As filed with the Securities and Exchange Commission July 23,
1996.
File No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AFGL INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 75-2134871
(State or other jurisdiction (I.R.S.
Employer
of incorporation or organization)
Identification No.)
850 Third Avenue, 11th Floor
New York, NY 10022
(212) 508-3560
(Address and telephone number of registrant's principal offices)
Barry S. Roseman, Chief Operating Officer
AFGL International, Inc.
850 Third Avenue, 11th Floor
New York, NY 10022
(212) 508-3560
(Name, address and telephone number of agent for service)
Copies to:
Mark E. Lehman, Esq.
Lehman, Jensen & Donahue, L.C.
8 East Broadway, Suite 620
Salt Lake City, UT 84111
(801) 532-7858
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to a dividend reinvestment plan, please check
the following box. [ ]
If any of the securities being registered on the Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than the securities
offered only in connection with dividend or interest reinvestment
plans, 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. [ ]
CALCULATION OF REGISTRATION FEE
Title of Amount to Proposed Proposed Amount of
each be maximum maximum registratio
class of Registered offering aggregate n fee
securities price offering
to be per share price(2)
registered (2)
Common 3,364,711(1 $3.37566 $11,355,899 $3,915.83
Stock ) .63
(1) The shares registered are issuable on conversion or exercise
of outstanding securities. The number of shares so issuable will
vary based on the market price of the Company's Common Stock.
Additional shares are being registered to take into account
variations in the number of shares issuable. The amount
registered also includes an indeterminate number of shares of
common stock that may be issuable by reason of stock splits,
stock dividends, or similar transactions in accordance with Rule
416 under the Securities Act of 1933.
(2) Estimated solely for purposes of determining the
registration fee. Based upon the average of the high and low
sales prices of the Company's Common Stock as reported in the
NASDAQ SmallCap Market for July 17, 1996, pursuant to Rule
457(c).
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.
[INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL
OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.]
SUBJECT TO COMPLETION:
JULY 23, 1996
PROSPECTUS
3,364,711 Shares
AFGL INTERNATIONAL, INC.
Common Stock
(Par value $.01 per share)
This Prospectus relates to 3,364,711 shares of Common Stock,
$.01 par value per share (hereinafter referred to as "Shares" or
"Common Stock"), of AFGL International, Inc. (the "Company").
Included in the Shares are (i) approximately 2,000,000 Shares
issuable on conversion of the Company's Series D Convertible
Preferred Stock, (ii) approximately 160,000 Shares issuable at
the election of the Company in payment of accrued dividends on
conversion of the Series D Convertible Preferred Stock, (iii)
approximately 500,000 Shares issuable on exercise of warrants the
Company is obligated to issue on conversion of the Company's
Series D Convertible Preferred Stock (the "Series D Warrants"),
(iv) 129,711 Shares issuable on exercise of warrants issued by
the Company in 1993 (the "1993 Warrants"), and (v) 575,000 Shares
issuable on exercise of warrants (the "Series E Warrants") issued
by the Company to purchase shares of Series E Convertible
Preferred Stock, each share of which is convertible into one
share of Common Stock.
All of the Shares offered hereunder will be acquired by
certain stockholders (the "Selling Stockholders") of the Company
as described herein. The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders
but has agreed to bear certain expenses of registration of the
Shares. See "Selling Stockholders" and "Plan of Distribution."
The Shares may be re-offered by the Selling Stockholders in
transactions for their own account (which may include block
transaction) in the over-the-counter market, negotiated
transactions, or in a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at
the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling Shares directly to purchasers
or to or through underwriters, agents or broker-dealers, and such
underwriters, agents or broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the
Selling Stockholders or the purchasers of Shares for whom such
underwriters, agents or broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary
commissions). The Shares may be offered from time to time
following the date of this Prospectus, subject to the right of
the Company to suspend (and later resume) the distribution of
Shares hereunder as required by law or upon the advice of counsel
(regarding violations of law or regulations). See "Selling
Stockholders."
The Selling Stockholders, any agents or brokers executing
sales orders on behalf of Selling Stockholders, and dealers to
whom the Shares may be sold, may, under certain circumstances, be
considered "underwriters" within the meaning of Section 2(11) of
the Securities Act of 1933, as amended (the "Securities Act"),
and any commissions received by them and any profit on the resale
of the Shares may be deemed to be underwriting commissions or
discounts under the Securities Act. See "Plan of Distribution"
herein for indemnification arrangements among the Company and the
Selling Stockholders.
