As filed with the U.S. Securities and
Exchange Commission on
Registration No. -NY
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
Registration Statement
Under
The Securities Act of 1933
New Jersey 2899 223-319-224
State of Standard Industrial IRS Employer
Incorporation Classification Code Identification No.
PPA TECHNOLOGIES, INC.
163 South St.
Hackensack, New Jersey 07601
(201) 457-1221
Address, including zip code and telephone number, including area code of
registrant's principal executive offices and principal place of business or
intended principal place of business.
ROGER L. FIDLER
163 South St.
Hackensack, New Jersey 07601
(Name and Address of Agent for Service)
Copies of Communication to:
Roger L. Fidler, 163 South St., Hackensack, New Jersey 07601
(201) 457-1221
Steve Gutstein, Esq., Attorney at Law, 276 Fifth Avenue, New York, New York
10001
Approximate date of proposed sale to public: As soon as possible after the
effective date of the Registration Statement.
CALCULATION OF REGISTRATION FEE
_____________________________________________________________________
Title of Amount to be Proposed maximum Proposed maximum Amount
each class registered offering price aggregate(1) Registration
of Securities l per Unit (1) offering Price Fee
Units consisting
of 1 Share of
Common Stock
and 1 Class
A Warrant 1,150,000 $6.00 $6,900,000.00 $2,090.91
Common Stock,
no par value
per share,(2)
underlying
Class A
Warrants 1,150,000 $7.00 $8,050,000.00 $2,439.40
Underwriter's
warrants, no
par value 115,000 $0.001 $115.00 $0.04
Units, no
par value
per share,
underlying
Underwriter's
Warrants 115,000 $7.20 $828,000.00 $250.91
Units, no
par value
per share,
underlying
warrants in
Underwriter's
Warrant Units 115,000 $7.00 $805,000.00 $243.94
Total Registration-Fee ----------------------------- $ 5025.20
The Exhibit Index is located at page 54
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Pursuant to Rule 416 there are also being registered such additional
shares as may be issued pursuant to the anti-dilution provisions of the
Warrants.
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 on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
PPA TECHNOLOGIES, INC.
CROSS REFERENCE SHEET FOR PROSPECTUS
(Pursuant to Item 501 of Regulation S-K)
Item No. Caption in Prospectus
1. Forepart of the Registration
Statement and Outside Front Cover
Page of Prospectus............................Forepart, Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus...........................Inside Front Cover Page
3. Summary Information Risk Factors
and Ratio of Earnings
to-Fixed Charges.............................. Prospectus Summary
4. Use of Proceeds.............................. Use of Proceeds
5. Determination of offering Price.............. Description of
Units; Description of Capital Stock
6. Dilution..................................... Dilution
7. Selling Security Holders..................... Not Applicable
8. Plan of Distribution......................... Underwriting
9. Legal Proceedings............................ Legal Proceedings
10. Directors and Executive Officers............. Management
11. Security ownership of Certain
Beneficial owners and Management............. Principal Shareholders
12. Description of Securities to Be
Registered................................... Description of Units
13. Interest of Named Experts and
Counsel ..................................... Legal Counsel, Experts
14. Information With Respect To
The Registrant; Organization
with Five Years.............................. Prospectus Summary;
The Company; Dividend Policy; Selected Financial Information; Management's
Discussion Analysis of Financial Condition and Results of Operations;
Business; Management; Principal Shareholders; Certain Transactions;
Description of the Securities.
15. Disclosure of Commission
Position on Indemnification
For Securities Act Liabilities.................... Not applicable
16. Description of Business....................... Business of the Company
17. Description of Property....................... Business of the Company
18. Interest of Management and Others
in Certain Transactions....................... Certain Transactions;
Principal Shareholders
19. Certain Market Information.................... Risk Factors; Description
of Securities; Underwriting
20. Remuneration of Directors and officers........ Remuneration
21. Financial Statements.......................... Financial Statements
PROSPECTUS
PPA TECHNOLOGIES, INC.
1,000,000 Units, Each consisting of One Share of
One Share of Common Stock and One Class A Redeemable
Common Stock Purchase Warrant,
offered at a price of $6.00 per Unit
_____________________________
All of the Units (the "Units") offered hereby (the "Offering"), each Unit
consisting of one share of common stock, without par value, (hereinafter
referred to as "Share" or "Share of Common Stock") and one "Class A"
Redeemable Common Stock Purchase Warrant (hereinafter referred to as the
"Warrants" or "Redeemable Warrants"), exercisable into one share of common
stock per warrant for a period of one year from the effective date ("Effective
Date") of the registration statement of which this prospectus (this
"Prospectus") is a part at an exercise price of $7.00 per share, are being
offered by PPA Technologies, Inc. (the "Company" or "PPA"). The Warrants are
redeemable at the Company's option commencing [ ] (90 days after the
effective date (the "Effective Date")of the registration statement (the
"Registration Statement") of which the Prospectus is a part) upon 30 days
notice to the Warrant holders at $.05 per Warrant if the closing bid price of
the Common Stock in the over-the-counter market as reported by ("NASD") shall
have for a period of 30 consecutive trading days ending within 15 days of the
notice of redemption average in excess of $8.50 per share (subject to
adjustments in the case of a stock split, stock dividend, recapitalization or
similar event). Since it is the Company's present intention to exercise such
right, Warrant holders should presume that the Company would call the
Redeemable Warrants for redemption if such criteria are met. The Redeemable
Warrants are immediately detachable and separately tradeable from the Units
upon issuance. It is anticipated that the Shares of Common Stock and
Redeemable Warrants will be included on the NASDAQ Small-Cap Market ("Nasdaq")
under the symbols "PPAS" and "PPAW", respectively.
Prior to the offering, there has been no market for the securities of the
company. There can be no assurance that a market for the company's securities
will develop after completion of this offering or, if developed, that it will
be maintained. As a consequence of such a limited market, a purchaser of the
Shares may be unable to sell the Shares when desired and may have to hold the
Shares indefinitely. See "Risk Factors - Limited Trading Market." The
determination of the offering price of the Shares was made arbitrarily by the
Company. See "Risk Factors - Arbitrary Offering Price."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION TO
PUBLIC INVESTORS. A PROSPECTIVE PURCHASER MAY LOSE HIS TOTAL INVESTMENT. SEE
"RISK FACTORS" AND "DILUTION."
