifically:
o on May 16, 2000, expiring May 15, 2005, to purchase 18,500 shares of
our common stock at an exercise price of $3.20 per share;
o on September 14, 2000, expiring September 13, 2005, to purchase
1,000 shares of our common stock at an exercise price of $7.179 per
share;
o on September 18, 2000, expiring September 17, 2005, to purchase 557
shares of our common stock at an exercise price of $7.179 per share.
FELIX REBHOLZ
In consideration of assistance provided in a private sale of our common
stock, we have issued the following warrants to Felix Rebholz to purchase a
total of 16,557 shares of our common stock. Specifically:
o on May 16, 2000, expiring May 15, 2005, to purchase 15,000 shares of
our common stock at an exercise price of $3.20 per share;
o on September 14, 2000, expiring September 13, 2005, to purchase
1,000 shares of our common stock at an exercise price of $7.179 per
share;
o on September 18, 2000, expiring September 17, 2005 to purchase 557
shares of our common stock at an exercise price of $7.179 per share.
27
We have agreed to file a registration statement, of which this prospectus
is a part, to register the shares of the Selling Stockholders described above in
order to permit the Selling Stockholders to sell these shares from time to time
in the public market or in privately-negotiated transactions. We cannot
determine the actual number of shares of our common stock that we will issue
because of the variables discussed herein.
In general, it is possible that we may be required to register additional
shares of our common stock. See the "Risk Factors" subsection entitled
"Stockholders May Suffer Dilution From the Exercise of Options, Warrants and
Convertible Notes."
The following table sets forth the number of shares of our common stock
issued or issuable to the Selling Stockholders:
SELLING STOCKHOLDERS NUMBER OF SHARES OF NUMBER OF SHARES OF NUMBER OF SHARES OF
COMMON STOCK HELD COMMON STOCK HELD COMMON STOCK OFFERED
PRIOR TO COMPLETION AFTER COMPLETION OF ON BEHALF OF SELLING
OF OFFERING(9) OFFERING(10) STOCKHOLDERS
Crescent International Ltd. 2,587,870 0 2,587,870
Gruntal & Co., LLC, 790,811 0 790,811
William McCluskey,
Richard Serrano,
Derek Woodworth,
Mitchell Kosches,
Jack Schwartz(11) and
Maurice Sabogol
Riverview Group, LLC 4,703,976 0 4,703,976
Laterman & Co. 470,397 0 470,397
Forevergreen Partners 470,397 0 470,397
Marc Drimer 16,558 0 16,558
Guido Roennefahrt 20,057 0 20,057
Felix Rebholz 16,557 0 16,557
TOTAL: 9,076,623 0 9,076,623
The Selling Stockholders and we are not making any representation that any
shares covered by the prospectus will or will not be offered for sale or resale.
The Selling Stockholders reserve the right to accept or reject, in whole or in
part, any proposed offer for their shares. The shares offered by this prospectus
may be offered from time to time by the Selling Stockholders named above and by
us. In addition to the number of shares held by the Selling Stockholders,
Crescent may be required to purchase additional shares of our common stock for
up to $15,000,000.
MAXIMUM NUMBER OF SHARES ISSUABLE TO CRESCENT, GRUNTAL AND RIVERVIEW GROUP, LLC,
LATERMAN & CO. AND FOREVERGREEN PARTNERS
Under the terms of our agreement with Crescent, the number of shares to be
acquired by Crescent cannot exceed the number of shares that, when combined with
all other shares of common stock and securities then owned
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(9) Includes shares issuable upon conversion of convertible securities and
exercise of warrants, where applicable.
(10) Assumes Crescent and Gruntal will offer and sell all of the shares
registered by the registration statement of which this prospectus is a part.
(11) Each of the named individuals is an officer, member or employee of Gruntal
& Co. LLC to whom Gruntal may transfer the warrants issued to Gruntal.
28
by Crescent, would result in Crescent owning more than 9.9% of our outstanding
common stock at any given point of time.
The maximum number of shares of our common stock we may issue to Gruntal
upon exercise of warrants currently held by Gruntal is 790,811.