The Company's Common Stock is traded in the over-the-counter
market and price quotations are listed in the NASDAQ SmallCap
Market under the symbol AFGL. On July 17, 1996, the last
reported sale price of the Common Stock, as reported in the
NASDAQ SmallCap Market, was $3.375 per share.
Investors should carefully consider the material risks set
forth under the caption "Risk Factors."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is ___________________, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the following Regional Offices of the Commission:
Northeast Regional Office, Suite 1300, Seven World Trade Center,
New York, New York 10048; and Midwest Regional Office, Suite
1400, 500 W. Madison Street, Chicago Illinois 60661-2511. Copies
of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, upon payment of prescribed rates.
The Company has filed with the Commission a Registration
Statement on Form S-3 (together with any amendments and exhibits
thereto, the "Registration Statement") under the Securities Act,
with respect to the Shares offered hereby. This Prospectus
constitutes a part of the Registration Statement. This
Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for
further information with respect to the Company and the Shares.
Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance,
reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this
Prospectus the following documents heretofore filed by the
Company with the Commission pursuant to the Exchange Act:
1. The Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1995;
2. The Company's Quarterly Report on Form 10-QSB for the
fiscal quarter ended March 31, 1996 (and Amendment No. 1
thereto);
3. The Company's Current Report on Form 8-K dated May 31,
1996 (and Amendment No. 1 thereto); and
4. The description of the Company's Common Stock contained
in its registration statement on Form 8-A filed under the
Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date hereof and prior to the termination of the offering made
hereby shall be deemed to be incorporated herein by reference and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to
be modified or superseded for purposes hereof to the extent that
a statement contained herein or in any other subsequently filed
document which also is, or is deemed to be, incorporated herein
by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to
constitute a part hereof, except as so modified or superseded.
The Company hereby undertakes to provide without charge to
each person to whom a copy of this Prospectus has been delivered,
upon the written or oral request of any such person, a copy of
any or all of the documents referred to above which have been or
may be incorporated by reference in this Prospectus. Requests
for such copies should be directed to Julie Risi, Investor
Relations, AFGL International, Inc., 850 Third Avenue, 11th
Floor, New York, NY 10022, telephone number: 212-508-3560.
THE COMPANY
AFGL International, Inc. ("the Company"), is a provider of
human resource management and strategic advisory services in the
United States and overseas. The Company provides these services
through its wholly-owned subsidiaries, Headway Corporate Staffing
Services, Inc. ("Headway"), Whitney Partners, Inc. ("Whitney"),
and Furash & Company, Inc. ("Furash"). Headway was formed in
1996 to acquire Irene Cohen Temps, Inc., Corporate Staffing
Alternatives, Inc., Certified Technical Staffing, Inc., and the
operating assets of Irene Cohen Personnel, Inc. (collectively the
"IC Group"), which was completed in May 1996. Whitney conducts
operations in Europe through its wholly-owned subsidiary, The
Whitney Group (Europe) Limited, based in London, which also
operates through an office in Hong Kong. Whitney also maintains
an office in Japan. Hereinafter, the term "Company" shall refer
collectively to AFGL International, Inc., Headway (including its
subsidiaries), Whitney, and Furash, unless the context otherwise
indicates.
The human resource management services of the Company
provide businesses with staffing solutions and alternatives to
the complexities and high costs related to employment and human
resources. The Company offers a broad range of employment-related
services consisting of human resource administration (including
temporary and permanent placement services), executive search
services, employment regulatory compliance management, workers'
compensation coverage, health care, and other employee benefits.
The Company believes its services assist businesses in: (i)
locating and employing persons who will contribute to the owners'
business; (ii) meeting temporary staffing needs as they arise in
the business; (iii) managing escalating costs associated with
workers' compensation, health insurance coverage, workplace
safety programs, and employee-related litigation; (iv) providing
1099 consultants with competitive health care and related
benefits that are more characteristic of large employers; and (v)
reducing the time and effort required of business management to
deal with the increasingly complex legal and regulatory
environment affecting employment
The Company has traditionally focused its services, and
marketing effort for such services, on the financial services
industry consisting of investment banking firms, broker-dealers,
banks, and similar finance institutions. The Company intends to
continue to focus on this industry in the foreseeable future.