__ ___________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY It is A CRIMINAL OFFENSE.
_________________________________________________________________
_________________________________________________________________
Price to Underwriting Proceeds to
Public Discounts(l) Company(2)
_________________________________________________________________
Per Unit $6.00 $0.60 $5.40
_________________________________________________________________
Total(3) $6,000,000 $600,000 $5,400,000
_________________________________________________________________
_________________________________________________________________
(1) The Company will agree, subject to the sale of at least 1,000,000 Units
being offered hereby, to pay to Kenneth Jerome & Co., as the representative of
the several Underwriters (the "Representative") the Underwriting Discounts.
Additionally, the Company agrees: (i) to indemnify the Underwriter or Dealer
against certain liabilities, including liabilities under the Securities Act of
1933; and, (ii) to sell to the Underwriter, at a nominal price, warrants to
purchase 10% of the number of Units sold by the Underwriter or Dealers, with
an exercise price of $7.20 per Unit, which warrants shall be exercisable for
four years commencing one year after issuance.(See "Underwriting.")
(2) Before deducting expenses payable by the Company in connection with the
Offering estimated at approximately $347,000. These expenses include filing
fees, printing, a 3% non-accountable fee to the Underwriters, legal and
accounting fees. Net proceeds to the Company after such expenses are estimated
to be $5,053,000.
(3) The Company has granted to the Underwriters an option (the "Over-Allotment
Option") exercisable within 45 days after the date of this Prospectus to
purchase up to 150,000 additional Units, upon the same terms and conditions as
set forth above, solely to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts, and
Proceeds to Company will be $6,900,000, $690,000, and $6,210,000,
respectively. See "Underwriting."
The date of this Prospectus is 1997.
Kenneth Jerome & Company, Inc.
In connection with this offering, the Underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the Units and the
components thereof at a level above that which might otherwise prevail in the
open market. Such transactions may be effected on the NASDAQ SmallCap market.
Such stabilizing, if commenced, may be discontinued at any time.
The Units are offered by the underwriters subject to prior sale, to allotment
and withdrawal, and to cancellation or modification of the offer, without
notice. The Underwriters reserve the right, in their sole discretion, to
reject any order, in whole or in part, for the purchase of any Units. In
addition, each Underwriter reserves the right to cancel any confirmation of
sale, even after the purchase price has been paid, if, in the opinion of that
Underwriter, completion of such sale would violate Federal or State securities
laws or a rule or policy of The National Association of Securities Dealers,
Inc.
AVAILABLE INFORMATION
The Company intends to file with the Securities and Exchange Commission (the
"Commission"), New York, New York, a registration statement on Form SB-2 under
the Act with respect to the Units offered hereby. For further information
about the company and the securities being offered hereby, reference is made
to the registration statement and to the financial statements and exhibits
filed as a part thereof. Statements contained in this Prospectus as to the
contents of any contract or any other document are not necessarily complete,
and in each instance, reference is made to the copy of such contract or
document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by such reference. The registration
statement, including exhibits thereto, may be inspected without charge at the
Commission's principal office in Washington, D.C., and the Northeast Regional
Office located at 7 World Trade Center, New York, New York and copies of all
or any part thereof may be obtained from such offices after payment of the
fees prescribed by the Commission.
Reports to Shareholders
The Company intends to furnish its shareholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year, commencing with the next fiscal year. In addition, the
Company may, from time to time, issue unaudited interim reports and financial
statements.
Glossary
Coalescent - A liquid material which when exposed to the environment becomes a
solid.
Volatile Organic Compound ("VOC") - liquid substances which evaporate when
exposed to the environment.
Coupling Agent - A material which can either bond two materials together with
greater strength or, alternatively, can also serve to bond two different
materials together more weakly.
Resin - Organic polymer.
Hologenated - Compounds containing a halogen, e.g. chlorine or flourine.
Phr - Parts per hundred of resin.
V0 - Flame spread rate.
Plate-out - Bloom to the surface of mobile phases.
Cross-linking - Establishment of chemical bonds between different substances.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed information
and financial statements, including the notes thereto, appearing elsewhere in
this Prospectus and, accordingly, should be read in conjunction with such
information and statements.
The Company
PPA Technologies, Inc. (the "Company" or "PPA") was incorporated on July 22,
1994 under the laws of the State of New Jersey. The Company's principal
offices are located at 163 South St., Hackensack, NJ 07601 and its telephone
number is (201) 457-1221.
PPA Technologies, Inc., hereinafter referred to as PPA Technologies or "the
Company", was formed to develop and manufacture innovative specialty chemical
products with applications in the plastics and coatings industries. After
research, development and testing, PPA has begun to sell certain products.
In general, PPA Technologies' products improves processing and/or the end
product. This is accomplished through its proprietary Coupling Agents and
Reactive Coalescents. In these areas, the Company's products are an advance
in environmental performance, product performance, cost performance, or, in
many cases, performance in more than one of these parameters. (See "Business
of the Company").
The Offering
The Company is offering hereby through the Underwriter on a "firm commitment
basis" 1,000,000 Units at an offering price of $6.00 per Unit. Each Unit is
comprised of one (1) share of common stock (no par value per share) and one
(1) Class A redeemable common stock purchase warrant exercisable for five
years from the Effective Date at an exercise price of $7.00 per common share.
The Redeemable Common Stock Purchase Warrants (hereinafter referred to as the
"Warrants" or "Redeemable Warrants") are redeemable at the Company's option
commencing [ ] (90 days after the Effective Date) upon 30 days notice
to the Warrant holders at $.05 per Warrant if the closing bid price of the
Common Stock in the over-the-counter market as reported by NASDAQ shall have
for a period of 30 consecutive trading days ending within fifteen days of the
notice of redemption average in excess of $8.50 per share (subject to
adjustments in the case of a reverse stock split, stock dividend, etc.). The
Redeemable Warrants are immediately detachable and separately tradeable from
the Units upon issuance. The offering price of the Units and the exercise
price of the Redeemable Warrants were determined by the Company and the
Underwriter. Such prices bear no relation to the book value, assets or
earnings of the Company, or to any other generally recognized objective
criteria of value.