Under the terms of our agreement with Riverview Group, LLC, Laterman & Co.
and Forevergreen Partners, the number of shares to be received upon conversion
of the convertible debt held by any of the foregoing investor cannot exceed the
number of shares that, when combined with all other shares of common stock and
securities then owned by the converting investor, would result in that investor
owning more than 9.9% of our outstanding common stock at any given point of
time.
The maximum number of shares issuable to Riverview Group, LLC, Laterman &
Co. and Forevergreen Partners in the aggregate upon conversion of warrants is
463,426.
PRIOR RELATIONSHIPS BETWEEN SELLING STOCKHOLDERS AND THE COMPANY
We are not aware of any material relationship between us and Crescent
within the past three years other than as a result of our agreements with
Crescent described above and the ownership of the stockholders' shares.
We entered into agreements with Gruntal described above in the section
entitled "Recent Agreements." We are not aware of any material relationship
between us and Gruntal within the past three years other than as a result of our
agreements with Gruntal described above.
We entered into a purchase agreement with Riverview Group, LLC, Laterman &
Co. and Forevergreen Partners. We are not aware of any material relationship
between us and Riverview Group, LLC, Laterman & Co. and Forevergreen Partners
within the past three years other than as a result of our agreements with
Riverview Group, LLC, Laterman & Co. and Forevergreen Partners described above.
PLAN OF DISTRIBUTION
Of the 13,276,623 shares of our common stock offered by this prospectus,
we may sell 4,200,000 shares of our common stock in underwritten "at the market"
sales from time to time, or in privately negotiated transactions.
We are registering the remaining 9,076,623 shares of common stock offered
by this prospectus on behalf of the Selling Stockholders and their pledgees,
donees, transferees or other successors-in-interest, who may sell the shares
from time to time. We will not receive any proceeds from the sale of shares by
the Selling Stockholders.
The Selling Stockholders or their successors may sell all of the shares of
our common stock offered by this prospectus from time to time in transactions in
the over-the-counter market through Nasdaq SmallCap Market, on one or more other
securities markets and exchanges, or in privately negotiated transactions. They
may sell the shares offered by this prospectus at fixed prices, at market prices
prevailing at the time of sale, or at negotiated prices. The Selling
Stockholders may use any one or more of the following methods when selling the
shares offered by this prospectus:
o block trades in which a broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account;
o distribution on an exchange or automatic quotation system in
accordance with the rules of such market;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o privately negotiated transactions;
o short sales (except as contractually prohibited);
o transactions in which broker-dealers may agree with the Selling
Stockholders to sell a specified number of the shares at a
stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders have advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares. They have also advised us
29
that no underwriter or coordinating broker is now acting in connection with the
proposed sale of shares. The Selling Stockholders may enter into hedging
transactions with broker-dealers in connection with distributions of shares or
otherwise, subject to the terms of our agreements with the Selling Stockholders.
In such transactions, broker-dealers may engage in short sales of shares in the
course of hedging the positions they assume with the Selling Stockholders. The
Selling Stockholders also may sell shares short, subject to the terms of our
agreements with the Selling Stockholders, and redeliver shares to close out such
short positions. The Selling Stockholders may enter into option or other
transactions with broker-dealers that require the delivery of shares to the
broker-dealer. The broker-dealer may then resell or otherwise transfer such
shares pursuant to this prospectus.
The Selling Stockholder may from time to time pledge or grant a security
interest in some or all of the shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
Selling Stockholders to include the pledgee, transferee or other successors in
interest as Selling Stockholders under this prospectus. Broker-dealers or agents
may receive compensation in the form of commissions, discounts or concessions
from the Selling Stockholders. Broker-dealers or agents may also receive
compensation from the purchasers of shares for whom they act as agents or to
whom they sell as principals, or both. Compensation to a particular
broker-dealer might be in excess of customary commissions and will be in amounts
to be negotiated in connection with transactions involving shares.
Broker-dealers or agents and any other participating broker-dealers or the
Selling Stockholders may be deemed to be an "underwriter" within the meaning of
Section 2(11) of the Securities Act of 1933 in connection with sales of shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act of 1933. Because
the Selling Stockholders may be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933, the Selling Stockholders will be
subject to the prospectus delivery requirements of the Securities Act of 1933
and the rules and regulations under their act.