The acquisition of the IC Group by Headway in 1996 will enable
the Company to further develop this core business. The long term
plan of the Company is to expand its services to the financial
services industry throughout the United States.
The Company's May 1996 acquisition of the IC Group was a
major step in establishing the Company as a full-service staffing
company serving the financial services industry, and marked the
Company's entrance into the temporary staffing industry. Based
on a market study obtained by the Company, the temporary staffing
industry is experiencing growth in revenues and earnings. Gross
revenues in the industry grew from $20 billion in 1991 to $40
billion in 1995, representing a compounded annual growth rate of
approximately 19%. It is estimated that this industry will grow
at an annual average rate of approximately 11% through the year
2000. This growth is attributable to a trend among employers to
control costs by reducing the number of employees and relying on
human resource management firms to provide temporary workers and
consultants as needed to satisfy staffing requirements as they
fluctuate between the peaks and valleys of the business cycle.
The temporary placement, permanent placement, and employee
management services of Headway are provided primarily to clients
in New York City and surrounding areas. Whitney focuses on
placement services for middle and upper sales and management
level positions in the finance industry, and provides this
service in the United States, Japan, Europe, and Hong Kong.
Management and strategic advisory services are offered by
the Company in the United States through Furash, which is based
in Washington, D.C. These services are provided by Furash
primarily to banks, thrifts, and holding companies ranging in
size from $1 billion to $100 billion in assets; mortgage banks;
investment and brokerage firms; law firms with financial services
clients; private investors; insurance companies; regulatory
agencies; trade associations representing the industry; new
groups entering the industry; and international firms. The
Company advises its clients on all aspects of the financial
services industry, including client operations, new products and
services, marketing of products and services, cost containment
strategies, mergers and acquisitions, turnaround of troubled
institutions, technology and information planning, and regulatory
developments and trends.
The principal offices of the Company are located at 850
Third Avenue, New York, New York, 10022, where its telephone
number is (212) 508-3560.
RISK FACTORS
Government Regulations
The Company's operations are affected by numerous federal,
state and local laws relating to labor, tax, insurance and
employment matters. By entering into an employment relationship
with employees who work at client company locations ("worksite
employees"), the Company assumes certain obligations and
responsibilities of an employer under these laws, which are
subject to varying interpretations. Uncertainties arising under
the Internal Revenue Code of 1986, as amended (the "Code")
include, but are not limited to, the qualified tax status and
favorable tax status of certain benefit plans provided by the
Company and other alternative employers and the status of 1099
worksite employees provided on a temporary basis. The
unfavorable resolution of these unsettled issues could have a
material adverse effect on the Company's results of operations
and financial condition.
The Internal Revenue Service ("IRS") is conducting a Market
Segment Study of the professional employer organization industry,
focusing on selected members of that industry (not including the
Company), in order to examine the relationships among provider
organizations, worksite employees, and owners of client
companies. The Company is unable to predict the timing or nature
of the findings of the Market Segment Study or the ultimate
outcome of such conclusions or findings, but the result could
impose restrictions or new regulations on the business of the
Company, adversely affect the current favored tax status of
Company employee plans, or disallow the current withholding and
reporting practices of the Company, any one or more of which
could adversely affect the business of the Company.
Expansion into Additional States
The Company operates primarily in New York. Future growth
of Company operations depends, in part, on its ability to offer
its services to prospective clients in additional states. In
order to operate effectively in a new state, the Company must
obtain all necessary regulatory approvals, achieve acceptance in
the local market, adapt its procedures to that state's regulatory
requirements and local market conditions, and enhance internal
controls that enable it to conduct operations in several
locations. The length of time required to obtain regulatory
approval to begin operations will vary from state to state, and
there can be no assurance that the Company will be able to
satisfy licensing requirements or other applicable regulations of
any particular state in which it is not currently operating, that
it will be able to provide the full range of services currently
offered in New York, or that it will be able to operate
profitably within the regulatory environment of any state in
which it does obtain regulatory approval. The absence of
required licenses would require the Company to restrict the
services it offers.