Common Stock:
On June 20, 1996, the stockholders approved an increase in the authorized
capital to 10,000,000 Shares of Common Stock par value, and 1,000,000 shares
of preferred stock having a par value of $100.00 each. On June 28, 1996 the
Board of Directors effected a 1,000 to 1 stock split upon the filing of the
Amendment of the Certificate of Incorporation authorized by the stockholders.
All financial and stock related numbers set forth herein reflect this stock
split, except where otherwise specifically stated.
Common Stock Outstanding at June 30, 1997 ....... 1,555,000(1)
Preferred Stock Outstanding at June 30, 1997 ..... 3261(1)
To be offered(2) ................................ 1,000,000
To be outstanding after the offering(2).......... 2,555,000
Use of Proceeds........... The Company intends to use the net proceeds of this
offering principally for working capital purposes, including the general
expansion of its business, the development of new products, the acquisition of
equipment and other general business purposes. The proceeds of this Offering
will enable the Company to expand marketing of its entire line of products, to
build an inventory of such products and to market and advertise them. (See
"Use of Proceeds.")
Risk Factors and Dilution ..... Prospective Investors should carefully
consider the factors described under the captions "Risk Factors" and
"Dilution."
NASDAQ
Proposed Listing Symbol (3) .............................PPAS, PPAW
______________
(1) Does not include an aggregate of 500,000 shares reserved for issuance
under the Company's Stock Grant and Stock Option Plans nor does it include
options on 1,275,000 shares, exerciseable at $1.00 per share, held by
management.
(2) Does not include the exercise of any of the Redeemable Warrants contained
in said Units, nor the exercise of any Underwriter's Warrants or the Unit
Warrants contained in the Units issuable upon the exercise of the
Underwriter's Warrants, nor the outstanding warrants held by current
shareholders.
(3) The Company intends to apply for and anticipates listing on the NASDAQ
Small Cap Market, but there can be no guarantee that such listing will be
approved, or if approved that such listing will be maintained, or if listed
that a market will develop or if developed, that such market will be
sustained.
SUMMARY FINANCIAL INFORMATION
The following table summarizes certain selected financial data of the Company
and is qualified in its entirety by the more detailed financial statements
contained elsewhere in this Memorandum.
Income Statement:
Year Ending Year Ending Year Ending
June 30,1995 June 30, 1996 June 30, 1997
Sales 226,202 155,525 131,335
Cost Of Goods 156,348 104,552 61,453
Gross Profit 69,854 50,973 69,882
Operating Expenses 181,651 165,388 211,080
Other Income -0- -0- -0-
Other Expenses -0- -0- 3065
Net Profit(Loss) (111,797) (114,715) (144,263)
Per share (0.07) (0.08) (0.09)
Shares Outstanding 1,555,000 1,555,000 1,555,000
Dividends -0- -0- -0-
Balance Sheet
as of: June 30, 1997 As Adjusted(1)
Cash And Cash Equivalents 210,657 5,263,657
Working Capital (deficit) (57,332) 4,995,668
Total Assets 290,976 5,343,976
Current Liabilities 313,401 313,401
Long Term Debt -0- -0-
Stockholders' (deficit) (22,425) 5,030,575
Equity
(1) Gives effect to the issuance and sale of the maximum 1,000,000 Units
offered hereby and the receipt of the estimated net proceeds ($5,053,000)
before their application. This does not take into account any potential
revenues from the 150,000 Units allotted for the over-allotment. See "Use of
Proceeds".
RISK FACTORS
The Units being offered hereby are speculative and involve a high degree
of risk. In addition to the other information in this Prospectus, prospective
investors, prior to making an investment, should carefully consider the
following risks and speculative factors inherent in and affecting the business
of the Company and this offering.
Risks Associated With Forward-Looking Statements. This Prospectus
contains certain forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Securities and Exchange Act of
1934, as amended, (the "Exchange Act" and the Company intends that such
forward-looking statements be subject to the safe harbors for such statements
under such sections.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that the Company will continue to design,
market and provide new products and services on a timely basis, that
competitive conditions in the polymers and additives markets will not change
adversely or materially, that demand for the Company's products will continue
or increase, that the market will accept the Company's new and existing
products, that the Company will retain and add qualified sales, research and
systems integration personnel and consultants, that the Company's forecasts
will accurately anticipate market demand, and that there will be no material
adverse change in the Company's operations or business. The foregoing
assumptions are based on judgments with respect to, among other things, future
economic, competitive and market conditions, and future business decisions,
all of which are difficult or impossible to predict accurately and many of
which are beyond the Company's control. Accordingly, although the Company
believes that the assumptions underlying the forward-looking statements are
reasonable, any such assumption could prove to be inaccurate and therefore
there can be no assurance that the results contemplated in forward-looking
statements will be realized.
Accumulated Losses; History of Operating Losses; Explanatory Paragraph Within
Accountants' Opinion. The Company commenced in July of 1994. In order to
execute its business strategy and develop new products, the Company will
require significant funds. Increased spending and decreased sales levels
resulted in a net loss of $144,263 for the fiscal year ended June 30, 1997,
and may result in future losses as the Company will incur significant expenses
in connection with research and development of its products, development of
its direct and indirect selling and marketing strategies, and the hiring of
additional personnel. There can be no assurance that the Company will be
profitable in the future or that the net proceeds of this offering, together
with any funds provided by operations and presently available capital, will be
sufficient to fund the Company's ongoing operations. At June 30, 1997, the
Company's current liabilities exceeded its current assets by $57,332, its cash
balance was $210,657. The Company is dependent on generating additional sales
to improve cash flow, and it is possible that the Company will require
additional debt or equity bridge financing prior to completion of this
offering. The Company believes its current operating funds, along with the
proceeds of the offering after amounts used to repay debt, will be sufficient
to finance its cash requirements for at least the next 12 months. See "Use of
Proceeds." If the Company has insufficient funds, there can be no assurance
that additional financing can be obtained on acceptable terms, if at all. The
absence of such financing would have a material adverse effect on the
Company's business, including a possible reduction or cessation of operations.
The report of the Company's independent accountants on the Company's financial
statements as of June 30, 1997 contains an explanatory statement concerning
the Company's ability to continue as a going concern. See "Financial
Statements-Report of Independent Auditors."
No Trading Market. There is no trading market for the Company's Common Stock
and there is no assurance that such a market will develop after this offering,
or if such a market develops, that it will be maintained. Holders of the
Shares may, therefore, have difficulty in selling their stock should they
desire to do so and should be able to withstand the risk of holding their
Shares indefinitely.