The shares may be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act of 1934, any
person engaged in the distribution of shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days before the commencement of such distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act of 1934 and the associated rules and regulations under the Exchange Act of
1934, including Regulation M, which provisions may limit the timing of purchases
and sales of shares of our common stock by the Selling Stockholders. We will
make copies of this prospectus available to the Selling Stockholders and have
informed them of the need for delivery of copies of this prospectus to
purchasers at or prior to the time of any sale of the shares.
To the extent required, we may amend or supplement this prospectus from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate in the resales.
We will file a supplement to this prospectus, if required, pursuant to
Rule 424 under the Securities Act of 1933 upon being notified by the Selling
Stockholders that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or
dealer. Such supplement will disclose:
o the name of each Selling Stockholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus; and
o other facts material to the transaction.
30
We will bear all costs, expenses and fees in connection with the
registration and sale of the shares other than selling commissions and fees and
stock transfer taxes. The Selling Stockholders will bear all commissions and
discounts, if any, attributable to the sales of the shares. We have also agreed
to indemnify the Selling Stockholders against liabilities based on any untrue or
alleged untrue statements of material fact in this prospectus or the related
registration statement or on any omission or alleged omission of a material fact
required to be included in this prospectus or the registration statement or
necessary to make the statements herein and therein not misleading. We will not
be required to provide indemnification to the extent any untrue or alleged
untrue statement was included, or an omission or alleged omission was made, as a
result of information furnished by the Selling Stockholders. The Selling
Stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act of 1933.
Any underwriter may engage in over-allotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Securities Exchange Act of 1934. Over-allotment involves sales in
excess of the offering size, which create a short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Any underwriter may make
short sales of shares of our stock and may purchase shares of our stock on the
open market to cover positions created by short sales. Short sales involve the
sale by the underwriters of a greater number of shares than they are required to
purchase in the offering. "Covered" short sales are sales made in an amount not
greater than the underwriters' "overallotment" option to purchase additional
shares in the offering. Any underwriter may close out any covered short position
by either exercising their overallotment option or purchasing shares in the open
market. In determining the source of shares to close out the covered short
position, any underwriter will consider, among other things, the price of shares
available for purchase in the open market as compared to the price at which they
may purchase shares through the overallotment option. "Naked" short sales are
sales in excess of the overallotment option. The underwriter must close out any
naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase the shares.
Similar to other purchase transactions, the underwriters' purchases to cover
short sales may have the effect of raising or maintaining the market price of
our stock or preventing or retarding a decline in the market price of our stock.
As a result, the price of our stock may be higher than the price that might
otherwise exist in the open market. If commenced, the underwriters may
discontinue any of these activities at any time.
DESCRIPTION OF CAPITAL STOCK
The following description of our common stock and preferred stock
summarizes the material terms and provisions of these types of securities. For
the complete terms of our common stock and preferred stock, please refer to our
Certificate of Incorporation and bylaws, which are incorporated by reference
into the registration statement, of which this prospectus is a part.
Under our Certificate of Incorporation, our authorized capital stock
consists of 100,000,000 shares of common stock, $0.001 par value per share, and
10,000,000 shares of preferred stock, $0.001 par value per share.
COMMON STOCK
As of April 10, 2002, 61,589,333 shares of our common stock were issued
and outstanding. All outstanding shares of our common stock are duly authorized,
validly issued, fully paid and non-assessable. Please refer to the description
of our common stock contained in our registration statement on Form 8-A filed
with the SEC on December 5, 1996, including any amendments or reports filed for
the purpose of updating that section which is incorporated by reference into
this prospectus.
TRANSFER AGENT AND REGISTRAR
Interstate Transfer Company, 6804 S. 900 E. Suite 101, Salt Lake City,
Utah 84121 is the transfer agent and registrar of our common stock.
PREFERRED STOCK
Our Certificate of Incorporation authorizes our board of directors to
issue preferred stock in one or more series and to determine the voting rights
and dividend rights, dividend rates, liquidation preferences, conversion rights,
31
redemption rights, including sinking fund provisions and redemption prices, and
other terms and rights of each of these series
As of April 11, 2002, one share of our Series A Preferred Stock was
outstanding. The share was issued to Tyco International Group S.A. or TIGSA, an
affiliate of Tyco International Ltd. and could shift control of our board of
directors. TIGSA guaranteed our obligations to Fleet National Bank under a
$10,000,000 credit facility between Fleet and us, dated as of December 20, 2000.