Geographic Market Concentration
The Company's New York operations currently account for a
majority of its revenues. Accordingly, while a primary aspect of
the Company's growth strategy involves expansion outside of New
York for the foreseeable future, a significant portion of the
Company's revenues will be subject to economic factors specific
to New York. In addition, while the Company believes that its
market expansion plans will eventually lessen or eliminate this
risk in addition to generating revenue growth, there can be no
assurance that the Company will be able to duplicate in other
markets the revenue growth and operating results experienced in
its New York market.
Effect of Financial Industry Conditions
The Company offers its services primarily to the financial
services industry. During periods of poor performance by the
economy and capital markets, members of the financial services
industry generally do not develop and market new financial
products, do not expand existing services and operations, and do
not employ new personnel or require the services of temporary
employees. Accordingly, during these periods of poor performance
the demand for the Company's services may decrease, which would
adversely affect its operations. Since the Company intends to
continue its emphasis on the financial services industry, it
should be expected that the Company's results of operations for
any given year will depend, to a certain extent, on the
performance of the financial services industry.
Dependence Upon Employees
The Company is dependent to a substantial extent upon the
continuing efforts and abilities of certain employees. The
Company has negotiated long-term employment agreements with
certain employees, but not with all employees who make
significant contributions to the Company. The Company possesses
key-man life insurance policies on the lives of certain
employees. The loss of services of certain employees, including
those with employment agreements, could have a material adverse
effect upon the Company's financial condition and results of
operations, notwithstanding any cash benefits the Company may
receive from key-man life insurance.
Financial Condition of Clients
The Company is obligated to pay the wages and salaries of
its worksite employees regardless of whether its clients pay on a
timely basis or at all. To the extent that any client
experiences financial difficulty, or is otherwise unable to meet
its obligations as they become due, the Company's financial
condition and results of operations could be materially adversely
affected.
Failure to Manage Growth
The Company intends to pursue internal growth and an
acquisition strategy. This growth may place a significant strain
on the Company's management, financial, operating, and technical
resources. The Company has limited acquisition experience in the
human resource management industry, and there can be no assurance
that suitable acquisition candidates can be found, that the
Company will have or be able to obtain the necessary financing to
consummate acquisitions, that acquisitions can be consummated on
favorable terms, or that any acquired companies can be
successfully integrated into the Company's operations. There can
be no assurance that management skills and systems currently in
place will be adequate to implement the Company's strategy, and
the failure to manage growth effectively or to implement its
strategy could have a material adverse effect on the Company's
results of operations and financial condition.
Liabilities for Client and Employee Actions
A number of legal issues remain uncertain with respect to
the co-employment arrangements among temporary placement
businesses, their clients and worksite employees, including
questions concerning the ultimate liability for violations of
employment and discrimination laws. The Company's standard client
service agreements establish a contractual division of
responsibilities for various human resource matters, including
compliance with and liability under various governmental
regulations. Nevertheless, the Company may be subject to
liability for violations of these or other laws despite these
contractual provisions, even if it does not participate in such
violations. Although such client service agreements generally
provide that the client is to indemnify the Company for any
liability attributable to the client's failure to comply with its
contractual obligations and the requirements imposed by law, the
Company may not be able to collect on such a contractual
indemnification claim and thus may be responsible for satisfying
such liabilities. In addition, worksite employees may be deemed
to be agents of the Company, subjecting the Company to liability
for the actions of such worksite employees.
Competition and New Market Entrants
The human resource management industry is highly fragmented,
with a very large number of companies providing similar
employment services. The Company encounters competition from
other employer organizations and from single-service and "fee for
service" companies such as payroll processing firms, insurance
companies and human resource consultants. In addition, the
Company may encounter substantial competition from new market
entrants. Some of the Company's current and future competitors
may be significantly larger, have greater name recognition and
have greater financial marketing and other resources than the
Company. There can be no assurance that the Company will be able
to compete effectively against such competitors in the future.
SELLING STOCKHOLDERS
The following table provides the names and the number of
Shares owned by each Selling Stockholder. Since the Selling
Stockholders may sell all, some or none of the Shares that may be
offered hereby, no estimate can be made of the aggregate number
of Shares that will actually be offered hereby or that will be
owned by each Selling Stockholder upon completion of the offering
to which this Prospectus relates.
The Shares offered by the Prospectus may be offered from
time to time by the Selling Stockholders named below:
Selling Stockholder Shares Percent Shares that
Beneficially of May Be
Owned Prior to Class Offered
the
Offering
Wood Gundy London 383,000 7.1 383,000
Ltd.
