AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 2000
REGISTRATION NO. 333-95597
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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SPIGADORO, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3920210
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(State or other jurisdiction (I.R.S. Employer ID No.)
of Incorporation)
70 East 55th Street
24th Floor
New York, New York 10022
(212) 754-4271
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(Address and telephone number of Registrant's principal executive offices)
Jacob Agam
70 East 55th Street
24th Floor
New York, New York 10022
(212) 754-4271
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(Address and telephone number of agent for service)
Copies to:
Robert G. Minion, Esq.
Steven M. Skolnick, Esq.
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
(973) 597-2500
Approximate date of proposed commencement of sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please 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, check the following box and list the
Securities Act registration statement number of the earlier 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 for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
=======================================================================================================================
Proposed Proposed Maximum
Title of Each Class of Amount to Maximum Aggregate Aggregate Amount of
Securities to be Registered be Price per Offering Price Registration Fee(3)
Registered(1)(3)(4) Security(2)
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Common Stock, $.01 par value . 991,159 $2.7188 $2,694,763.09 $712*
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* Previously paid.
(1) Registered for resale by certain selling stockholders of the Company.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, based on the
average of the high and low price of the common stock on The American Stock
Exchange on January 24, 2000.
(3) 3,901,321 shares of common stock registered in this offering are carried
forward pursuant to Rule 429(b) and $6,889 constituting the amount of the
filing fees associated with such securities was previously paid in the
Company's Registration Statements (333-64111 and 333-71901).
(4) Also includes an indeterminate number of shares of common stock that may
become issuable to prevent dilution resulting from stock splits, stock
dividends and conversion price or exercise price adjustments, which are
included pursuant to Rule 416 of the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
Subject to Completion, Dated February 9, 2000
PROSPECTUS
SPIGADORO, INC.
4,892,480 shares of Common Stock
The selling stockholders listed on page 28 are offering for resale
4,892,480 shares of common stock owned by them. We will not receive any of the
proceeds from the sale of the shares by the selling stockholders. We may receive
proceeds from the exercise of options and warrants if selling stockholders
choose to exercise their options and warrants.
Our common stock is listed on The American Stock Exchange under the symbol
"SRO." On February 8, 2000, the last sale price of the common stock as reported
on The American Stock Exchange was $2 7/16 per share.
Investing in our common stock involves a high degree of risk. For more
information, see "Risk Factors" beginning on page 8.
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.
The date of this prospectus is ________, 2000
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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Table of Contents
PAGE
Prospectus Summary...................................................... 4
Risk Factors............................................................ 8
Note Regarding Forward-Looking Statements............................... 24
Use of Proceeds......................................................... 25
Selling Stockholders.................................................... 25
Plan of Distribution.................................................... 29
Legal Matters........................................................... 31
Experts................................................................. 31
Where You Can Find More Information..................................... 32
Incorporation of Certain Documents by Reference......................... 32
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PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus
or incorporated by reference in this prospectus. This summary does not contain
all of the information that you should consider before investing in our common
stock. You should read the entire prospectus carefully, including the "Risk
Factors" section and the financial statements and notes to those statements
incorporated by reference in this prospectus.
THE COMPANY
We produce and sell animal feed and pasta and flour products. Our animal
feed business produces animal feed for:
o industrial breeders, including specific lines for the nutrition of
dairy cows, beef cattle, pigs, rabbits, birds, sheep, goats and horses;
o family-owned breeding farms, including specific lines for the nutrition
of rabbits, sheep, goats, birds and horses; and
o domestic pets, including specific lines for the nutrition of
principally dogs and cats.
We offer over 600 animal feed products that are manufactured in our seven
facilities located in Italy. These products are marketed under the brand name
"Petrini" and sold in Italy through direct sales by us, through our independent
sales agents and through our franchised network of stores.
Our pasta and flour business produces traditional, specialty and health and
diet pastas, as well as flours for use by the bakery industry. Our pasta product
line consists of over 150 products which are primarily marketed under the brand
name "Spigadoro," including:
o long goods, such as spaghetti, linguine, fettuccine, angel hair and
lasagna; and
o short goods, such as penne, elbow macaroni, mostaccioli, rigatoni,
rotini, ziti and egg noodles.
We sell our pasta products directly and through independent sales agents
principally through two distribution channels:
o retail distribution which supply shops and supermarkets that sell our
pasta products to consumers; and
o food service distribution which supply restaurants, hotels, schools and
hospitals.
We sell our flour products directly and through independent sales agents to:
o major Italian food groups such as Nestle, Ferrero Plasmon and Bauli;
and
o small and medium sized bakeries for the production of cookies,
panenoni, pandori, pizzas and croissants.
Our pasta and flour products are manufactured at our facility located in
Perugia, Italy. By-products of our pasta and flour business are used as raw
materials for our animal feed products.
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Our pasta products are sold primarily in Italy and, to a lesser extent, in the
United States, Europe and Southeast Asia and our flour products are sold in
Italy.
We also market and distribute personal computers and personal computer
components, peripherals and software in Germany. However, as a result of our
acquisition of Petrini S.p.A. in December 1999, we sold all of the capital stock
of FSE Computer-Handel GmbH & Co. KG and FSE Computer-Handel Verwaltungs GmbH
owned by us in January 2000. The FSE entities were responsible for the marketing
of our high performance personal computers in Germany. We also intend to sell
Columbus Computer Handel and its affiliates. Columbus distributes personal
computer components, peripherals and software, as well as personal computers, in
Germany. We have commenced discussions relating to the sale of Columbus, but no
agreement has been reached with any party regarding the terms of a potential
transaction and we cannot predict whether we will be able to sell this business
on terms favorable to us or at all.
Our goals are to expand our markets by acquiring complementary businesses
and by increasing market share, to provide superior quality and customer service
and to reduce costs and improve operating efficiencies. We intend to achieve
these goals through the application of the following strategies:
Acquire Complementary Businesses. We intend to pursue a consolidation
strategy within our two core businesses. Although our initial focus will likely
be on Italy, we may seek acquisition candidates in the Mediterranean food and
animal feed sectors throughout Europe. Our acquisition criteria include
o the ability to increase our market share and customer base and allow us
to compete more effectively;
o the ability to achieve operating efficiencies through consolidation of
facilities, equipment, purchasing and personnel;
o the expansion of product lines, including the expansion of the food
division into other Mediterranean products that utilize similar
distribution networks and marketing strategies as pasta and which
comprise the popular and growing Mediterranean diet trend, such as
olive oil, tomato sauce, bread products and vinegar;
o increasing production and distribution capacity; and
o the ability to capitalize on the strength of our brand names.
Increase Market Share. We pursue opportunities to increase market share and
improve profitability through
o the expansion and rationalization of our product lines;
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o penetration into new, and expansion in existing, geographic markets,
including Europe, North America and the Asia/Pacific region, where we
believe the opportunities for growth and/or competitive conditions are
favorable;
o the development of opportunities to cross-market and bundle multiple
products to new and existing customers;
o the expansion of our Agripui franchising network; and
o increased marketing and advertising to elevate our profile in new
markets.
Reduce Costs and Improve Operating Efficiencies. In order to reduce our costs,
we intend to continually identify opportunities, and implement production and
capital investment strategies, designed to achieve lower-cost production of our
products. For example, since November 1998, we have been implementing the
recommendations of an efficiency plan conducted by an independent consulting
firm, which includes
o the consolidation of our animal feed production and the conversion of
less efficient plants into advanced warehouses;
o the reduction of overhead costs through streamlining management
processes and rationalizing personnel;
o investments in new production technology and process control equipment;
o rationalization of purchasing and use of raw materials; and
o tighter credit control and a reduction in the collection period for
receivables.