Pursuant to the Guarantor Indemnification Agreement between TIGSA, Dr. Mohd
Aslami, Charles De Luca, Steven Phillips (each a member of our board of
directors), and us, dated as of December 26, 2000, we issued one share of Series
A Preferred Stock to TIGSA. The certificate of designations governing the Series
A Preferred Stock enables TIGSA to effectively take control of our board of
directors if there is an event of default under the Guarantor Indemnification
Agreement. Events of default include our failure to timely pay TIGSA guarantee
fees; our failure to timely repay TIGSA if TIGSA is required to perform under
its guaranty of our obligations to Fleet; our failure to comply with specific
covenants; the sale by any of Dr. Mohd Aslami, Charles De Luca or Steven
Phillips during any 12 month period after December 26, 2001 (until termination
of the Guarantor Indemnification Agreement) of more than 10% of the total number
of shares each owned or had to the option to obtain during the 12 month period;
our admission that we or any of our subsidiaries cannot pay our debts as they
become due; our making an assignment for the benefit of any of our creditors;
the commencement of bankruptcy proceedings against us or our subsidiaries or the
appointment of a receiver or trustee over a substantial part of our or any of
our subsidiaries' assets, which have not been discharged within 60 days; or the
acceleration our indebtedness or the indebtedness of any of our subsidiaries for
borrowed money in an outstanding principal amount of $2,500,000.
NEVADA ANTI-TAKEOVER LAWS
We are incorporated under the laws of the State of Nevada and are
therefore subject to various provisions of the Nevada corporation laws that may
have the effect of delaying or deterring a change in control or management of
us.
Nevada's "Combination with Interested Stockholders Statute," Nevada
Revised Statutes 78.411-78.444, which applies to Nevada corporations like us
having at least 200 stockholders, prohibits an "interested stockholder" from
entering into a "combination" with the corporation, unless specific conditions
are met. A "combination" includes:
o any merger with an "interested stockholder," or any other
corporation which is or after the merger would be, an affiliate or
associate of the interested stockholder,
o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets, in one transaction or a series of
transactions, to an "interested stockholder," having (i) an
aggregate market value equal to 5% or more of the aggregate market
value of the corporation's assets, (ii) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding
shares of the corporation, or (iii) representing 10% or more of the
earning power or net income of the corporation,
o any issuance or transfer of shares of the corporation or its
subsidiaries, to the "interested stockholder," having an aggregate
market value equal to 5% or more of the aggregate market value of
all the outstanding shares of the corporation,
o the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by the "interested
stockholder,"
o certain transactions which would have the effect of increasing the
proportionate share of outstanding shares of the corporation owned
by the "interested stockholder," or
o the receipt of benefits, except proportionately as a stockholder, of
any loans, advances or other financial benefits by an "interested
stockholder." An "interested stockholder" is a person who (i)
directly or indirectly owns 10% or more of the voting power of the
outstanding voting shares of the corporation or (ii) an affiliate or
associate of the corporation which at any time within three years
before the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the then
outstanding shares of the corporation.
A corporation to which the statute applies may not engage in a
"combination" within three years after the interested stockholder acquired its
shares, unless the combination or the interested stockholder's acquisition of
the
32
shares that caused the interested stockholder to become an interested
stockholder was approved by the board of directors before the interested
stockholder acquired those shares. If this approval was not obtained, then after
the three-year period expires, the combination may be consummated if all the
requirements in the Company's Certificate of Incorporation are met and either
o (i) the board of directors of the corporation approves, prior to the
person becoming an "interested stockholder," the combination or the
purchase of shares by the "interested stockholder" or (ii) the
combination is approved by the affirmative vote of holders of a
majority of voting power not beneficially owned by the "interested
stockholder" at a meeting called no earlier than three years after
the date the "interested stockholder" became one or
o the aggregate amount of cash and the market value of consideration
other than cash to be received by holders of common shares and
holders of any other class or series of shares meets the minimum
requirements set forth in Sections 78.411 through 78.443, inclusive,
and prior to the consummation of the combination, except in limited
circumstances, the "interested stockholder" will not have become the
beneficial owner of additional voting shares of the corporation.