The Tail Wind Fund 723,000 12.6 383,000
Ltd.
Hull Overseas Ltd. 191,500 3.7 191,500
Leibel Stern 159,584 3.1 159,594
Jules Nordlicht 319,167 6.0 319,167
A. Zyskind 734,048 2.8 1734,048
Halifax Fund, L.P. 383,000 7.1 383,000
Internationale 575,000 10.3 575,000
Nederlanden
(U.S.) Capital
Corporation
Ehud D. Laska 84,856 1.7 64,856
Richard S. Frary 32,428 0.6 32,428
Joel A. Mael 31,177 0.6 31,177
Karen J. Furst 1,250 Nil 1,250
On June 14, 1996, the Company completed a private placement
of Series D Convertible Preferred Stock. The Company sold 80
shares of Series D Convertible Preferred Stock for $4,000,000.
Each of the Selling Stockholders listed above, except INCC, Ehud
D. Laska, Richard S. Frary, Joel A. Mael, and Karen J. Furst,
were purchasers in the private placement. The face value for
each share of Series D Convertible Preferred Stock ($50,000), is
convertible to Common Stock of the Company at the lesser of
$5.210625 or 80% of the market price for the Company's Common
Stock on the date of conversion. Dividends are payable on the
Series D Convertible Preferred Stock at the rate of 8% per annum.
In the event of conversion, the Company may, at its election,
issue Common Stock in payment of the dividend. On conversion,
the holders of the Series D Convertible Preferred Stock are
entitled to receive a warrant to purchase one share of Common
Stock for every four shares of Common Stock issued on conversion
exercisable on or before May 1, 1999, at an exercise price of
$4.25 per share. The amounts reflected in the foregoing table
for the Shares owned by the Selling Stockholders who are holders
of Series D Convertible Preferred Stock assume that all such
preferred stock is converted four months following issuance at an
estimated price of $2.00 per Share. Based on this assumption, a
total of 2,053,335 Shares would be issued to Selling Stockholders
on conversion of the Series D Convertible Preferred Stock
(including Shares issued in payment of dividends), and warrants
to purchase an additional 500,000 Shares would be issued to such
Selling Stockholders.
In connection with the placement of Series D Convertible
Preferred Stock, the Company entered into a registration rights
agreement in which it agreed to use its best efforts to file a
registration statement on Form S-3 covering the shares of Common
Stock issuable on conversion of the Series D Convertible
Preferred Stock. If such registration statement is not declared
effective within a period of 100 days following May 31, 1996,
then the Company is obligated to pay the purchasers in the
offering a fee at the expiration of the 100-day period and at the
expiration of each 30-day period thereafter until the
registration statement is effective. The initial fee is equal to
one and one-half percent of the purchase price for the Series D
Convertible Preferred Stock, which increases in each subsequent
30-day period one-quarter of one percent month to a maximum of
two percent of the purchase price. The Tail Wind Fund Ltd.,
received a consulting fee in connection with the private
placement consisting of $200,000 in cash and warrants to purchase
120,000 shares of the Company's Common Stock exercisable over a
period of five years commencing September 1, 1996, at a price of
$4.25 per share. The Tail Wind Fund Ltd., holds an additional
warrant to purchase 120,000 shares of the Company's Common Stock
exercisable over a period of five years commencing June 1, 1996,
at a price of $4.25 per share.
On May 31, 1996, the Company entered into a Credit Agreement
with Internationale Nederlanden (U.S.) Capital Corporation
("INCC"). Under the Credit Agreement, INCC made a term loan of
$9,000,000 to the Company, and established a $6,000,000 revolving
credit facility for the Company. In connection with this
financing arrangement, the Company granted to INCC the Series E
Warrant to purchase 575,000 shares of Series E Convertible
Preferred Stock of the Company at an exercise price of $0.02 per
share. The Series E Convertible Preferred Stock is convertible
at the election of the holder to Common Stock of the Company at
the rate of one share for one share, subject to adjustment based
on anti-dilution provisions. The Company also entered into a
Registration Rights Agreement with INCC pertaining to the Common
Stock of the Company issuable on conversion of the Series E
Convertible Preferred Stock. Under the terms of the Registration
Rights Agreement, the Company is required to file and keep
effective a shelf registration covering the Common Stock issuable
to INCC. In the Registration Rights Agreement, INCC agrees not
to make any private or public sale of the Common Stock prior to
May 31, 1997.