Capitalize on Brand-Name Recognition. We intend to capitalize on the success of
our well-recognized Spigadoro and Petrini brand names by extending those
trademarks to innovative or complementary new products, including new pasta and
food products, and product lines, including new products that may be acquired
through strategic acquisitions. We also intend to leverage the success of our
animal feed brand names, including AgriPiu, by extending our franchising network
in Italy which is currently comprised of 217 stores. We believe that our brand
names communicate product consistency and high quality.
We were incorporated in Delaware in September 1996. Our address is 70 East
55th Street, 24th Floor, New York, New York 10022 and our telephone number is
(212) 754-4271. Unless the context otherwise requires, "Spigadoro" refers to
Spigadoro, Inc., the Delaware corporation, and our subsidiaries, and "Petrini"
refers to Petrini S.p.A., an Italian corporation and wholly-owned subsidiary of
Spigadoro. Petrini produces and sells animal feed and pasta and flour products.
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THE OFFERING
Shares offered by the selling stockholders 4,892,480 shares
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders. We may receive proceeds from the exercise of options and
warrants if the selling stockholders choose to exercise their options and
warrants. See "Selling Stockholders" and "Plan of Distribution."
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RISK FACTORS
The following factors should be reviewed carefully, in conjunction with the
other information in this prospectus and our consolidated financial statements.
These factors could cause actual results to differ materially from those
currently anticipated and contained in forward-looking statements made in this
prospectus and presented elsewhere by our management from time to time. See
"--This prospectus contains forward-looking statements which may not prove to be
accurate or complete."
Company Risks
We have changed our principal business and we may not be successful operating a
new business.
Prior to our acquisition of Petrini, our sole business has been the
marketing and distribution of personal computers and personal computer
components, peripherals and software. The production and marketing of animal
feed and pasta and flour products is a new business for us and our management
group has limited experience operating this type of business. Although we have
retained the management personnel of Petrini, we cannot assure that we will be
able to continue to retain such individuals or that our management team will be
successful in managing this new business. If we are unable to successfully
operate this new business, our business and operating results will be materially
impaired.
If we do not successfully sell our existing computer business, the combined
company may be adversely affected.
We sold the FSE entities at a loss. We intend to sell our remaining
computer business. However, in the event we are unable to sell our computer
business, we would be subject to various risks relating to the operation of two
significantly different businesses including:
o the possibility that the business cultures of the two businesses may
not mesh;
o the possibility that management may be distracted from regular business
concerns by the need to integrate operations or operate the businesses
separately;
o difficulty in obtaining additional financing;
o problems in retaining employees;
o challenges in retaining customers;
o potential adverse effects on operating results; and
o unanticipated costs relating to the operation of each of the
businesses.
If we are unable to sell our remaining computer business and discontinue
these operations, we may incur costs and expenses relating to the
discontinuation of operations, the
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termination of some of our employees and the termination of certain contracts,
including our leases. These costs could reduce our available cash and our
profitability and could adversely affect our business and operating results.
We have commenced discussions relating to the sale of this business.
However, we have no agreements or arrangements for the sale of our remaining
computer business. We cannot assure that we will be able to sell this business
on terms favorable to us or at all or that there will not be substantial
unanticipated costs associated with such sale.
Vertical Financial Holdings and affiliated entities control Spigadoro.
Vertical Financial Holdings, one of the selling stockholders, and entities
affiliated with Vertical Financial Holdings, have the ability to vote or direct
the vote of approximately 54.9% of our outstanding common stock and will control
the actions that require stockholder approval, including:
o the election of our directors; and
o the outcome of mergers, sales of assets or other corporate transactions
or matters submitted for stockholder approval.
Jacob Agam, our Chairman of the Board and Chief Executive Officer, is also the
Chairman of the Board of Gruppo Spigadoro, N.V. and Vertical Financial Holdings
and some of its affiliated entities. Entities affiliated with Vertical Financial
Holdings have the power to vote approximately 90% of the shares of our common
stock owned by Gruppo Spigadoro. Gruppo Spigadoro or its assignee also has the
right to nominate up to a majority of the members for election to our Board of
Directors so long as Gruppo Spigadoro, its affiliates and Carlo Petrini, one of
our directors, continue to own, in the aggregate, a specified number of our
securities.
Because we are a holding company, our ability repay our indebtedness will depend
upon the level of our cash reserves, the distribution of funds from our
operating subsidiaries and our ability to obtain sufficient additional funds.
We are a holding company and substantially all of our operating results
will be derived from the operations of our operating subsidiaries and other
businesses that we may acquire in the future. In connection with the Petrini
acquisition, we assumed approximately $20 million of short term indebtedness,
approximately $12.5 million of which is convertible into shares of our common
stock. All of the assumed indebtedness will become payable during 2000. Our
ability to repay this indebtedness will depend on the level of our cash
reserves, including any proceeds from the sale of our personal computer
business, and the operating results of our operating subsidiaries and the
distribution of sufficient funds from these subsidiaries to us. The ability of
our operating subsidiaries to make such funds available to us may be restricted
by the terms of their indebtedness and by applicable law. If our available
working capital, together with any distributions from our subsidiaries, are not
sufficient to enable us to repay our indebtedness, we will be required to obtain
additional debt or equity financing for the repayment of this debt. One of the
promissory notes issued by us in the Petrini acquisition is denominated and
payable in Lire in the principal amount of 12,050,000,000 Lire or approximately
$6.4 million. Although the
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maximum amount payable by us under this note is capped at $7.0 million, the
amount to be paid by us under this note is subject to fluctuations in the value
of the Lire against the U.S. Dollar.
Our substantial debt may adversely affect our ability to obtain additional funds
and increases our vulnerability to economic or business downturns.
Our indebtedness as of September 30, 1999, on a pro forma basis after
giving effect to the Petrini acquisition, aggregated approximately $51.3
million. Accordingly, we are subject to the risks associated with substantial
indebtedness, including:
o we have less funds available for operations, future business
opportunities and other purposes;
o our ability to obtain additional financing to repay our debt and for
acquisitions, working capital, capital expenditures, general corporate
or other purposes may be impaired;
o it may be more difficult and expensive to obtain additional funds, if
available at all;
o we are more vulnerable to economic downturns, less able to withstand
competitive pressures and less flexible in reacting to changes in our
industry and general economic conditions; and
o if we default under any of our debt instruments or if our creditors
demand payment of a portion or all of our indebtedness, we may not have
sufficient funds to make such payments.
Any of these risks may materially adversely affect our operations and financial
condition and adversely affect our stock price.
A portion of our debt is secured by our assets. If we default under the
debt instruments secured by our assets, such assets would be available to the
creditor to satisfy our obligations to the creditor before any payment could be
made to our stockholders.
We experience fluctuations in our operating results which may cause our stock
price to fluctuate.
Our results of operations have fluctuated significantly in recent years and
may continue to fluctuate in the future. In 1998, Petrini's net sales decreased
by approximately 9.7% as compared to 1997. In 1997, Petrini's net sales
decreased by approximately 7.9% as compared to 1996. A number of factors have
caused and may continue to cause these fluctuations, including:
o price fluctuations for raw materials;
o demand for our products;
o increased marketing costs;
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o pricing and competition;
o the timing and scope of new customer and new product volumes;
o plant expansion or consolidation and equipment upgrade costs; and
o general economic conditions.
Any of these factors may adversely affect our business and financial
condition. Our results of operations for any past or interim periods may not be
indicative of our future performance.
Our operating results will be adversely affected by charges from acquisitions.