Proceeds of Offering. A substantial portion of the proceeds of the
offering will be used for general working capital. If the maximum number of
Shares is sold, working capital will comprise 8.2% of total net proceeds.
Management will have broad discretion as to the use of such proceeds and
management reserves the right to reallocate all proceeds to working capital.
See "Use of Proceeds."
Additional Capital. The Company believes that the minimum proceeds of this
offering will allow the Company to meet all of its presently planned future
operations for at least twelve months. However, a significant portion of the
proceeds will be used to develop and improve product lines. Thus, while the
Company has no plans that would require it to seek additional funding, it may
be required to do so to complete or accelerate these development programs.
There can be no assurance that such funding will be available on terms
acceptable to the Company, and the failure to procure such funding on
acceptable terms could materially and adversely affect the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources."
Financial Condition; Decreasing Sales; The Company's sales to date have been
lower in each succeeding year. There can be no assurance that this trend will
be reversed. Even applying the proceeds of this offering, the Company might
not be able to significantly improve revenues and profitability. Failure to
reverse this trend would materially and adversely affect the Company's ability
to exist.
Limitations Imposed by Environmental Regulation. Federal, state and local
environmental laws govern air emissions and discharges into water and the
generation, transportation, storage, and treatment and disposal of solid and
hazardous waste. These laws establish standards governing most aspects of the
construction and operation of the Company's facilities, and often require
multiple governmental permits before these facilities can be constructed,
modified, or operated. There can be no assurance that all required permits
will be issued for the Company's projects under development or for future
projects, or that the requirements for continued environmental regulatory laws
and policies governing their enforcement may change, requiring new technology
or stricter standards for the control of discharges of air or water
pollutants, or for solid or hazardous waste or ash handling and disposal.
Such future developments could affect the manner in which the Company operates
its plants and could require significant additional expenditures to achieve
compliance with such requirements. It is possible that compliance may not be
technically or economically feasible.
Untested Marketing Strategy. To date, the Company has experienced development
and shipment delays due to a lack of working capital and resultant inadequate
staffing and there is no assurance that such delays will not continue. To
date, the Company's product marketing efforts have been very limited and the
Company has not been able to capitalize on the interest generated by said
marketing efforts. There is no assurance that if the Company applies the
proceeds of this offering to marketing and distribution that these problems
will disappear.
Dependence On Others; Limited Manufacturing Capability. The Company's
strategy for the research, development, marketing, distribution, and
commercialization of its products entails entering into various arrangements
with third party toll manufacturers, and it is dependent upon the ability of
these outside parties to perform their responsibilities. The Company may also
enter into marketing agreements and arrangements with various third parties,
rely on collaborative partners to conduct research efforts and trials, and to
manufacture and distribute certain of the Company's products. The Company
does not currently have in place all such relationships. There can be no
assurance that the Company will be successful in establishing all the
necessary collaborative arrangements or that, if established, the arrangements
will be successful or on terms that will enable the Company to achieve
profitability.
Possible Delisting of Securities from Nasdaq System; Risks Relating to
Low-Priced Stocks. It is currently anticipated that the Company's Common
Stock and Warrants will be eligible for listing on the Nasdaq SmallCap market
upon the completion of this offering. In order to continue to be listed on
Nasdaq, however, the Company must maintain $2,000,000 in total assets, a
$1,000,000 market value of the public float and $1,000,000 in total capital
and surplus. In addition, continued inclusion requires two market-makers and a
minimum bid price of $1.00 per share. The failure to meet these maintenance
criteria in the future may result in the delisting of the Common Stock from
Nasdaq, and trading, if any, in the Company's securities would thereafter be
conducted in the non-Nasdaq over-the-counter market. As a result of such
delisting, an investor could find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's
securities.
In addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to fall below $5.00 per
share, trading in the Common Stock would also be subject to the requirements
of certain rules promulgated under the Exchange Act, which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a penny stock (generally, any non Nasdaq equity security that has a
market price of less than $5.00 per share, subject to certain exceptions).
Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers
who sell penny stocks to persons other than established customers and
accredited investors (generally institutions). For these types of
transactions, the 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. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions
in the Common Stock, which could severely limit the market price and liquidity
of the Common Stock and the ability of purchasers in this offering to sell the
Common Stock in the secondary market.
Business Dependent Upon Key Employee. The business of the Company is
specialized. The continued employment of Gerald Sugerman is critical to the
Company's proposed product development and the conduct of the Company's
business. Upon closing, the Company intends to procure key man insurance
insuring Mr. Sugerman. There can be no assurance that the Company will be
able to retain Mr. Sugerman or other equally qualified individuals to run the
affairs of the Company.
Need To attract And Retain Qualified Personnel. The Company currently has
only four full time employees. The Company's ability to develop, produce, and
market its products, and to achieve a competitive industry position will
depend, in large part, on its ability to attract and retain qualified
personnel, including a Chief Financial Officer. Prior to large scale
commercial production of its products, the Company will have to hire
significant numbers of technical and production personnel. Competition for
qualified personnel may be intense and the Company may be required to compete
for such personnel with companies having substantially greater financial and
other resources. The Company's failure to attract and retain such personnel
could have a materially adverse effect upon its business.
Competition. The Company is aware of several business entities in the
United States marketing products similar to those offered by the Company and
the Company's customers. Some of these companies have substantially greater
capital resources, larger staffs and more sophisticated facilities than the
Company. Such companies may produce products which are more effective than
any developed by the Company or its customers and may be more successful than
the Company or its customers in their production and marketing of such
products. There can be no assurance that other companies will not enter the
markets developed by the Company or its customers. There can be no assurance
that the Company will be able to compete successfully in the future with
existing or new competitors. See "Business of the Company--Competition."
No Cumulative Voting - Control by Management. The Company's Certificate
of Incorporation does not provide for cumulative voting. The Company's
present shareholders will own approximately 60.9% (not including the exercise
of options held by management, which, if exercised, would increase such
ownership to 73.4%) of the Company's outstanding Common Stock following the
offering, and thus will be able to continue to elect all of the Company's
directors and control the Company. More specifically, Management, will own
approximately 44% (not including the exercise of options held by management,
which, if exercised, would increase such ownership to 62.3%) of the Company's
outstanding Common Stock following the offering. Thus, Management will be
able to continue to control the election of all of the Company's directors
and control the Company. See "Principal Shareholders" and "Description of
Capital Stock."