In July of 1993, the Company entered into a consulting
agreement with an investment banking and consulting firm. As
partial consideration under the agreement, the Company issued to
the consulting firm warrants to purchase 129,711 shares of the
Company's Common Stock at an exercise price of $1.25 per share
(the "1993 Warrants"). The 1993 Warrants were subsequently
transferred to affiliates of the consulting firm; Ehud D. Laska,
Richard S. Frary, Joel A. Mael, and Karen J. Furst. Mr. Laska
was subsequently elected a director of the Company. In addition,
Mr. Laska currently serves as the chairman of the board of a
member firm of the National Association of Securities Dealers,
Inc. ("NASD"). Messrs. Frary and Mael own stock in a general
partner of an NASD member firm.
For consulting services rendered in connection with the
Company's debt and equity financings in 1996, the Company paid to
a corporation owned by Mr. Laska and his associate, in equal
shares, a total of $582,500 in cash. In addition, the Company
granted to Mr. Laska and his associate warrants to purchase
240,000 shares of Common Stock exercisable over a period of four
years commencing May 31, 1997, at an exercise price of $4.25 per
share.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling
Stockholders in transactions for their own account (which may
include block transactions) in the over-the-counter market,
negotiated transactions, or in a combination of such methods of
sale, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling Shares
directly to purchasers or to or through underwriters, agents or
broker-dealers, and such underwriters, agents or broker-dealers
my receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of
Shares for whom such underwriters, agents or broker-dealers may
act as agent or to whom they sell as principal, or both (which
compensation as to a particular broker-dealer might be in excess
of customary commissions). The Selling Stockholders, any agents
or brokers executing sales orders on behalf of Selling
Stockholders, and dealers to whom the Shares may be sold, may,
under certain circumstances, be considered "underwriters" within
the meaning of the Securities Act, and any commissions received
by such underwriters, agents or broker-dealers and any profit on
the resale of the Shares may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Shares may be offered from time to time following the
date of this Prospectus, subject to the right of the Company to
suspend (and later resume) the distribution of Shares hereunder
as required by law or upon the advice of counsel (regarding
violations of law or regulations). At the time a particular
offer is made, a Prospectus supplement, if required, will be
distributed that sets forth the name or names of underwriters,
agents or broker-dealers; the number of Shares involved; any
commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable; and other facts material to
the transaction. As of the date of this Prospectus, there are no
selling arrangements between the Selling Stockholders and any
underwriter, broker or dealer.
As required by the Registration Rights Agreement with the
holders of the Series D Convertible Preferred Stock, the
Registration Rights Agreement with the holder of the Series E
Warrant and the terms of the 1993 Warrants, the Company has filed
the Registration Statement, of which this Prospectus forms a
part, with respect to the sale of the Shares. The Company will
not receive any of the proceeds from the sale of the Shares. The
Company will bear the costs of registering the Shares under the
Securities Act, including the registration fee under the
Securities Act, legal and accounting fees (including legal fees
for counsel to the Selling Stockholders) and any printing
expenses. The Selling Stockholders will bear all other expenses
in connection with this offering, including selling commissions
and brokerage fees.
Pursuant to the terms of their respective agreements, the
Company and the Selling Stockholders have agreed to indemnify
each other and certain other related parties for certain
liabilities in connection with the registration of the Shares,
including liabilities under the Securities Act. The Selling
Stockholders and the Company may agree to indemnify any broker-
dealer or agent that participates in transactions involving the
Shares against certain liabilities, including liabilities under
the Securities Act.
LEGAL OPINION AND EXPERTS
The validity of the issuance of the Shares offered hereby is
being passed upon for the Company by Lehman, Jensen & Donahue,
L.C., counsel to the Company.
The financial statements of AFGL International, Inc., and
subsidiaries as of December 31, 1995, and for each of the fiscal
years in the two-year period ended December 31, 1995,
incorporated in this Prospectus by reference to the Company's
Annual Report on Form 10-KSB for the fiscal year ended December
31, 1995, have been so included in reliance on the report of
Moore Stephens, P.C. (formerly Mortenson and Associates, P.C.),
independent accountants, given on the authority of said firm as
experts in auditing and accounting. In such financial statements,
Moore Stephens, P.C., has relied on the report dated April 12,
1996, of Letchfords, Chartered Accountants, with respect to the
financial statements of Whitney Group (Europe) Limited, given on
the authority of said firm as experts in auditing and accounting.