Because we plan to grow our business through acquisitions, we will likely
incur significant non-cash charges for depreciation and amortization as we
acquire additional businesses. These charges will adversely affect our results
of operations and may result in decreased net income or increased net loss. In
connection with our acquisition of Petrini, we incurred approximately $6.0
million of goodwill. We will amortize this goodwill over 20 years, which will
cause us to record in our financial statements an annual non-cash charge of
approximately $300,000. In addition, if we finance new acquisitions through
borrowings, we will also incur increased interest expense.
Our strategy of acquiring other companies for growth may not succeed and may
adversely affect our financial condition, results of operations and cash flows.
Our strategy of growth through acquisitions presents risks that could
materially adversely affect our business and financial performance, including:
o the diversion of our management's attention;
o the assimilation of the operations and personnel of the acquired
business;
o the contingent and latent risks associated with the past operations of
and other unanticipated problems arising in the acquired business;
o the need to expand management, administration, and operational systems;
and
o increased competition for acquisition opportunities and qualified
employees.
We cannot predict whether:
o we will be able to identify suitable acquisition candidates;
o we will be able to acquire additional businesses on terms favorable to
us or at all;
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o we will be able to successfully integrate into our business the
operations of any new businesses;
o we will realize any anticipated benefits of completed acquisitions; or
o there will be substantial unanticipated costs associated with new
acquisitions.
Because expansion of our operations will likely be predominately in
international markets, acquisitions could also involve risks relating to
operating in other foreign countries, including those relating to:
o management of remote operations;
o cultural incompatibilities;
o currency exchange rates; and
o additional legal, tax, accounting and regulatory requirements.
The failure to manage growth effectively may adversely affect our business
and financial condition. We are evaluating, and are in preliminary discussions
in connection with, the potential acquisition of assets or equity of businesses
related to our business. However, we have no agreements or arrangements with
respect to any particular acquisitions and we may not be able to complete any
additional acquisitions on terms favorable to us or at all. If we are unable to
acquire additional businesses, our growth may be reduced.
We intend to issue our securities in connection with future acquisitions.
If businesses we want to acquire will not accept our securities as payment of
all or a portion of the purchase price, we may be unable to make additional
acquisitions, except through the use of cash.
If we do not obtain sufficient additional funds our ability to grow through
acquisitions may be limited.
We will likely require additional funds for acquisitions and integration
and management of acquired businesses. We have no commitments or arrangements
for any additional funds. We cannot predict whether additional funds will be
available on terms acceptable to us or at all. If we cannot obtain funds when
required, the growth of our business may be adversely affected which could
materially adversely affect our financial condition. If we issue our securities
to obtain additional funds, or in our acquisitions, our existing stockholders
will experience dilution.
The loss of our key personnel may adversely affect our business.
Because we have a limited number of management personnel, we are dependent
on our executive officers, including Jacob Agam, our Chairman of the Board and
Chief Executive Officer, and Lucio De Luca, our Chief Operating Officer, as well
as other principal members of our management team and the management team at
Petrini. Mr. Agam will be providing services to us on a part-time basis. We
cannot assure that any of our management personnel, including
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Mr. Agam and Mr. De Luca, will continue to devote sufficient time to our
business. The loss of services of, or a material reduction in the amount of time
devoted to our business by these individuals could adversely affect our business
and financial condition. Competition for qualified executive officers is
intense. In addition, if we are unable to attract, retain and motivate other
highly skilled employees, our business, prospects and financial condition could
be materially adversely affected.
Because the seller of Petrini is a holding company, our ability to recover for
an indemnification claim under the stock purchase agreement may be limited.
Gruppo Spigadoro, the seller of Petrini, is a holding company whose assets
consist primarily of the shares of our common stock issued to it in the
acquisition. Gruppo Spigadoro is not restricted from distributing such shares to
its stockholders. If a claim for indemnification arises out of the stock
purchase agreement and Gruppo Spigadoro has transferred such shares to its
stockholders, Gruppo Spigadoro may not have sufficient assets to pay a claim for
indemnification. In addition, we may not be able to pursue claims against those
stockholders. As a result, a misrepresentation by Gruppo Spigadoro in the stock
purchase agreement may result in a material loss to us.
Industry Risks
Intense competition in the pasta and animal feed industries may adversely affect
our operating results.
We operate in a highly competitive environment and compete with numerous
well established national, regional and foreign companies, as well as many
smaller companies in:
o the production, marketing and distribution of animal feed and pasta and
flour products;
o the procurement of raw materials;
o the development and improvement of animal feed and the design of
optimal animal nutrition and genetic breeding programs; and
o the development, improvement and expansion of pasta and flour products
and product lines.
As compared to us, many of our competitors have:
o significantly longer operating histories and broader product lines;
o significantly greater brand recognition; and
o greater production capacity and financial, management and other
resources.
As a result, our competitors may be able to:
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o adapt more quickly to new or emerging production technologies and
product development;
o adapt more quickly to changing market conditions and customer
preferences;
o devote greater resources to the promotion and sale of their products;
and
o respond more effectively to competitive pressures.
Our competitive environment depends to a significant extent on the industry
capacity relative to demand for pasta and animal feed products. We believe that
the worldwide pasta and animal feed industries have significant excess
production capacity. This excess capacity has given rise to intense competition
for sales, often focused on product pricing. A variety of discount programs are
used by industry participants to obtain market share. The effect of such
competition has been to put pressure on profit margins and to involve us in
vigorous competition to obtain and retain product customers. Significant
industry capacity levels above demand for pasta and animal feed products may
materially adversely affect our business and financial condition.
Our direct competitors in our pasta business include Barilla, the industry
leader in Italy, as well as approximately 45 other Italian pasta producers. In
the United States, we also compete with:
o Large United States based multi-national companies such as:
o New World Pasta with brands such as San Giorgio(Registered Trademark)
and Ronzoni(Registered Trademark); and
o Borden, Inc. with brands such as Prince(Registered Trademark) and
Creamette(Registered Trademark); and
o Regional U.S. producers of retail and institutional pasta.
The animal feed industry is highly fragmented, with the bulk of the
industry consisting of national and regional competitors, including
cooperatives. We believe our largest competitors in Italy are:
o in Northern Italy: Purina Italia S.p.A., Raggio di Sole Mangimi S.p.A.
and Veronesi Finaziaria S.p.A.; and
o in Central-Southern Italy: Progeo S.c.a.r.l., F. lli Martini & C.
S.p.A. and Mignini S.p.A.
However, as animal breeders become larger they tend to integrate their
business by acquiring or constructing feed production facilities. As a result,
the available market for
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commercial feed may become smaller and competition may increase, which could
materially adversely affect our business and financial condition.
Our financial results may be affected by increases in the costs of raw materials
and packaging.
Our financial results depend to a large extent on the cost of raw materials
and packaging and our ability to pass along to our customers increases in these
costs. Historically, market prices for commodity grains and food stocks have
fluctuated in response to a number of factors, including:
o change in the agricultural policies of the European Community;
o changes in United States government farm support programs;
o changes in international agricultural and trading policies;
o weather conditions during the growing and harvesting seasons;
o level of international stocks in storage;
o currency fluctuations;
o shipping costs;
o speculations on commodities; and
o other factors over which we have no control.
Lower prices for durum wheat and the resulting semolina, when combined with
excess production capacity, has placed downward pressure on pasta prices and has
intensified competition in the pasta industry. In the event costs for raw
materials increase, we would be required to increase sales prices for our
products in order to avoid margin deterioration. However, because there is
significant competition in the pasta and animal feed industries in Italy, we may
not be able to increase prices without losing market share. If we are unable to
increase prices in response to increased raw material costs, our business and
financial condition may be materially adversely affected.
Our business may be adversely affected by, and we may be subject to legal
liability for, defects in our products.