The above provisions do not apply to corporations that so elect in a
charter amendment approved by a majority of the disinterested shares. Such a
charter amendment, however, would not become effective for 18 months after its
passage and would apply only to stock acquisitions occurring after its effective
date. Our Certificate of Incorporation does not exclude us from the restrictions
imposed by the above provisions.
Nevada's "Control Share Acquisition Statute," Sections 78.378 through
78.3793 of the Nevada Revised Statutes, prohibits an acquirer, in particular
circumstances, from exercising voting rights of shares of a target corporation's
stock after crossing specific threshold ownership percentages, except those
voting rights that are granted by the target corporation's stockholders.
SECURITIES AND EXCHANGE COMMISSION POSITION ON INDEMNIFICATION
Our by-laws provide for a broad right for indemnification for any person
who is or was involved in any manner in any threatened, pending, or completed
investigation, claim, action, suit, or proceeding by reason of the fact that the
person had agreed to become a director, officer, employee, or agent of our
company.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been informed that in the opinion of the Securities and Exchange
Commission this type of indemnification is against public policy as expressed in
the Act and is, therefore unenforceable. In the event that a claim for
indemnification against liabilities arising under the Securities Act of 1933
(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 any 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 the
submitted issue.
LEGAL MATTERS
The validity of the securities we are offering will be passed upon for us
by Lionel, Sawyer & Collins, Nevada.
EXPERTS
The financial statements incorporated in this prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 2001
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of Deloitte & Touche LLP, given upon
their authority as experts in accounting and auditing.
33
================================================================================
We have not authorized any person to
make a statement that differs from what
is in this prospectus. If any person
does make a statement that differs from
what is in this prospectus, you should
not rely on it. This prospectus is not
an offer to sell, nor is it seeking an
offer to buy these securities in any
state in which the offer or sale is not
permitted. The information in this
prospectus is complete and accurate as
of its date, but the information may
change after that date.
FIBERCORE, INC.
----------------------------------------
PROSPECTUS
----------------------------------------
April 12, 2002
================================================================================
34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated expenses in connection
with the offering described in the registration statement (all of which will be
borne by FiberCore).
Securities and Exchange Commission Fee $ 1,581
Accountants' Fees and Expenses* $15,000
Legal Fees and Expenses* $35,000
TOTAL* $51,581
- ----------
*estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The registrant's by-laws provide for a broad right for indemnification for
any person who is or was involved in any manner in any threatened, pending, or
completed investigation, claim, action, suit, or proceeding by reason of the
fact that the person had agreed to become a director, officer, employee, or
agent of our company. Section 78.751 of the Nevada Revised Statutes, as amended,
authorizes the registrant to indemnify any director or officer under prescribed
circumstances and subject to some limitations against costs and expenses,
including attorneys' fees actually and reasonably incurred in connection with
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, to which the person is a party by reason of being a director or
officer of the registrant if it is determined that the person acted in
accordance with the applicable standard of conduct set forth in such statutory
provisions.
The registrant may also purchase and maintain insurance for the benefit of
any director or officer, which may cover claims for which the registrant could
not indemnify the director or officer.