The combined financial statements of Irene Cohen Temps,
Inc., and Certified Technical Staffing, Inc., at December 31,
1995 and 1994 and for each of the two years in the period ended
December 31, 1995, and the combined financial statements of Irene
Cohen Personnel, Inc., and Corporate Staffing Alternatives, Inc.,
at December 31, 1995 and 1994 and for each of the two years in
the period ended December 31, 1995, incorporated by reference in
this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their
reports thereon, also incorporated herein by reference, in
reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
[Outside Back Cover]
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY SELLING STOCKHOLDER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
SINCE THE DATES AS OF WHICH INFORMATION IS SET FORTH HEREIN.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER IN SUCH JURISDICTION.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
THE COMPANY
RISK FACTORS
SELLING STOCKHOLDERS
PLAN OF DISTRIBUTION
LEGAL OPINION AND EXPERTS
3,364,711 SHARES
AFGL INTERNATIONAL, INC.
COMMON STOCK ($.01 Par Value)
PROSPECTUS
____________________, 1996
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee $
3,915.83
NASD Registration Fee
1,635.59
Blue Sky Registration Fees
10,000.00
Legal Fees
70,000.00
Auditors' Fees
50,000.00
Printing and Engraving Expenses
10,000.00
Miscellaneous
10,000.00
Total
$155,551.42
All of the above items are estimated except the SEC and NASD
Registration Fees.
Item 15. Indemnification of Directors and Officers.
Section 78.751 of the Nevada Revised Statutes provides in
relevant part as follows:
--------------------
(1) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative except an action by or
in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against expenses, including attorneys' fees,
judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit,
or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or on a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect to
any criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
(2) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee, or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise against expenses, including amounts paid in settlement
and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue, or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which
such action or suit was brought shall determine on application
that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or
agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred
to in subsections 1 and 2, or in defense of any claim, issue, or
matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
--------------------
The Company's articles of incorporation provide that the
Company may indemnify to the full extent of its power to do so
under Nevada law, all directors, officers, employees, and/or
agents of the Company for liabilities and expenses reasonably
incurred in connection with any action, suit, or proceeding to
which such person may be a party by reason of such person's
position with the Company. Consequently, the Company intends to
indemnify its officers, directors, employees, and agents to the
full extent permitted by the statute noted above.
As permitted by Chapter 78 of the Nevada Revised Statutes,
the Company's articles of incorporation contain the following
provision:
--------------------
A director or officer of the corporation shall have no
personal liability to the corporation or its stockholders for
damages for breach of fiduciary duty as a director or officer,
except for damages for breach of fiduciary duty resulting from
(a) acts or omissions which involve intentional misconduct,
fraud, or a knowing violation of law, or (b) the payment of
dividends in violation of section 78.300 of the Nevada Revised
Statutes as it may from time to time be amended or any successive
provision thereto.
--------------------
The Company intends to limit the liability of its officers
and directors to the full extent set forth in the foregoing
provision in its articles of incorporation.
Insofar as indemnification by the Company for liabilities
arising under the Securities Act may be permitted to officers and
directors of the Company the Company is aware 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 Company of expenses incurred or paid by an officer or
director in the successful defense of any action, suit, or
proceeding) is asserted by such officer or director in connection
with the securities being registered hereby, the Company 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 of whether such indemnification by it
is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue. (See
"ITEM 17. UNDERTAKINGS.")
Item 16. Exhibits.
Exhibit SEC Ref. Title of Document Location
No. No.