The sale of food products for human consumption involves the risk of injury
to consumers and, to a lesser extent, the sale of animal feed products involves
the risk of injury to animals as a result of:
o tampering by unauthorized third parties;
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o product contamination or spoilage;
o the presence of foreign objects, substances, chemicals, and other
agents; or
o residues introduced during the growing, storage, handling or
transportation phases.
We cannot assure that consumption of our products will not cause a
health-related illness in the future or that it will not be subject to claims or
lawsuits relating to such matters. There can be no assurance that we will not
incur claims or liabilities for which we are not insured or that exceed the
amount of our insurance coverage.
We are dependent upon independent agents and distributors to market our
products.
We market and distribute a substantial portion of our products through a
network of independent agents and distributors and the loss of certain key
agents or distributors could adversely affect our business. In addition to our
products, the independent agents and distributors selling our products typically
sell other food products manufactured by third parties. The performance of our
agents and distributors is outside our control and we cannot predict whether
such agents and distributors will continue to market our products. If we are
unable to attract, retain and motivate other highly skilled agents and
distributors, our business could be materially adversely affected. In addition,
our arrangements with several of our agents are governed by a national
collective labor agreement. If we terminate any of these relationships, we would
be required to pay an indemnity which could, in the aggregate, be material to
our business.
Our business may be adversely affected by our dependence upon our suppliers.
We require a high volume of raw materials to produce our products Our
inability to obtain these raw materials in a timely manner could adversely
affect our business and financial condition. We do not have any long term
contracts with our suppliers. The availability of such raw materials is affected
by factors such as:
o demand for raw materials, including durum wheat;
o weather conditions during the growing and harvesting seasons; and
o political and economic downturns in the countries in which such
suppliers are located.
Our business may be adversely affected by the potential relocation of our
largest production facility.
Our largest plant for the production of animal feed and our only plant for
the production of pasta and flour may need to be relocated due to a rezoning of
the land on which these plants are located. These plants are located on land
owned by us in Bastia Umbra in a region of Italy called Regione Umbria. In 1996,
the municipality of Bastia Umbra initiated a rezoning proceeding to reclassify
this land as residential and public park space. The municipality has since
finalized its rezoning plan, which is now being considered by the government of
the Regione Umbria which must also approve the plan before it can become
effective. Unless the
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Regione Umbria amends the rezoning plan or we are able to appeal the decision,
we will be required to:
o terminate operations at this plant;
o possibly terminate the employees who work at this plant; and
o relocate these operations to a new location.
Although we do not expect a decision to be finalized in the near future and
would be compensated for the fair value of the property, relocation of these
operations to a new location could materially and adversely affect our business
operations and financial condition as a result of:
o operational problems;
o production interruptions;
o quality control concerns;
o delays in shipments; and
o costs and other risks associated with the relocation of these
operations and the possible hiring of new employees.
We are dependent upon third parties for the delivery of our raw materials and
products.
Our raw materials, including durum wheat and commercialized products, are
shipped to our production facilities from different collection centers by third
parties. Our finished products are then transported by third parties to our
customers in Italy and elsewhere. An extended interruption in our ability to
ship raw materials to our facilities, or finished products from our facilities,
could adversely affect our business and our financial condition. If we were to
experience an interruption due to strike, natural disasters or otherwise, we may
not be successful in transporting such materials or finished products in a
timely and cost-effective manner.
Our business may be adversely affected by an inability to successfully manage
our production and inventory.
Most of our customers use inventory management systems which track sales of
particular products and rely on reorders being rapidly filled by suppliers to
meet consumer demand rather than on large inventories being maintained by these
customers. These systems increase pressure on us to fill orders promptly and
thereby shift a portion of the customer's inventory management cost to us. Our
production of excess inventory to meet anticipated retailer demand could result
in markdowns and increased inventory carrying costs for us. In addition, if we
underestimate the demand for our products, we may be unable to provide adequate
supplies of products to retailers in a timely fashion, and may consequently lose
sales.
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Our business may be adversely affected by our limited proprietary rights or by
legal actions to enforce or defend our proprietary rights.
We hold trademarks that are of fundamental value and importance for our
business. Although these trademarks have been registered in Italy and certain
other countries in which our products are sold, we may not be able to prevent
misappropriation of our trademarks or protect our other intellectual property.
The laws of some foreign countries where we sell our products may not
protect our proprietary rights to the same extent as do laws in the United
States. Our inability to protect our proprietary rights could materially
adversely affect our operations which may adversely affect our financial
condition. Litigation also may be necessary to:
o enforce our intellectual property rights;
o protect our trademarks and other proprietary rights;
o determine the scope and validity of such intellectual property rights;
and
o defend claims of infringement of other parties' proprietary rights.
Litigation may not be successful, could result in substantial costs and
diversion of management time and resources and could materially adversely affect
our operations and our financial condition.
In the event a third party brings an infringement claim against us, such
party could secure a judgment awarding substantial damages, as well as
injunctive or other equitable relief. This relief could effectively block our
ability to make, use, sell, distribute or market our products. If we fail to
obtain a necessary license or other right to proprietary rights held by third
parties, it could preclude the sale, manufacture or distribution of our products
and could materially adversely affect our financial condition.
Our operations are subject to government regulations.
Many aspects of our operations are subject to government regulations in
Italy and the other countries within which we operate. Such regulations include
those relating to:
o the production, packaging, labeling and marketing of our products;
o price controls;
o currency conversion and repatriation;
o significant taxation of our earnings and earnings of our personnel;
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o manufacturing, environmental, safety and other regulations relating to
our operations and the industries in which we operate;
o restrictive labor policies; and
o our use of local employees and suppliers.
Our operations are also subject to the risk of changes in international,
national, foreign and local laws and policies that may impose restrictions on
us, including trade restrictions, that could have a material adverse effect on
our operations and financial condition. Other types of government regulation
which could, if enacted or implemented, materially and adversely affect our
business include:
o expropriation or nationalization decrees;
o confiscatory tax systems;
o primary or secondary boycotts or embargoes directed at specific
countries or companies;
o import restrictions or other trade barriers;
o mandatory sourcing rules; and
o high labor rate and fuel price regulation.
We cannot determine to what extent our future operations and earnings may
be affected by new legislation, new regulations or changes in or new
interpretations of existing regulations.
Risks Relating to Foreign Operations
Our business may be adversely affected by risks associated with foreign
operations.
Substantially all of our revenues are generated from operations in Italy
and, to a lesser extent, in 45 countries throughout the world. Conducting an
international business inherently involves a number of difficulties and risks,
such as:
o currency fluctuations;
o export restrictions;
o compliance with existing and changing regulatory requirements;
o tariffs and other trade barriers;
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o difficulties in staffing and managing international operations;
o cultural issues;
o longer payment cycles;
o problems in collecting accounts receivable;
o political instability and economic downturns;
o seasonal reductions in business activity in Europe during the summer
months; and
o potentially adverse tax consequences.
Any of these factors may materially adversely affect our business and
financial condition.
We are subject to a number of regulatory and contractual restrictions governing
our relations with our employees.
We are subject to a number of regulatory and contractual restrictions
governing our relations with our employees, including our management. Our
employment relations in Italy are governed by numerous regulatory and
contractual requirements, including:
o national collective labor agreements; and
o individual employer labor agreements.
These arrangements address a number of specific issues affecting our
working conditions, including:
o hiring;
o work time;
o wages and benefits; and
o termination of employment.
We will be required to make extraordinary or significant payments in order
to comply with these requirements. The cost of complying with these requirements
may materially adversely affect our business and financial condition. In
addition, our arrangements with several of our agents who market our products
are governed by a national collective labor agreement. In the event we were to
terminate any of these relations, we would be required to pay an indemnity which
could, in the aggregate, materially adversely affect our business and financial
condition.
