PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED DECEMBER 11, 2000
2,000,000 SHARES
DCH TECHNOLOGY, INC.
COMMON STOCK
You should read this entire prospectus supplement, our prospectus dated
December 11, 2000, the prospectus supplement dated May 3, 2001, and the other
documents incorporated by reference into the prospectus, the May 3, 2001
prospectus supplement and this prospectus supplement before you invest. These
documents contain information you should consider carefully before making your
investment decision. You should rely only on the information contained or
incorporated by reference in this prospectus supplement and the accompanying May
3, 2001 prospectus supplement and prospectus. We have not authorized anyone
else to provide you with different or additional information.
This prospectus supplement and the accompanying May 3, 2001 prospectus
supplement and prospectus do not constitute an offer to sell or a solicitation
of an offer to buy any securities other than the common stock offered hereby.
This prospectus supplement and the accompanying May 3, 2001 prospectus
supplement and prospectus do not constitute an offer to sell or a solicitation
of an offer to buy our common stock in any circumstances in which an offer or
solicitation is unlawful.
Information in this prospectus supplement replaces any inconsistent
information in the May 3, 2001 prospectus supplement and the prospectus.
Information in this prospectus supplement and the accompanying May 3, 2001
prospectus supplement and prospectus may change after the date on the front of
the applicable document. You should not interpret the delivery of this
prospectus supplement or the accompanying May 3, 2001 prospectus supplement and
prospectus or the sale of the common stock as an indication that there has been
no change in our affairs since the respective dates of those documents.
Our principal executive offices are located at 24832 Avenue Rockefeller,
Valencia, California 91355. Our telephone number is (661) 775-8120.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 7 OF THE ACCOMPANYING PROSPECTUS.
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 supplement is October 15, 2001.
PLAN OF DISTRIBUTION
We entered into a Purchase Agreement with Swartz Private Equity, LLC
("Swartz") on August 24, 2001 (the "Swartz Agreement"), pursuant to which we may
offer to Swartz through a series of puts, and Swartz must purchase, from time to
time, a maximum of 2,000,000 shares of our common stock during the term of the
Swartz Agreement. We are limited as to the number of shares of common stock we
may issue during each put. This limit is equal to the sum of two put limits;
one for each of two consecutive ten (10) business day pricing periods beginning
on the day following the date that we initiate a put of shares to Swartz. The
first put limit is equal to the lesser of (i) 15% of the sum of the aggregate
daily reported trading volumes in our common stock on the American Stock
Exchange (excluding certain block trades in excess of 20,000 shares made by us
or any of our affiliates) for all business days in the first ten (10) day
pricing period for the put, (ii) the amount of shares we indicate we would like
to include in that put; and (iii) the number of shares when, multiplied by the
put price per share, equals $2 million. The second put limit is equal to the
lesser of (i) 15% of the sum of the aggregate daily reported trading volumes in
our common stock on the American Stock Exchange (excluding certain block trades
in excess of 20,000 shares made by us or any of our affiliates) for all business
days in the pricing period for that put, (ii) the amount of shares we indicate
we would like to include in that put, less the limit in our first put; and (iii)
the number of shares when, multiplied by the put price per share, equals
$2,000,000 (less the purchase price of any shares to be sold pursuant to the
first ten (10) day pricing period).
The price Swartz will pay for each share of common stock sold in a put is
equal to the lesser of (i) the market price for each of the two consecutive ten
business day periods beginning on the business day immediately following the day
we invoked the put right minus $0.10, or (ii) 93% of the market price for each
of the two ten day periods. Market price is defined as the average of the three
(3) lowest Volume Weighted Average Prices ("VWAPs") published daily by
Bloomberg, Inc., of the Company's Common Stock during each of the ten (10)
Business Day pricing periods. However, the purchase price may not be less than
the designated minimum per share price, if any, that we may specify in our put
notice. The first pricing period, which applies to the number of shares
issuable under the first put limit, begins on the business day after the put
date, and ends on the tenth business day after that put date. The second pricing
period, which applies to the number of shares issuable under the second put
limit, begins on the eleventh business day after the put date and ends on the
twentieth business day after the put date.