Lack of Dividends. The Company has not paid dividends since its
inception and does not intend to pay any dividends in the foreseeable future,
but intends to retain all earnings, if any, for use in its business
operations. Prospective investors who seek dividend income from their
investment should not purchase the Shares offered by this Prospectus. See
"Description of Capital Stock--Dividends."
Immediate Substantial Dilution. The present shareholders have acquired a
controlling interest in the Company at a cost substantially below the offering
price of the Shares. Upon the completion of the offering, investment in the
Company's Common Stock will result in an immediate substantial dilution of
approximately $4.03 per share if all Units are sold at $6.00 per Unit, while
the present shareholders will realize an immediate increase in the net
tangible book value of approximately $1.97 per share if the all Units are
sold. The foregoing assumes that no Redeemable Warrants are exercised and does
not take the over-allotment into account. See "Dilution."
Management Experience. Gerald Sugerman is the originator of the
Company's business concept and has run the Company since inception. No
officer of the Company has had, prior to the organization of the Company,
experience in the managerial aspects of the inks, paints, and plastics polymer
additives industry. Since the business is relatively new, the experience of
management can give no assurance that the business will continue to succeed.
See "Management."
Arbitrary offering Price. The Offering Price at which the Shares are
being offered has been arbitrarily determined by the Company and the
Underwriter. There is no relationship between the said prices and the
Company's assets, book value, net worth or any other economic or recognized
criteria of value.
Sales Pursuant to Rule 144. Officers, Directors and/or affiliates of the
Company hold 1,555,000 Common Shares of the Company, all of which are, subject
to quantity limitations discussed below, available for sale. Such shares are
"restricted securities" under Rule 144, as promulgated by the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, which
shares may not be freely resold. Rule 144 provides, in essence, that a
shareholder who is an affiliate of the Company, after holding restricted
securities for a period of two years, may, every three months, sell them in an
unsolicited brokerage transaction in an amount equal to 1% of the Company's
outstanding Common Shares, or the average weekly trading volume, if any,
during the four weeks preceding the sale. Non-affiliated shareholders holding
restricted securities are not subject to the 1% limitation and may sell
unlimited amounts of shares they own, under certain circumstances, after a one
year holding period. If a substantial part of the shares which can be sold
were so sold, the price of the Company's Common Shares might be adversely
affected. (See "Principal Shareholders" and "Underwriting.")
Underwriter's Warrants The Company has agreed to sell to the
Representative Underwriter Warrants (the "Underwriter's Warrants") to purchase
an aggregate of 10% of the Units sold by the Company hereby. The
Underwriter's Warrants may be exercised for a period of four years commencing
one year after the date of this Prospectus, at a price equal to 120% of the
public offering price. For the life of the Underwriter's Warrants, the holders
are given, at a nominal cost, the opportunity to profit from a rise in the
market price for the Common Stock of the Company without assuming the risk of
ownership, with a resulting dilution in the interest of the other securities
holders. As long as the Underwriter's Warrants remain unexercised, the terms
under which the Company could obtain additional capital may be adversely
affected. Moreover, the holders of the Underwriter's Warrants might be
expected to exercise them at a time when the Company would, in all likelihood,
be able to obtain additional capital by a new offering of its securities on
terms more favorable than those provided by the Underwriter's Warrants. See
"Descriptions of Securities - Underwriter's Warrants" and "Underwriting."
Product Protection and Infringement. The Company relies on a combination of
patent and trade secret laws, nondisclosure and other contractual agreements
and technical measures to protect its proprietary rights in its products. The
company has applied for several patents, both domestic and foreign, and will
be applying for several more patents. Such protection may not preclude
competitors from developing products with features similar to the Company's
products. The Company believes that its products, trademark and other
proprietary rights do not infringe on the proprietary rights of third parties.
There can be no assurance, however, that third parties will not assert
infringement claims against the Company in the future. The successful
assertion of such claims would have a material adverse effect on the Company's
business, operating results and financial condition. See "Business of the
Company - Proprietary Rights."
Possible Difficulties In Obtaining Supplies. The success of the Company's
additive products will depend on the ability of the Company to obtain
significant amounts of raw materials at affordable prices. The Company may
encounter shortages or delays in obtaining adequate amounts of raw materials,
and the Company has not yet entered into an arrangement pursuant to which it
will ensure adequate access to those materials. The failure of the Company to
obtain adequate materials at affordable prices could have a material adverse
affect on the Company's ability to produce and deliver its products.
Credit Risk. Although the Company has not experienced any material
losses related to client inability to pay for its services, as the Company's
customer base expands it may be subject to increased credit risk. Because the
Company's revenues are derived from a small number of significant customers,
the Company's receivables are similarly concentrated. The inability of one of
these significant customers to satisfy its obligations to the Company could
have an adverse material affect on the Company. Also, in the event that the
Company's additives performance does not meet customer expectations, customers
could hold back on payments for portions of overall contract prices until
additional services have been performed and additives added. Such hold backs
could cause the Company to: (I) incur losses on its product or earn less
profit than anticipated; or (ii)fail to receive payments for certain portions
of its product. See "Risk Factors-Revenue Concentration From Small Group of
Customers."
Authorization and Issuance of Preferred Stock. The Company's Articles of
Incorporation, as amended authorize the issuance of up to 1,000,000 shares of
Preferred Stock with such rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, under the Articles of
Incorporation the Board of Directors may, without stockholder approval, issue
Preferred Stock with dividend, liquidation, conversion, voting, redemption or
other rights which could adversely affect the voting power or other rights of
the holders of the Common Stock. The issuance of any shares of Preferred
Stock, having rights superior to those of the Common Stock, may result in a
decrease of the value or market price of the Common Stock and could be used by
the Board of Directors as a device to prevent a change in control of the
Company. Holders of the Preferred Stock may have the right to receive
dividends, certain preferences in liquidation and conversion rights. The
Company has issued any Preferred Stock in payment of debt and services
rendered, and until this Offering is completed, the Company intends to
continue to do so. See "Description of Securities-Preferred Stock."
Current Prospectus and State Registration Required to Exercise Warrant.