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Our results of operations may be adversely affected by foreign currency
fluctuations and transition to the Euro.
Historically, a substantial portion of our revenues has been denominated in
the Italian Lire. Our results of operations are subject to fluctuations in the
value of the Italian Lire, and will be subject to fluctuations in the value of
the Euro against the U.S. Dollar and other currencies. Accordingly, fluctuations
in exchange rates could materially adversely affect our business and financial
condition.
On January 1, 1999, certain members of the European Union, including Italy,
introduced a single currency, the Euro. During the transition period ending
January 1, 2002, European Monetary Union (EMU) countries will have the option of
settling transactions in local currencies or in the Euro. We have not yet
determined when we intend to convert to the Euro. The conversion to the Euro
will result in increased costs to us related to updating operating systems,
review of the effect of the Euro on our contracts and updating catalogues and
sales materials for our products. In addition, adoption of the Euro will limit
the ability of an individual EMU country to manage fluctuations in the business
cycles through monetary policy.
Investors may not be able to enforce judgments against us or our officers and
directors.
Although we are organized under the laws of the State of Delaware, we are
primarily a holding company which primarily holds stock in entities outside the
United States and a substantial portion of our assets are located outside the
United States. In addition, six of our seven directors and all of our executive
officers are residents of foreign countries and all or a substantial portion of
the assets of such directors and officers is located outside of the United
States. As a result, it may not be possible for investors to:
o effect service of process upon most of our directors and officers; or
o enforce judgments of U.S. courts predicated upon the civil liability
provisions of U.S. laws against our directors' and officers' assets.
The market price of our common stock may be adversely affected by the
difficulty for investors to enforce judgments of U.S. courts.
Stock and Market Risks
Our stock may be delisted from The American Stock Exchange if we do not meet the
continued listing criteria.
We will be subject to the continued listing requirements of The American
Stock Exchange and if we are unable to satisfy any of these requirements, our
stock may be delisted from The American Stock Exchange. If our stock is delisted
from The American Stock Exchange, the liquidity of our stock could be impaired,
not only in the number of securities which could be bought and sold, but also
through delays in the timing of transactions, reduction in coverage by security
analysts and the news media and lower prices for our common stock than might
otherwise be attained.
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If our stock is delisted from The American Stock Exchange, trading, if any,
in our stock would thereafter be conducted:
o on the Nasdaq National Market or the Nasdaq SmallCap Market, assuming
we meet the requirements for initial listing on the Nasdaq National
Market or the Nasdaq SmallCap Market, some of which we may not
currently meet, including the minimum bid price requirement;
o on the National Association of Securities Dealers, Inc.'s "Electronic
Bulletin Board"; or
o the over the counter market in the "pink sheets."
If our stock was delisted from The American Stock Exchange and could not be
quoted on the Nasdaq National Market or the Nasdaq SmallCap Market, it could
become subject to Rule 15g9 under the Exchange Act, which imposes additional
sales practice requirements on broker-dealers which sell such securities to
persons other than established customers and "accredited investors" (generally,
individuals with net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses). For transactions covered by
this rule, a broker-dealer must make a special suitability determination for the
purchaser and have received the purchaser's written consent to the transaction
prior to sale. Consequently, such rule may adversely affect the ability of
broker-dealers to sell our common stock and may adversely affect the ability of
stockholders to sell any of the shares of common stock in the secondary market.
We do not intend to pay dividends to our stockholders.
We have not paid any cash dividends on our common stock and do not expect
to do so in the foreseeable future.
Future sales of our common stock in the public market could adversely affect our
stock price and our ability to raise new funds.
Sales of shares of stock by existing stockholders could have an adverse
effect on our stock price. As of January 25, 2000, we had 60,892,099 shares of
common stock outstanding, of which approximately 7,700,000 shares are eligible
for sale without restriction. The remaining shares are subject to the resale
provisions of Rule 144 and Rule 145 under the Securities Act of 1933. In
addition to the 4,892,480 shares of common stock being registered for resale by
the selling stockholders in this offering, we intend to register for resale the
48,366,530 shares of our common stock issued in the Petrini acquisition. As a
result, the market price of our common stock could decline as a result of sales
of substantial amounts of our common stock in the public market or the
perception that substantial sales could occur.
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Additional shares of our common stock may be issued if options or warrants are
exercised or our convertible promissory notes are converted, causing dilution to
our stockholders.
We have outstanding:
o warrants to purchase an aggregate of approximately 2,800,000 shares of
common stock;
o options to purchase approximately 920,000 shares of our common stock;
and
o convertible promissory notes outstanding which are convertible into
approximately 5,000,000 shares of our common stock at the conversion
price of $2.50 as of February 7, 2000. We cannot predict the actual
number of shares of our stock that may be issued upon conversion of
the notes, which depends on:
o the conversion price in effect from time to time during the term of
the promissory notes; and
o timing of any conversion.
The existence of these securities may adversely affect us or our
stockholders for many reasons, including:
o the market price of our stock may be adversely affected by the
existence of convertible securities;
o if any of these securities are exercised, the value of the stock held
by our stockholders will be diluted if the value of such stock
immediately prior to the exercise of such securities exceeds the
exercise price;
o these securities give the holders the opportunity, at nominal cost, to
profit from a rise in the market price of our stock; and
o the terms upon which we could issue additional common stock or obtain
additional financing may be adversely affected.
Holders of warrants and options are also likely to exercise them when, in
all likelihood, we could obtain additional capital on terms more favorable than
those provided by the warrants and options.
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Anti-takeover provisions may adversely affect our stockholders.
We are subject to a Delaware statute regulating business combinations that
could discourage, hinder or preclude an unsolicited acquisition of us and could
make it less likely that stockholders receive a premium for their shares as a
result of any such attempt. In addition, our Board of Directors may issue,
without stockholder approval, shares of preferred stock. The preferred stock
could have voting, liquidation, dividend or other rights superior to those of
the common stock. Therefore, if we issue preferred stock, your rights as a
common stockholder may be adversely affected. These factors could depress our
stock price.
We will record charges to operations in the event shares of our stock are
released from escrow.
498,285 shares of common stock were deposited in escrow pursuant to an
escrow agreement in connection with our initial public offering in March 1997.
These shares will be released from escrow to our stockholders who were
stockholders prior to our initial public offering, if, prior to March 31, 2000,
our common stock trades at certain levels for any 30 consecutive trading days.
In the event of the probable release of the escrow shares, we will
recognize during the period in which the specified revenue levels are probable
of being met or stock levels achieved, a substantial non-cash charge to
operations, equal to the then fair value of these shares. The position of the
Securities and Exchange Commission is that in the event any shares are released
from escrow to stockholders who are our officers, directors, employees or
consultants, we will record a non-cash compensation charge in our financial
statements. We cannot deduct this charge to operations for income tax purposes.
This charge would significantly reduce or eliminate earnings, if any, at such
time.
The recognition of this compensation expense may depress the market price
of our common stock. We cannot predict whether our stock price will attain the
targets that would enable the shares to be released from escrow.
This prospectus contains forward-looking statements which may not prove
to be accurate or complete.
This prospectus contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. We use forward-looking statements in our description of our plans and
objectives for future operations, assumptions underlying these plans and
objectives. Forward-looking terminology includes the words "may," "expects,"
"believes," "anticipates," "intends," "projects," or similar terms, variations
of such terms or the negative of such terms. These forward-looking statements
are based on management's current expectations and are subject to factors and
uncertainties which could cause actual results to differ materially from those
described in such forward-looking statements. We expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this prospectus to reflect any change in
our expectations or any changes in events, conditions or circumstances on which
any forward-
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looking statement is based. Factors which could cause such results to differ
materially from those described in the forward-looking statements include those
set forth under "Risk Factors."