35
EXHIBIT LIST
EXHIBIT
NUMBER DESCRIPTION
2.1 Agreement dated February 13, 1987 between Norscan Instruments Ltd.
and ALT. (1)
2.2 Agreement and Plan of Reorganization dated as of July 18, 1995
between Venturecap, Inc. and FiberCore Incorporated. (1)
2.3 Agreement of Merger dated as of July 18, 1995 between Venturecap,
Inc. and FiberCore Incorporated. (1)
2.4 Agreement and Plan of Reorganization dated as of September 18, 1995
between the FiberCore, Inc. Alt Merger Co., and Automated Light
Technologies, Inc. ("ALT"). (1)
2.5 Investment Agreement, dated June 1, 2000, by and among FiberCore,
Ind. and Algar S.A. Empreendimentos e Participacoes Xtal Fibras
Opticas S.A. and Mamore Participacoes S.A. (2)
3.1 Certificate of Incorporation of FiberCore, Inc. (1)
3.2 Amended and Restated By-Laws of FiberCore, Inc. (9)
3.3 Amendments to Bylaws of Registrant, adopted December 18, 2000. (7)
3.4 Designations of Rights Privileges and Preferences of Series A
Preferred Stock of Registrant, dated as of December 19, 2000. (7)
4.1 Warrant issued to Gruntal & Co., LLC, dated April 14, 2000, to
purchase up to 300,000 Shares of FiberCore Common Stock. (5)
4.2 Warrant issued to Guido Roennefahrt, dated May 16, 2000, to purchase
18,500 Shares of FiberCore Common Stock at an exercise price of
$3.20 per share;
4.3 Warrant issued to Marc Drimer, dated May 16, 2000, to purchase
15,000 Shares of FiberCore Common Stock at an exercise price of
$3.20 per share;
4.4 Warrant issued to Felix Rebholz, dated May 16, 2000, to purchase
15,000 Shares of FiberCore Common Stock at an exercise price of
$3.20 per share;
4.5 Incentive Warrant, dated June 9, 2000, by and between FiberCore,
Inc. and Crescent International Ltd. (3)
4.6 Registration Rights Agreement, dated June 9, 2000, by and between
FiberCore, Inc. and Crescent International Ltd. (3)
4.7 Warrant issued to Gruntal & Co., LLC, dated June 9, 2000, to
purchase up to 30,000 Shares of FiberCore Common Stock. (5)
4.8 Warrant issued to Gruntal & Co., LLC, dated June 9, 2000, to
purchase up to 72,016 Shares of FiberCore Common Stock. (5)
4.9 Warrant issued to Gruntal & Co., LLC, dated June 26, 2000, to
purchase up to 54,870 Shares of FiberCore Common Stock. (5)
36
4.10 Warrant issued to Felix Rebholz, dated September 14, 2000, to
purchase 1,000 Shares of FiberCore Common Stock at an exercise price
of $7.179 per share;
4.11 Warrant issued to Marc Drimer, dated September 14, 2000, to purchase
1,000 Shares of FiberCore Common Stock at an exercise price of
$7.179 per share;
4.12 Warrant issued to Guido Roennefahrt, dated September 14, 2000, to
purchase 1,000 Shares of FiberCore Common Stock at an exercise price
of $7.179 per share;
4.13 Warrant issued to Guido Roennefahrt, dated September 18, 2000, to
purchase 557 Shares of FiberCore Common Stock at an exercise price
of $7.179 per share.
4.14 Warrant issued to Marc Drimer, dated September 18, 2000, to purchase
558 Shares of FiberCore Common Stock at an exercise price of $7.179
per share.
4.15 Revolving Credit Note executed by Registrant in favor of Fleet
National Bank, dated as of December 20, 2000. (7)
4.16 Warrant issued to Felix Rebholz, dated September 18, 2000, to
purchase 557 Shares of FiberCore Common Stock at an exercise price
of $7.179 per share.
4.17 Warrant issued to Gruntal & Co., LLC, dated December 29, 2000, to
purchase 47,260 shares of Shares of FiberCore Common Stock at an
exercise price of $2.538 per share;
4.18 Warrant issued to Gruntal & Co., LLC, dated December 29, 2000, to
purchase 100,000 shares of Shares of FiberCore Common Stock k at an
exercise price of $5.00 per share;
4.19 Warrant issued to Gruntal & Co., LLC, dated January 11, 2001, to
purchase 125,654 Shares of FiberCore Common Stock at an exercise
price of $2.5443 per share;
4.20 Warrant issued to Gruntal & Co., LLC, dated August 22, 2001, to
purchase 39,698 Shares of FiberCore Common Stock at an exercise
price of $4.53 per share;
4.21 Warrant issued to Gruntal & Co., LLC, dated October 25, 2001, to
purchase 26,800 Shares of FiberCore Common Stock at an exercise
price of $2.2388 per share.