Purchasers of the Warrants included as a component of the Units in this
offering will not be able to exercise them unless at the time of exercise, a
current prospectus under the Securities Act, covering the shares of Common
Stock issuable upon exercise of the Warrants, is effective and such shares
have been registered for sale or are exempt from registration under the
applicable securities or "blue sky" laws of the states in which the various
holders of the Warrants reside. Although the Company has undertaken to use
reasonable efforts to maintain the effectiveness of a current prospectus
covering the Common Stock underlying the Warrants, there can be no assurance
that the Company will be able to do so. Although the Company will use its best
efforts to register or qualify the shares for sale in jurisdictions where the
registered holders of the Warrants reside, no assurance can be given that the
Company will be able to do so. Further, the Company may determine not to
register or qualify the shares underlying the Warrants in jurisdictions where
time and expense do not justify such action. The value of the Warrants may be
greatly reduced if a current prospectus covering the shares underlying the
Warrants is not effective or if such Common Stock is not registered or exempt
from registration in the states in which the holders of the Warrants then
reside. See "Description of Securities."
Limitations on Liability of Directors. The Company's Articles of
Incorporation substantially limit the liability of the Company's Directors to
its shareholders for breach of fiduciary or other duties to the Company, to
the full extent permitted by New Jersey law. See "Description of
Securities-Indemnification and Waiver of Director Liabilities."
USE OF PROCEEDS
The net proceeds to be realized by the Company from the sale of the Units
offered hereby, after deducting all commissions and expenses of the offering,
is estimated at $5,053,000. Included in the expenses of this offering are the
commissions and projected legal fees, accounting fees, filing fees and
printing costs. No officer, director or affiliate of the Company, or
associated person of them, will receive any portion of the gross proceeds of
this offering, except for legal fees owed to the law firm of its President in
an amount not to exceed $100,000.00, and the forward going payments due to
Gerald Sugerman, Vice President and Secretary of the Company for future
payments due under his employment contract. (See "Remuneration of Officers and
Directors") These funds will be used by the Company in substantially the
following manner:
ADMINISTRATIVE
Equipment $ 6,000
Supplies 2,000
Salaries 240,000
Overhead 60,000
308,000
PRODUCTION & CUSTOMER SERVICE
Salaries 240,000
Equipment 1,800,000
Inventory 450,000
2,490,000
PRODUCT DEVELOPMENT
Equipment 300,000
Supplies 175,000
Salaries 110,000
585,000
MARKETING
Advertising 500,000
Salaries 650,000
Travel and Entertainment 50,000
1,200,000
WORKING CAPITAL 470,000
TOTAL ------------------------ $5,053,000
Since the proceeds of this Offering, will be applied over time, the
actual expenditure of such proceeds for any purpose could vary significantly
from the anticipated expenditures described above. The Company reserves the
right, therefore, to reallocate proceeds among the uses described above,
depending upon factors such as the results of the Company's marketing efforts,
the Company's success in developing new products, and technological advances
in the industry.
The net proceeds of this offering may not be used immediately. Any net
proceeds of this offering that are not expended immediately will be deposited
only in short-term interest bearing obligations of the United States
government. See "MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS".
DIVIDEND POLICY
The payment by the Company of dividends, if any, in the future rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other relevant factors. The Company has not
paid any dividends to date and does not anticipate that it will be in a
position to pay any dividends in the foreseeable future.
DILUTION
As of June 30, 1997, there were 1,555,000 of the Company's Common Shares
issued and outstanding. See "Description of Securities." If all Units
(1,000,000) offered hereby are sold there will be 2,555,000 Shares
outstanding.
As of June 30, 1997, the approximate net tangible book value of the Company's
common stock (total tangible assets less total liabilities) was $(23,775) or
$(.02) per share. See "CAPITALIZATION." Giving effect to the sale of
1,000,000 Units and receipt of the net proceeds therefrom, the pro forma net
tangible book value of the Company would be approximately $5,029,225, or $1.97
per share. This represents an immediate dilution of $4.03 for each share of
Common Stock purchased by new investors and an immediate increase of $1.99 per
share to existing shareholders.
Sale price per unit $6.00
Net tangible book value per unit
before offering............ $(0.00)
Increase to present shareholders
in net tangible book value
attributable to sale of
shares offered........... $1.99
Pro Forma net tangible book value
per share after offering... $1.97
Dilution of net tangible book
value per share to new
investors.................. $4.03
The officers and directors of the Company have acquired their common
shares for no cash and for property and services valued at $1,450. If the
maximum number of Shares is sold, the new investors shall acquire 1,000,000
shares (about 39.13% of the total outstanding common shares) at a price of
$6.00 per share or a total of $6,000,000. The following table summarizes the
number of shares acquired from the Company and the aggregate consideration
paid by the existing shareholders and to be paid by new shareholders in this
Offering:
Number of Percentage Aggregate
Shares Acquired of Shares Consideration
from Company Held by Group Paid for Shares
Existing
shareholders........1,555,000 60.87% $76,750
New shareholders....1,000,000 39.13% $6,000,000
Total...............2,555,000 100.0% $6,076,750
SELECTED FINANCIAL INFORMATION
The following table sets forth certain selected financial data for the years
ended June 30, 1995, 1996, and 1997. This information is derived from the
Company's financial statements which appear elsewhere in this Prospectus. The
selected financial data is qualified by reference to, and should be read in
conjunction with, the Company's financial statements and notes thereto
included elsewhere in this Prospectus and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS".
Balance Sheet
as of:
Year Ending Year Ending Year Ending
June 30,1995 June 30, 1996 June 30, 1997
Sales 226,202 155,525 131,335
Cost Of Goods 156,348 104,552 61,453
Gross Profit 69,854 50,973 69,882
Operating Expenses 181,651 165,388 211,080
Other Income -0- -0- -0-
Other Expenses -0- -0- 3,065
Net Profit(Loss) (111,797) (114,715) (144,263)
Per share (0.07) (0.08) (0.09)
Shares Outstanding 1,555,000 1,555,000 1,555,000
Dividends -0- -0- -0-
Balance Sheet
as of:
June 30, 1997 As Adjusted(1)
Cash And Cash Equivalents 210,657 5,263,657
Working Capital (defecit) (57,332) 4,995,668
Total Assets 290,976 5,343,976
Current Liabilities 313,401 313,401
Long Term Debt -0- -0-
Stockholders' (defecit) (22,425) 5,030,575
Equity
(1) Gives effect to the issuance and sale of the maximum 1,000,000 Units
offered hereby and the receipt of the estimated net proceeds ($5,053,000)
before their application, including the application to the expenses of this
offering. This does not take into account any potential proceeds from the
150,000 shares exercisable from the over-allotment option, nor any proceeds
from exercise of the Redeemable Warrants or the Underwriters Warrants. See
"Use of Proceeds".