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock by the selling stockholders named in this prospectus. We will receive
proceeds from the exercise of options and warrants. If all of the options and
warrants exercisable for shares of common stock being registered in this
offering are exercised, we would receive net proceeds of approximately $15.2
million. Holders of the options and warrants are not obligated to exercise their
options and warrants and we cannot assure that holders of the options and
warrants will choose to exercise all or any of the options or warrants.
We intend to use the estimated net proceeds received upon exercise of the
options and warrants, if any, for working capital and general corporate
purposes, including future acquisitions. We are evaluating and are engaged in
discussions in connection with the potential acquisition of assets or equity of
similar or complementary businesses. However, we have no agreements or
commitments for any particular acquisition and we cannot predict whether any
such acquisitions will be consummated.
SELLING STOCKHOLDERS
The shares are being registered to permit public secondary trading of the
shares, and the selling stockholders, or their pledgees, donees, transferees or
other successors-in interest, may offer all or any portion of the shares for
resale from time to time. See "Plan of Distribution."
Spigadoro has filed with the Commission under the Securities Act a
registration statement on Form S-3, of which this prospectus forms a part,
relating to the resale of the shares. We have agreed to pay expenses in
connection with the registration and sale of the shares being offered by the
selling stockholders. See "Plan of Distribution."
Agreements with the Selling Stockholders
In October 1996, we sold an aggregate of 1,780,303 shares of our Series A
Convertible Preferred Stock and warrants to purchase 1,780,303 shares of our
common stock to Vertical Financial Holdings and Behala Anstalt, Lupin Investment
Services, Ltd. and Henilia Financial Ltd., each an affiliate of Vertical, for an
aggregate purchase price of approximately $1.4 million. At the time of our
public offering in March 1997, all of the outstanding shares of Series A
Preferred Stock were converted into an equal number of shares of common stock.
Entities affiliated with Vertical have economic ownership of approximately
75% of the outstanding common stock of Gruppo Spigadoro, N.V. and have the power
to vote approximately 90% of the outstanding common stock of Gruppo Spigadoro.
Gruppo Spigadoro beneficial owns approximately 59.3% of our common stock. As a
result, Vertical and entities affiliated with Vertical have the ability to vote
or direct the vote of approximately 54.9% of our common stock. Jacob Agam, our
Chairman of the Board and Chief Executive Officer, is also Chairman of the Board
of Gruppo Spigadoro, Vertical and affiliates of Vertical.
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We have also been advised that Vertical owns equity interests in Behala
Anstalt, Lupin Investment Services and Henilia Financial, each of which is a
selling stockholder, and that Vertical has agreements with third party investors
in each of these selling stockholders. These equity interests and agreements
entitle Vertical to varying percentages of the profits resulting from the sale
of the shares of each of these selling stockholders. Under an agreement with
each of these selling stockholders, the trustee of each of these selling
stockholders has voting and dispositive power over the shares held by that
selling stockholder, although Vertical retains the right to appoint or terminate
the appointment of the trustee. We have also been advised that under an
agreement between Orida Capital and Vertical, Orida has the right to receive a
portion of the profits from the sale of the shares held by Vertical. Mr. Agam is
also the Chairman of Orida.
Under an agreement between us and Gruppo Spigadoro, we agreed that for so
long as Gruppo Spigadoro, or its current shareholders, their respective
affiliates and Carlo Petrini, one of our directors, collectively hold at least:
o 50% of the outstanding shares of our common stock, Gruppo Spigadoro or its
assignees will have the right to nominate 50% of the members for election
to our Board of Directors;
o 25% of the outstanding shares of our common stock, Gruppo Spigadoro or its
assignees will have the right to nominate 25% of the members for election
to our Board of Directors;
o 10% of the outstanding shares of our common stock, Gruppo Spigadoro or its
assignees will have the right to nominate a single member for election to
our Board of Directors.
In March 1997, we issued warrants to purchase an aggregate of 335,000
shares of common stock to Royce Investment Group, Inc. and Continental
Broker-Dealer Corp., underwriters in our initial public offering. At the time of
our initial public offering, Royce and Continental received underwriting
discounts and commissions of approximately $1.6 million and a non-accountable
expense allowance of $502,500. In February 1998, we granted options to purchase
10,000 shares of common stock to Value Management & Research (U.K.), Limited, as
consideration for financing services rendered to us in February 1998. In March
1998, we granted options to purchase 80,000 shares of common stock to Value
Management & Research S.A., Luxembourg, as consideration for financing services
rendered to us for the period from February 1998 through March 1999. These
options were subsequently transferred to Value Management & Research AG.
At various times from July 1997 through April 1998, we granted options to
purchase an aggregate of 195,000 shares of common stock to Andreas Beyer, Reiner
Hallauer and Arnold Wasserman. Mr. Beyer received his options as consideration
for investor relations services. Mr. Hallauer is the former Managing Director of
one of our subsidiaries and a former director of Spigadoro, and Mr. Wasserman is
a former director of Spigadoro.
In June 1998, we sold to JNC Opportunity Fund, Ltd.:
o $3,000,000 principal amount Series A Convertible Debenture due June 19,
2001; and
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o warrants to purchase 35,300 shares of our common stock.
In June 1998, we sold to JNC Strategic Fund, Ltd.:
o 198,255 shares of our common stock; and
o warrants to purchase 23,529 shares of our common stock.
In January 1999, JNC Strategic Fund exchanged its 198,255 shares of our common
stock for 2,000 shares of our Series B Convertible Preferred Stock. These shares
of preferred stock were converted by JNC Strategic Fund into 198,255 shares of
our common stock in December 1999.
The convertible debenture issued to JNC Opportunity Fund was convertible at
a fluctuating conversion price below fair market value. Under the debenture, JNC
Opportunity Fund had the right to accelerate the repayment of the debenture upon
the closing of the Petrini transaction. We entered into an agreement with JNC
Opportunity Fund in November 1999, under which JNC Opportunity Fund agreed not
to accelerate repayment of the debenture and agreed to fix the number of shares
of common stock issuable upon conversion of the debenture at 2,451,745. JNC
Opportunity Fund converted the debenture into an aggregate of 2,451,745 shares
of common stock in two transactions in November and December 1999. In December
1999, JNC Opportunity Fund transferred 870,947 shares of our common stock owned
by it to JNC Strategic Fund. JNC Opportunity Fund and JNC Strategic Fund have
agreed, subject to some exceptions, not to offer, sell, contract to sell or
otherwise dispose of any shares of our common stock until June 29, 2000; except
that the JNC entities can sell in the aggregate up to 50% of the shares of our
common stock owned by them at any time after March 29, 2000.
In the transaction with JNC Opportunity Fund and JNC Strategic Fund in June
1998, VTR Capital Markets, an advisor in such transaction, received warrants to
purchase 29,412 shares of common stock.
Based on information provided by each selling stockholder, the following
table lists:
o the name of each selling stockholder;
o the number of shares of common stock beneficially owned before the
commencement of the offering;
o the number of shares of common stock issuable upon exercise of warrants
and options;
o the number of shares of common stock offered for resale in this
offering; and
o the number of shares and percentage of common stock owned after this
offering, assuming the sale of all shares offered in this offering by
each selling stockholder.
All of the warrants and options are exercisable within 60 days of the date of
this Prospectus.
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Common stock beneficially
Number of shares of Number of Shares Number of Shares owned after the offering
Common Stock Issuable Upon Issuable Upon ------------------------
Selling Beneficially Owned Exercise of Exercise of Shares Being Number of Percent of
Security Holder Prior to the Offering Warrants Options Offered Shares Outstanding
--------------- --------------------- -------- ------- ------- ------ -----------
Value Management & 90,000 90,000 0 0
Research AG
Andres Beyer 25,000 25,000 0 0
Reiner Hallauer 8,561 50,000 58,561 0 0
Arnold Wasserman 95,000 95,000 0 0
Royce Investment 201,000 201,000 0 0
Group, Inc.