4.22 Registration Rights Agreement among the Registrant, Riverview Group,
LLC, Laterman & Co. & Forevergreen Partners, dated as of January 15,
2002. (6)
4.23 Convertible Subordinated Debenture issued to Riverview Group, LLC,
dated as of January 15, 2002. (6)
4.24 Convertible Subordinated Debenture issued to Laterman & Co., dated
as of January 15, 2002. (6)
4.25 Convertible Subordinated Debenture issued to Forevergreen Partners,
dated as of January 15, 2002. (6)
4.26 Warrant to purchase 80,000 shares of the Registrant's common stock,
issued to Riverview Group, LLC, dated as of January 15, 2002. (6)
4.27 Warrant to purchase 53, 334 shares of the Registrant's common stock,
issued to Riverview Group, LLC, dated as of January 15, 2002. (6)
4.28 Warrant to purchase 252,854 shares of the Registrant's common stock,
issued to Riverview Group, LLC, dated as of January 15, 2002. (6)
4.29 Warrant to purchase 26,666 shares of the Registrant's common stock,
issued to Laterman & Co., dated as of January 15, 2002. (6)
37
4.30 Warrant to purchase 11,953 shares of the Registrant's common stock,
issued to Laterman & Co., dated as of January 15, 2002. (6)
4.31 Warrant to purchase 38,619 shares of the Registrant's common stock,
issued to Forevergreen Partners, dated as of January 15, 2002. (6)
4.32 Convertible Subordinated Debentures and Warrants Purchase Agreement
among the Registrant, Riverview Group, LLC, Laterman & Co. &
Forevergreen Partners, dated as of January 15, 2002. (6)
4.33 Promissory Note to Employees' Retirement Systems of Alabama, dated
December 31, 2001.
4.34 Promissory Note to Teachers' Retirement Systems of Alabama, dated
December 31, 2001.
5.1 Opinion of Lionel, Sawyer & Collins, dated as of April 12, 2002.
10.1 Agreement, dated May 19, 2000, by and between FiberCore, Inc. and
Tyco Electronics Corporation. (4)
10.2 Standstill Agreement, dated May 19, 2000, by and between FiberCore,
Inc. and Tyco Electronics Corporation. (4)
10.3 Securities Purchase Agreement by and between Crescent International
Ltd. and FiberCore, Inc., dated June 9, 2000. (2)
10.4 Loan Agreement, dated June 20, 2000, by and between Algar S.A.
Empreendimentos e Participacoes, FiberCore Inc., and FiberCore Ltda.
(2)
10.5 Loan Agreement, dated June 20, 2000, by and between Algar S.A.
Empreendimentos e Participacoes, FiberCore Inc., and FiberCore Ltda.
(2)
10.6 Loan Agreement between the Registrant and Fleet National Bank, dated
as of December 20, 2000. (7)
10.7 Limited Guaranty by Tyco International S.A., dated as of December
20, 2000. (7)
10.8 Pledge and Security Agreement between Registrant and Fleet National
Bank, dated as of December 20, 2000. (7)
10.9 Collateral Assignment of Patents and Trademarks and Security
Agreement between the Registrant and Fleet National Bank, dated as
of December 20, 2000. (7)
10.10 Guarantor Indemnification Agreement among Tyco International Group
S.A., the Registrant, Mohd Aslami, Charles DeLuca and Steven
Phillips, dated as of December 20, 2000. (7)
10.11 Stock Purchase Agreement between the Company and Crescent
International, Ltd., dated as of August 20, 2001. (8)
10.12 Registration Rights Agreement between the Company and Crescent
International, Ltd., dated as of August 20, 2001. (8)
10.13 Loan Agreement, dated as of December 31, 2001, between FiberCore
USA, Inc. and Employees' Retirement System of Alabama and Teachers'
Retirement System of Alabama.
10.14 Environmental Indemnity Agreement, dated as of December 31, 2001, by
FiberCore USA, Inc. in favor of Employees' Retirement System of
Alabama and Teachers' Retirement System of Alabama.
38
10.15 Option Agreement, dated as of December 31, 2001, between FiberCore
USA, Inc. and Industrial Development Board of the City of Auburn.
10.16 Security Agreement, dated as of December 31, 2001, between FiberCore
USA, Inc. and Employees' Retirement System of Alabama and Teachers'
Retirement System of Alabama.
10.17 Mortgage and Security Agreement between the Company and Employees
Retirement System of Alabama and Teachers' Retirement System of
Alabama, dated as of December 31, 2001.
10.18 Exhibit A to Alabama UCC-1 Financing Statement.
23.1 The Consent for Lionel, Sawyer & Collins is included in its opinion
in Exhibit 5.1.