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997 and as adjusted to give effect to the issuance and sale of the shares
upon the closing of this offering:
Actual As Adjusted
Current Liabilities 313,401 313,401
Long Term Liabilities 0 0
Stockholders' Equity:
Preferred Stock 296,600 296,600
Common Stock, no par
value authorized
10,000,000 shares;
issued and outstanding
1,555,000 shares; as
adjusted 2,555,000 51,750 5,053,750
Deficit Accumulated During
Development Stage (370,775) (370,775)
Total Liabilities and
Stockholders' Equity (22,425) 5,030,575
Total Capitalization 290,976 5,343,976
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE PERIOD
FROM INCEPTION (JULY 22, 1994) TO JUNE 30, 1997.
Development stage activities.
The Company has been a development stage enterprise from its inception July
22, 1994, to June 30, 1997. During this period, management devoted the
majority of its efforts to obtaining new customers for its products,
developing sources of supply, developing and testing formulas, pursuing and
finding a management team to begin the process of: completing its marketing
goals; furthering its research and development for its products; marketing
limited quantities of the Company's products; completing the documentation for
and selling initial shares through the Company's private placement; and
completing the documentation for the Company's initial public offering. These
activities were funded by the Company's management and investments from
stockholders and borrowings from related third parties. The Company has not
yet generated sufficient revenues during its limited operating history to fund
its ongoing operating expenses, repay outstanding indebtedness, or fund its
product development activities. For the period of inception July 22, 1994, to
June 30, 1997, the Company completed the development of its first product
line.
Results of operations.
Results of Operations for the period of inception (July 22, 1994) to June 30,
1997
Revenues were $513,062. Cost of goods sold was $322,353. Gross profit was
$190,709.
General and Administrative costs were $558,119 consisting of $550,749 of
general and administrative expenses, and $7,370 incurred for depreciation and
amortization. The net loss for the period was $370,775.
Liquidity and capital resources.
The Company increased liquidity by $210,657 from a cash balance of $1,000 at
the Company's inception through the sale of $249,315 in convertible notes
payable, and the sale of 25,000 shares of common stock aggregating $50,000.
The Company expended $5,000 for security deposits, and purchased $35,897 in
equipment, $42,679 in inventory, and has invested 2,733 in accounts
receivable.
The Company is initiating an initial public offering of 1,000,000 Units at
$6.00 per Unit for an aggregate of $6,000,000. Management believes that the
present cash balance will pay the initial cost of beginning the set-up of the
business and the initial cost of the Offering. The Company will defer the
expenses of the Offering until the Offering is completed and the offering
expenses will be deducted from proceeds received therefrom. The Offering
proceeds will be sufficient to satisfy Management's objectives of purchasing
equipment for office and production of $1,806,000, purchasing supplies of
$177,000, financing the payment of salaries of $1,240,000, pay advertising of
$500,000, purchase inventory of $450,000, pay overhead of $60,000, pay travel
and entertainment expenses of $50,000, provide working capital of $2,750,500
pay Underwriter's Discounts of $600,000 and pay projected offering expenses of
$347,000.
BUSINESS OF THE COMPANY
SUMMARY
PPA Technologies, Inc., hereinafter referred to as "PPA" or "the Company", was
incorporated in the State of New Jersey in July, 1994 to develop and
manufacture innovative specialty chemical products with broad application in
the plastics and coatings industries. The Company now markets coupling agents
and has recently launched the marketing of paints and coatings utilizing the
Company's proprietary reactive coalescent technology.
THE INDUSTRY
Industry
The Company operates in two industries, plastics and coatings. Each of these
are vast in total worldwide production and sales.
The plastic industry is composed of several subsets, however to present a
concept of general size, worldwide sales of polyvinyl chloride ("PVC")
exceeded 18 billion dollars in 1995. Sales by the twenty five largest film
and sheet plastics manufactures were 12.4 billion dollars in 1996. Domestic
sales of PVC pipe totaled about 8.7 billion dollars in 1996.
The global paints and coatings market totaled $65 billion in 1995. In North
America alone 4.7 million metric tons were produced in 1995 having a value of
about 15 billion dollars. The top ten producers accounted for about 60% of
the market.
Coupling Agents
Coupling agents are organometallic compounds which may be delivered in liquid,
powder or pelletized forms depending primarily upon customer need. These
products are used primarily by plastics compounders and manufacturers of
plastic products to obtain improved line speed, faster throughput, lower
operating temperatures and pressures, better dry blend and hot melt flow,
reduced energy requirements, better control over wall/sheet thickness, higher
impact resistance and greater flame retardance.
Since only small quantities (.2 to 2% of the total product mix by weight) of
these compounds are used, worldwide market volumes of coupling agents are
quite low and total only several million pounds. However, because of the great
benefits to be derived from their use, profit margins on coupling agents are
quite high. Also, the totality of products in which coupling agents could be
used is vast, including at least 10% of the total plastics output worldwide.
At present there are only two sources of these compounds, one of which is PPA.
Reactive Coalescents
Reactive Coalescents allow resin producers and coatings end-users to utilize
Zero VOC solutions in place of current solvent-based packages. In
architectural and industrial coatings, volatile organic solvents have been
historically required and applied to a) dissolve the resin, and b) to provide
coalescing action. These traditional solvents, which comprise the competing
products for the Company's reactive coalescents, have markets exceeding $5
billion per year. Historically they have been used because of their low price
and a lack of concern regarding the environmental impact of their use, i.e.
the evaporation of the solvent into the air. With increasing restrictions
being placed upon the use of VOC's because of these environmental concerns the
use of solvents is under wide spread attack and many companies have been
attempting to develop replacements for these solvents in a wide variety of
applications. To date such replacements have been generally unsatisfactory and
limited in application.