We may also, for any put, designate a maximum dollar amount of common
stock, not to exceed $2,000,000, that we will sell during that put, and/or a
minimum purchase price per share for that put. However, the designated minimum
purchase price for a put may not be greater than the lesser of (i) 85% of the
closing bid price of our common stock on the business day immediately preceding
the date on which we give advance notice of the put and (ii) the closing bid
price of our common stock on the business day immediately preceding the date on
which we give advance notice of the put, less $0.15.
Limitations and Conditions Precedent to Our Put Rights. We may not
initiate a put if, as of the proposed date of such put:
1. We have issued shares of our common stock equal to the maximum
offering amount that have been paid for by Swartz;
2. The registration statement covering the resale of the shares becomes
ineffective or unavailable for use; or
3. Our common stock is not actively trading on the OTC Bulletin Board,
the Nasdaq Small Cap Market, the Nasdaq National Market, the American Stock
Exchange, or the New York Stock Exchange, or is suspended or delisted with
respect to the trading on such market or exchange.
If any of the following events occur during the pricing period for a put,
the volume accrual shall cease. The pricing period for the put shall be
adjusted to end ten (10) business days after the date that we notify Swartz of
the event, and any minimum price per share we specified shall not apply to the
put:
1. We have announced or implemented a stock split or combination of our
common stock between the advanced put notice date and the end of the pricing
period;
2. We have paid a common stock dividend or made any other distribution
of our common stock between the advanced put notice date and the end of the
pricing period;
3. We have made a distribution to the holders of our common stock or of
all or any portion of our assets or evidences of indebtedness between the put
notice date and the end of the pricing period;
4. We have consummated a major transaction (including a transaction,
which constitutes a change of control) between the advance put notice date and
the end of the pricing period, the registration statement covering the resale of
the shares becomes ineffective or unavailable for use, or our stock becomes
delisted for trading on our then primary exchange; or
5. We discover the existence of facts that cause us to believe that the
registration statement of which this prospectus is a part contains an untrue
statement or omits to state a material fact.
Our right to initiate puts will terminate automatically and immediately
upon the occurrence of any of the following events: (i) if we or any of our
directors or executive officers engage in a transaction or conduct which results
in an SEC enforcement action or criminal or certain civil liability; (ii) after
an aggregate of four months of periods during which the registration statement
incorporating the prospectus is not effective or our common stock is delisted
from the American Stock Exchange; (iii) we are the subject of a bankruptcy,
insolvency or similar proceeding; (iv) after the sooner of (x) 18 months after
the date of the Swartz Agreement or (z) the date on which we have made aggregate
puts of common stock in the amount of 2,000,000 shares; and (v) our breach of
certain covenants in the Swartz Agreement.
We have also agreed to issue to Swartz three-year warrants to purchase
shares of our common stock. The warrants are to be issued within five business
days after the end of the second pricing period for each put. The number of
shares of our common stock underlying each warrant will equal 10% of the amount
of shares in the applicable put, and the exercise price per share will equal
125% of the put share price for the applicable put.
MARKET FOR OUR COMMON STOCK
On October 12, 2001, the last reported sales price of our common stock on
the American Stock Exchange was $0.71 per share. As of October 12, 2001, we had
30,931,271 shares of common stock issued and outstanding.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus supplement and the documents
incorporated herein by reference are forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties,
including, among others, those listed under "Risk Factors" on page 7 of the
accompanying prospectus and in the documents incorporated therein by reference.
In some cases, you can identify forward-looking statements by words such as
"anticipates", "believes", "estimates", "seeks", "expects", "plans", "intends",
"future" and similar expressions.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance or achievements and therefore such expectations may be
incorrect. You are cautioned not to place undue reliance on these
forward-looking statements.
All subsequent written and oral forward-looking statements attributable to
us or to persons acting on our behalf are expressly qualified in their entirety
by our cautionary statements. The forward-looking statements included or
incorporated herein are made only as of the date of this prospectus supplement
or as of the date of the documents incorporated by reference. We do not intend,
and undertake no obligation, to update these forward-looking statements.