23.2 Consent of Deloitte & Touche LLP.
24.1 Power of Attorney (included on signature page of this registration
statement).
- ----------
(1) Incorporated by reference to the exhibits to our Annual Report on
Form 10-K for the year ended December 31, 1996, filed with the
Commission on March 26, 1997.
(2) Incorporated by reference to the exhibits to our Current Report on
Form 8-K, filed July 3, 2000, as amended July 10, 2000.
(3) Incorporated by reference to the exhibits to our Current Report on
Form 8-K, filed June 15, 2000.
(4) Incorporated by reference to the exhibits to our Current Report on
Form 8-K, filed June 9, 2000.
(5) Incorporated by reference to the exhibits to our Registration
Statement on Form S-3, dated as of September 29, 2000.
(6) Incorporated by reference to the exhibits to our Current Report on
Form 8-K, dated as of January 17, 2002.
(7) Incorporated by reference to the exhibits to our Current Report on
Form 8-K, filed on January 10, 2001.
(8) Incorporated by reference to the exhibits to our Quarterly Report on
Form 10-Q, filed on November 14, 2001.
(9) Incorporated by reference to the exhibits to our Quarterly Report on
Form 10-Q, filed on November 14, 2000.
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 the registration statement of which
this prospectus is a part:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in the volume of securities offered (if the
total dollar 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 Securities and Exchange Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate
offering price set forth in the "Calculations of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to the information in the
registration statement.
Provided, however, that paragraphs (i) and (ii) above 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.
39
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of the securities in the post-effective
amendment 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 the purpose of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 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 the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
the registration statement of which this prospectus is a part in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration statement of
which this prospectus is a part as of the time it was declared effective.
(6) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of the securities at that
time shall be deemed to be the initial bona fide offering thereof.
(7) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been informed that in the
opinion of the Securities and Exchange Commission this type of
indemnification is against public policy as expressed in the Act and is,
therefore unenforceable. In the event that a claim for indemnification
against liabilities arising under the Securities Act of 1933 (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 any 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 the submitted issue.
40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused the registration
statement of which this prospectus is a part to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Charlton and Commonwealth
of Massachusetts on the 12th day of April, 2002.
FIBERCORE, INC.
By: /s/ Mohd A. Aslami
------------------------------------
Name: Dr. Mohd A. Aslami
Title: Chairman, Chief Executive
Officer and President
(Principal Executive Officer)
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of FiberCore, Inc., hereby
severally constitute and appoint Mohd A. Aslami and Robert P. Lobban and each of
them singly, our true and lawful attorneys with full power to any of them, and
to each of them singly, to sign for us and in our names in the capacities
indicated below the registration statement on Form S-3 filed herewith and any
and all pre-effective and post-effective amendments to said registration
statement, and any subsequent registration statement for the same offering or
for any additional offerings (as contemplated by the registration statement
filed herewith) which may be filed under Rule 415 or Rule 462, and generally to
do all that is necessary in our name and on our behalf in our capacities as
officers and directors to enable FiberCore, Inc. to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
registration statement and any and all amendments thereto or to any subsequent
registration statement for the same offering or for any additional offerings (as
contemplated by the registration statement of which this prospectus is a part
filed herewith) which may be filed under Rule 415 or Rule 462.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
Chairman, Chief Executive Officer and
/s/ Mohd A. Aslam President (Principal Executive Officer) April 12, 2002
- ------------------------
Dr. Mohd A. Aslami
/s/ Charles De Luca Secretary April 12, 2002
- ------------------------
Charles De Luca
/s/ Robert P. Lobban Chief Financial Officer and Treasurer April 12, 2002
- ------------------------
Robert P. Lobban
/s/ Steven Phillips Director April 12, 2002
- ------------------------
Steven Phillips
Director April 12, 2002
- ------------------------
Hedayat Armin-Arsala
Director April 12, 2002
- ------------------------
Javad K. Hassan
41
/s/ Michael Robinson Director April 12, 2002
- ------------------------
Michael Robinson
/s/ Charles De Luca Director April 12, 2002
- ------------------------
Charles De Luca
/s/ Mohd A. Aslami Director April 12, 2002
- ------------------------
Dr. Mohd A. Aslami
42