Continental 134,000 134,000 0 0
Broker-Dealer
Corp.
JNC Opportunity Fund, 1,580,798 35,300 1,616,098 0 0
Ltd.
JNC Strategic Fund, 1,069,202 23,529 1,092,731 0 0
Ltd.
VTR Capital Markets 29,412 29,412 0 0
Vertical Financial 890,152(1)(2) 690,152 890,152 690,152 (6) 1.1%
Holdings
Behala Anstalt 296,402(3) 296,402 296,402 296,402 (6) *
Lupin Investments 296,402(4) 296,402 296,402 296,402 (6) *
Services Ltd.
Henilia Financial Ltd. 67,722(5) 297,347 67,722 297,347 (6) *
- ----------------------
* Less than 1%
(1) Jacob Agam, our Chairman and Chief Executive Officer, is the Chairman of the
Board of Vertical. Vertical is owned of record by a trustee on behalf of members
of Mr. Agam's family. Mr. Agam disclaims beneficial ownership of the shares held
by Vertical.
(2) Includes 71,212 shares of common stock which are held in escrow but which
Vertical retains the power to vote. Excludes:
o 690,152 shares of common stock issuable upon exercise of warrants
beneficially owned by Vertical and exercisable within 60 days; and
o an aggregate of 739,351 shares of common stock and 890,151 shares of
common stock issuable upon exercise of warrants held by Behala Anstalt,
Lupin Investments Services and Henilia Financial. Vertical has the
right to receive a percentage of the proceeds from the sale of shares
by these selling stockholders.
(3) Includes 23,712 shares of common stock which are held in escrow but which
Behala Anstalt retains the power to vote. Excludes 296,402 shares of common
stock issuable upon exercise of warrants beneficially owned by Behala Anstalt
and exercisable within 60 days.
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(4) Includes 23,712 shares of common stock which are held in escrow but which
Lupin Investments Services Ltd. retains the power to vote. Excludes 296,402
shares of common stock issuable upon exercise of warrants beneficially owned by
Lupin Investments Services Ltd. and exercisable within 60 days.
(5) Includes 23,788 shares of common stock which are held in escrow but which
Henilia Financial Ltd. retains the power to vote. Excludes 297,347 shares of
common stock issuable upon exercise of warrants beneficially owned by Henilia
Financial Ltd. and exercisable within 60 days.
(6) Represents shares of common stock issuable upon exercise of warrants that
are exercisable within 60 days.
PLAN OF DISTRIBUTION
We have been advised that the selling stockholders, their pledgees, donees,
transferees or other successors-in-interest, may from time to time, sell all or
a portion of the shares in privately negotiated transactions or otherwise, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to these market prices or at negotiated prices.
The shares may be sold by the selling stockholders by one or more of the
following methods:
o block trades in which the broker or dealer so engaged will attempt to
sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o short sales;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
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In addition to being sold on The American Stock Exchange, the shares may
also be sold by the selling stockholders on the Freiverkehr in Frankfurt,
Berlin, Stuttgart and Dusseldorf, Germany.
The selling stockholders are not restricted as to the price or prices at
which they may sell their shares. Sales of shares by the selling stockholders
may depress the market price of our common stock since the number of shares
which may be sold by the selling stockholders is relatively large compared to
the historical average weekly trading of our common stock. Accordingly, if the
selling stockholders were to sell, or attempt to sell, all of such shares at
once or during a short time period, we believe such a transaction could
adversely affect the market price of our common stock.
From time to time the selling stockholders may engage in short sales, short
sales against the box, puts and calls and other transactions in our securities
or derivatives of our securities, and can sell and deliver the shares in
connection with any of these transactions or in settlement of securities loans.
From time to time the selling stockholders may pledge their shares under margin
provisions of its customer agreements with its brokers. Upon a default by the
selling stockholders, the broker may offer and sell the pledged shares from time
to time.
In effecting sales, brokers and dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate in the sales. Brokers or
dealers may receive commissions or discounts from the selling stockholders or,
if the broker-dealer acts as agent for the purchaser of such shares, from the
purchaser in amounts to be negotiated, which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with
the selling stockholders to sell a specified number of such shares at a
stipulated price per share, and to the extent the broker-dealer is unable to do
so acting as agent for a selling stockholder, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholders. Broker-dealers who acquire shares as principal may
then resell those shares from time to time in transactions
o in the over-the counter market or otherwise;
o at prices and on terms then prevailing at the time of sale;
o at prices then related to the then-current market price; or
o in negotiated transactions.
These resales may involve block transactions or sales to and through other
broker-dealers, including any of the transactions described above. In connection
with these sales, these broker-dealers may pay to or receive from the purchasers
of those shares commissions as described above. The selling stockholders may
also sell the shares under Rule 144 under the Securities Act, rather than under
this prospectus.
The selling stockholders and any broker-dealers or agents that participate
with the selling stockholders in sales of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with these
sales. In this event, any commissions received by these
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broker-dealers or agents and any profit on the resale of the shares purchased by
them may be deemed to be underwriting commissions or discounts under the
Securities Act.
We have been advised that Continental and VTR Capital, each a selling
stockholder, are members of the NASD. Continental and VTR Capital will be deemed
to be "underwriters" as that term is defined in the Securities Act, and any
commissions received by them and profit on any resale of the shares as principal
will be deemed to be underwriting discounts and commissions under the Securities
Act.
We are required to pay all fees and expenses incident to the registration
of the shares, including reasonable fees and disbursements of counsel to the
selling stockholders. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act. The selling stockholders may agree to indemnify any
agent, dealer or broker-dealer that participates in transactions involving sales
of the shares against certain liabilities, including liabilities arising under
the Securities Act. We will not receive any proceeds from the sale of shares by
the selling stockholders.
At the time a particular offer of shares is made, to the extent required, a
supplement to this prospectus will be distributed which will identify and set
forth the aggregate amount of shares being offered and the terms of the
offering.
The selling stockholders are subject to applicable provisions of the
Exchange Act and the Commission's rules and regulations, including Regulation M,
which provisions may limit the timing of purchases and sales of the shares by
the selling stockholders.
In order to comply with certain states' securities laws, if applicable, the
shares may be sold in those jurisdictions only through registered or licensed
brokers or dealers. In certain states the shares may not be sold unless the
shares have been registered or qualified for sale in such state, or unless an
exemption from registration or qualification is available and is obtained.
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon for us
by Lowenstein Sandler PC, Roseland, New Jersey.
EXPERTS
The consolidated balance sheets of Spigadoro, Inc. (formerly IAT
Multimedia, Inc.) as of December 31, 1998 and 1997 and the consolidated
statements of operations, stockholders' equity (deficit) and cash flows for each
of the three years in the period ended December 31, 1998, incorporated by
reference in this prospectus, have been incorporated herein in reliance on the
report of Rothstein, Kass & Company, P.C., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
The financial statements of Petrini S.p.A. incorporated in this prospectus
by reference to our Current Report on Form 8-K, filed with the Commission on
January 12, 2000, as of December 31, 1998 and 1997, and for each of the three
years ended December 31, 1998, 1997 and 1996 have been incorporated herein in
reliance on the report of Reconta Ernst & Young
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S.p.A., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Exchange Act and we
file reports and other information with the Commission.
You can read reports and other information filed by us with the Commission
without charge and copy such reports and information at the public reference
facilities maintained by the Commission at the following addresses:
o New York Regional Office, Seven World Trade Center, New York, New York
10048; and
o Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511.