1 (3)(i) Articles of Incorporation, This
as amended Filing
2 (3)(ii) By-Laws, as amended This
Filing
3 (4) Series A Convertible Preferred This
Stock Designation Filing
4 (4) Series B Convertible Preferred This
Stock Designation Filing
5 (4) Series B Convertible Preferred This
Stock Designation Filing
(Correction)
6 (4) Form of Stock Purchase This
Agreement Filing
with purchasers of Series D
Convertible Preferred Stock
(2)
7 (4) Form of Registration Rights This
Agreement with purchasers of Filing
Series D Convertible
Preferred
Stock (2)
8 (4) Form of Warrant to be issued to This
purchasers of Series D Filing
Convertible Preferred Stock
(3)
9 (4) Warrant of Ehud D. Laska This
dated December 23, 1993 Filing
10 (4) Warrant of Ehud D. Laska This
dated November 10, 1994 Filing
11 (4) Warrant of Richard S. Frary This
dated December 23, 1993 Filing
12 (4) Warrant of Richard S. Frary This
dated November 10, 1994 Filing
13 (4) Warrant of Joel A. Mael This
dated December 23, 1993 Filing
14 (4) Warrant of Joel A. Mael This
dated November 10, 1994 Filing
15 (4) Warrant of Karen J. Furst This
dated December 23, 1993 Filing
16 (5) Opinion of Lehman, Jensen & This
Donahue, L.C. Filing
17 (23) Consent of Lehman, Jensen & This
Donahue, L.C. Filing
18 (23) Consent of More Stephens P.C. This
(formerly Mortenson and Filing
Associates, P.C.)
19 (23) Consent of Ernst & Young LLP This
Filing
20 (23) Consent of Letchfords, This
Chartered Filing
Accountants
21 (24) Power of Attorney (4) This
Filing
22 (99) Warrant of Ehud D. Laska This
dated July 22, 1996 Filing
23 (99) Warrant of Ziad K. Abdelnour This
dated July 22, 1996 Filing
24 (99) Warrant of The Tail Wind Fund This
Ltd. Filing
dated April 8, 1996
25 (99) Warrant of The Tail Wind Fund This
Ltd. Filing
dated July 19, 1996
26 (2) Stock Purchase Agreement dated Fm8-K
April 10, 1996 (1) Ex#1
27 (2) Asset Purchase Agreement dated Fm8-K
May 31, 1996 (1) Ex#2
28 (4) Series C 8% Convertible Fm8-K
Preferred Ex#3
Stock Designation (1)
29 (4) Series D 8% Convertible Fm8-K
Preferred Ex#4
Stock Designation (1)
30 (4) Series E Convertible Preferred Fm8-K
Stock Designation (1) Ex#5
31 (4) Credit Agreement dated Fm8-K
May 31, 1996 (1) Ex#6
32 (4) Revolving Note dated May 31, Fm8-K
1996 Ex#7
33 (4) Term Note dated May 31, 1996 Fm8-K
Ex#8
34 (4) Security Agreement dated Fm8-K
May 31, 1996 Ex#9
35 (4) Warrant Agreement dated Fm8-K
May 31, 1996 Ex#10
36 (4) Registration Rights Agreement Fm8-K
dated May 31, 1996 Ex#11
(1) Each of these exhibits are included in the Company's current
report on Form 8-K, dated May 31, 1996, and filed with the
Commission on June 14, 1996, and are incorporated herein by this
reference. The reference under the column "Location" is to the
exhibit number in the report on Form 8-K.
(2) These exhibits are the forms of the agreements entered into
between the Company and purchasers of the Company's Series D
Convertible Preferred Stock, all of whom are Selling
Stockholders.
(3) This is the form of warrant to be issued to Selling
Stockholders who are holders of Series D Convertible Preferred
Stock on conversion of the Series D Convertible Preferred Stock.
(4) The power of attorney is located under Part II of this
registration statement under the caption "Signatures", below.
Item 17. Undertakings.
(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: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act; (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; (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 such information in the Registration
Statement; provided, however, that paragraphs 1(i) and 1(ii) do
not apply if 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 Exchange Act that are incorporated by reference
herein.
(2) That, for purposes of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(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 Section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be
deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the 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 to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the city of New York, state of New York on July 19, 1996.
AFGL INTERNATIONAL, INC.
By: Gary S Goldstein
(Signature)
President
Power of Attorney
Each person whose signature appears below hereby constitutes
and appoints Gary S. Goldstein, and Barry S. Roseman, and each of
them, his true and lawful attorneys-in-fact and agents, for him
and in his name, place and stead, in any and all capacities, to
sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities indicated on July 19, 1996.
Signature Title
Gary S Goldstein (Signature) Principal Executive
Officer, and
Director
Barry S Roseman (Signature) Principal Financial
and
Accounting Officer,
and
Director
G. Chris Andersen (Signature) Director
Edward E. Furash (Signature) Director
Ehud D. Laska (Signature) Director
Richard Salomon (Signature) Director