You may read and copy any of the reports, statements, or other information
we file with the Commission at the Commission's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Information on
the operation of the Public Reference Room may be obtained by calling the
Commission at 1-800-SEC-0330. The Commission maintains a Web site at
http://www.sec.gov that contains reports, proxy statements and other information
regarding issuers that file electronically with the Commission. The American
Stock Exchange maintains a Web site at http://www.amex.com that contains
reports, proxy statements and other information filed by us.
Our common stock is listed on The American Stock Exchange under the symbol
"SRO" and also trades on the Freiverkehr in Frankfurt, Berlin, Stuttgart and
Dusseldorf Germany.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have filed with the Securities and Exchange Commission, Washington,
D.C., a registration statement on Form S-3 under the Securities Act of 1933,
covering the securities offered by this prospectus. This prospectus does not
contain all of the information that you can find in our registration statement
and the exhibits to the registration statement. Statements contained in this
prospectus as to the contents of any contract or other document referred to are
not necessarily complete and in each instance such statement is qualified by
reference to each such contract or document filed or incorporated by reference
as an exhibit to the registration statement.
The Commission allows us to "incorporate by reference" the information we
file with them. This means that we can disclose important information to you by
referring you to other documents that are legally considered to be part of this
prospectus, and later information that we file with the Commission will
automatically update and supersede the information in this prospectus and the
documents listed below. We incorporate by reference the documents listed below,
and any future filings made with the Commission under Section 139(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until the selling stockholders
sell all the shares.
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1. Our Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
2. Our Quarterly Reports on Form 10-Q for the periods ended March 31, 1999,
June 30, 1999 and September 30, 1999;
3. Our Current Reports on Form 8-K dated January 11, 1999, August 4, 1999,
August 24, 1999, December 20, 1999, January 12, 2000, January 19, 2000,
January 19, 2000 and February 2, 2000;
4. Our Proxy Statement/Prospectus dated December 3, 1999;
5. Our registration statement on Form 8-A declared effective on January 13,
2000, registering the common stock under the Exchange Act; and
6. All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of this offering, except the Compensation Committee Report on
Executive Compensation and the performance graph included in the Proxy
Statement filed pursuant to Section 14 of the Exchange Act.
You may request a copy of these filings, other than the exhibits, by
writing or telephoning us at Spigadoro, Inc., 70 East 55th Street, 24th Floor,
New York, New York 10022, telephone number (212) 754-4271.
You should rely only on the information incorporated by reference or
contained in this prospectus or any supplement. We have not authorized anyone
else to provide you with different or additional information. The selling
stockholders are not making an offer of the shares in any state where the offer
is not permitted. You should not assume that the information in this prospectus
or any supplement is accurate as of any date other than the date on the front of
those documents.
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Prospective investors may reply only on the information contained in this
prospectus. Spigadoro Inc. has not authorized anyone to provide prospective
investors with information different from that contained in this prospectus.
This prospectus is not an offer to sell nor is it seeking an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted. The
information contained in this prospectus is correct only as of the date of this
prospectus, regardless of the time of the delivery of this prospectus or any
sale of these securities.
SPIGADORO, INC.
4,892,480 SHARES OF COMMON STOCK
PROSPECTUS
_________, 2000
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PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are as follows:
SEC Registration Fee $712
Accounting Fees and Expenses 3,500
Legal Fees and Expenses 10,000
Miscellaneous Expenses 3,288
--------
Total $17,500
Item 15. Indemnification of Directors and Officers.
The Certificate of Incorporation and By-Laws of the Company provide that
the Company shall indemnify any person to the full extent permitted by the
Delaware General Corporation Law.
Reference is hereby made to Section 145 of the Delaware General Corporation
Law relating to the indemnification of officers and directors which Section is
hereby incorporated herein by reference.
The Registrant also has Indemnification Agreements with each of its
directors.
Item 16. Exhibits.
4.1 Underwriters' Warrant(1)
4.2 Form of Option Agreement*
4.3 Common Stock Purchase Warrant issued to JNC Opportunity Fund, Ltd.(2)
4.4 Common Stock Purchase Warrant issued to JNC Strategic Fund, Ltd. (2)
4.5 Common Stock Purchase Warrant issued to Century City Securities,
Inc.(2)
4.6 Warrant issued to Vertical Financial Holdings (one in a series of
warrants with identical terms)(1)
5.1 Opinion of Lowenstein Sandler PC*
10.1 Securities Purchase Agreement, dated as of June 19, 1998, by and among
IAT Multimedia, Inc., JNC Opportunity Fund, Ltd. and JNC Strategic
Fund, Ltd.(2)
10.2 Registration Rights Agreement dated as of June 19, 1998, by and among
IAT Multimedia, Inc., JNC Opportunity Fund, Ltd. and JNC Strategic
Fund, Ltd.(2)
10.3 Investor's Rights Agreement dated as of October 24, 1996 by and
between the Registrant and Vertical Financial Holdings(1)
23.1 Consent of Rothstein, Kass & Company, P.C. - Included on II-5
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23.2 Consent of Reconta Ernst & Young - Included on II-6
23.3 Consent of Lowenstein Sandler PC - Included in Exhibit 5.1*
------------
* Previously filed.
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 333-18529) declared effective on March 26, 1997.
(2) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated June 19, 1998 and incorporated by reference thereto.
Item 17. Undertakings
Undertaking Required by Regulation S-K, Item 512(a).
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Act"), each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering. Undertaking Required by Regulation S-K, Item 512(b).
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 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 such securities at that time shall be deemed to be initial
bona fide offering thereof.
Undertaking required by Regulation S-K, Item 512(h).
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or controlling persons pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such
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indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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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 this Registration
Statement or amendment thereto to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York on the 8th day of February,
2000.
SPIGADORO, INC.
/s/ Jacob Agam
---------------------------------
By: Jacob Agam
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement or amendment thereto has been signed by the following persons in the
capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Jacob Agam Chairman of the Board and Chief February 8, 2000
- ----------------------- Executive Officer (principal
Jacob Agam executive officer)
* Chief Financial Officer and February 8, 2000
- ----------------------- Director (principal financial
Klaus Grissemann officer)
* Chief Operating Officer February 8, 2000
- ----------------------- and Director
Lucio De Luca
* Director February 8, 2000
- -----------------------
Marc S. Goldfarb
* Director February 8, 2000
- -----------------------
Carlo Petrini
* Director February 8, 2000
- -----------------------
Robert Weiss
* Director February 8, 2000
- -----------------------
Erich Weber
/s/ Jacob Agam February 8, 2000
- -----------------------
By: Jacob Agam
Attorney-in-Fact
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Spigadoro, Inc. (formerly IAT Multimedia, Inc.) on Form S-3 of our report
dated March 25, 1999, on our audits of the consolidated financial statements and
the financial statement schedule of Spigadoro, Inc. (formerly IAT Multimedia,
Inc.) and Subsidiaries as of December 31, 1998 and 1997, and for the years ended
December 31, 1998, 1997, and 1996, which report is included in the Annual Report
on Form 10-K. We also consent to the reference to our Firm under the caption
"Experts."
ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
February 8, 2000
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Spigadoro, Inc. on Form S-3 of our Report dated October 14, 1999,
except for the convenience translation of the financial statements into U.S.
Dollars as to which the date is November 23, 1999, with respect to the financial
statements of Petrini, S.p.A. as of December 31, 1998 and 1997, and for each of
the three years in the period ended December 31, 1998, which report is included
in Form 8-K of Spigadoro, Inc. filed with the Commission on January 12, 2000. We
also consent to the reference to our Firm under the caption "Experts."
RECONTA ERNST & YOUNG, S.p.A.
Perugia, Italy
February 8, 2000
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