The architectural coatings market alone was over 450 million gallons in 1995
out of a total paint and coatings volume of one billion gallons. Reactive
coalescents typically comprise 15% of the complete formulation, for an
architectural requirement of 67.5 million gallons of reactive coalescents or
$918 million. As the Clean Air Act, 42 U.S.C. ((7401-7671, is further
enforced along with new environmental legislation, the need to replace solvent
with chemical coalescents will increase.
According to the Chemical Marketing Reporter, October 19, 1995 edition "The
$300 million additives segment is expected to continue to outpace the coatings
business as a whole, and the bulk of this growth comes from the push to reduce
solvent use." The percent solvent in these formulations should continue to
shrink in favor of water and additives, including reactive coalescents.
Flame Retardants
Flame retardants comprise 40% to 50% of all additives for plastics worldwide.
Historically, halogenated materials have been the preferred flame retardants.
In the past ten years, this group of chemicals has become the subject of
legislated restrictions and in general has lost market share to less effective
additives because of well known disadvantages: they often cause localized
corrosion of metals in direct contact (e.g. wire and cable), cannot incinerate
scrap or used product due to hazardous fumes generated, and their thermal
decomposition and/or combustion results in toxic fumes. Effective early in
1991, Western Electric banned all use of halogenated chemicals from its wire
and cable coatings.
Non-halogenated chemicals are available, with significant drawbacks, including
reject rates of 8 to 30% due to poor wetting and/or dispersion of flame
retardant. These flame retardants as a rule do not melt and therefore will
inhibit hot melt flow, making it necessary to employ higher cost resin for
acceptable processing.
Flame retardants comprise a significant percentage of all additives for
plastics worldwide. Almost 90% of the $3 billion per year domestic plastic
additives sector is comprised of just four products - plasticizers, flame
retardants, impact modifiers and lubricants. Of the approximately 35 billion
pound annual polyolefin market, about 10% or 3.5 billion pounds contain flame
retardant. At an average loading of 50 phr flame retardant, the 3.5 billion
pounds polyolefins sector translates to about one billion pounds of flame
retardant sold annually.
Historically, halogenated materials have been the preferred flame retardants,
comprising about 80% of the market. Halogen-based chemicals are added at 45
to 50 phr and are currently sold at $1.40 to $2.40 per pound. In the past ten
years, this group of chemicals has become the subject of legislated
restrictions and in general has lost market share to less effective additives
because of well known disadvantages, e.g. they often cause localized corrosion
of metals in direct contact ( e.g. wire and cable ), scrap containing such
halogenated retardants cannot be safely incinerated due to hazardous fumes
generated, and thermal decomposition or combustion results in generation of
toxic fumes. As an example, in 1991 Western Electric banned all use of
halogenated chemicals from their wire and cable coatings.
Aluminum and magnesium hydroxides do not have the disadvantages of the halogen
compounds discussed above, but these hydroxides offer limited application.
With an upper temperature limit of 320oF, and the need for as much as 75 to 85
phr in the formulation to achieve a Vo UL rating (a flame spread rate
measurement), only a small number of uses are possible. Other
non-halogenated chemicals are available, with similarly significant
drawbacks, including reject rates of 8 to 30% due to plate-out and otherwise
poor wetting and dispersion of the flame retardant. Finally, such flame
retardants as a rule do not melt and therefore will inhibit hot melt flow,
making it necessary to employ a higher cost resin for acceptable processing.
THE COMPANY'S PRODUCTS
Coupling Agents
PPA offers approximately 15 different organometallic coupling agents available
in liquid, powder or pelletized forms. Like their competitor products, they
can be and are used primarily by plastics compounders and manufacturers of
plastic products to obtain improvements such as: higher line speed, faster
throughput, lower operating temperatures and pressures, better dry blend flow
and hot melt flow, reduced energy requirements, better control over wall/sheet
thickness, higher impact resistance and greater flame retardance.
Since all coupling agents are presently proprietary products, the opportunity
for the production of value added products utilizing these compounds is more
than feasible. The overwhelming advantage of the coupling agents in almost all
applications is the ability to produce a more cost effective product with the
coupling agent thereby creating a true "value added" situation enabling either
direct sales of the agent or production of a more finished product at
competitive price advantages in large markets of essentially fungible
commodities. Most purchasers in fact prefer receipt of compounded resins
(resins in to which additives, such as the coupling agents, have been added)
rather than the pure coupling agents (which would then be added to the resin
by the end user). While margins on the value added products are lower than the
coupling agents, the total gross profit from operating a compounding facility
is many times greater than from sale of the coupling agents alone.
Our coupling agents have already been successful in extrusion, injection and
blow molding operations, so Management assumes that coupling agents can be
beneficially utilized in a large part of the total plastics market.
Reactive Coalescents
Approximately 23 reactive coalescent packages have been developed to-date.
These products allow resin producers and coatings end-users to utilize Zero
VOC solutions in place of current solvent-based packages. In architectural
and industrial coatings, volatile organic solvents have been historically
required and applied to a) dissolve the resin, and b) to provide coalescing
action. PPA coalescing packages are 100% solids (after application), Zero VOC
(as measured by present test methodologies), water-reducible systems that
provide all of the necessary dissolution and coalescing of solvent-based
systems, but which are a) without solvents for immediate Clean Air Act
compliance, b) more cost effective since there is no wasted solvent to
evaporate out of the coating, and of considerable importance, and c) generate
harder, more durable films due to chemically reactive cross-linking versus no
cross-linking in organic solvent systems.
Governmental Regulation
As a chemical manufacturer the Company is subject to a wide variety of local,
state and federal regulations. While the Company believes that it is in
compliance with all applicable regulations, there can be no assurance that
from time to time unintentional violations of such regulations will not occur.
In the event of such violations, the company may be subject to fines,
injunctive action and other forms or governmental action which would have a
material and adverse impact on the Company (see Risk Factors-Governmental
Regulation.) The following is a brief survey of some of the applicable
federal regulations. Many states, including the State of New Jersey where the
Company has its principle place of business, also regulate certain aspects of
the chemical industry. In general, compliance with federal regulation would
comprise the more difficult burden. One example discussed herein below,
California, has more stringent regulation.
The Resource Conservation and Recovery Act 42 U.S.C. Sec. 6901-6987 ("RCRA")
was enacted in 1976. The Comprehensive Environmental Response, Compensation
and Liability Act, 42 USC Sec. 9601-9657 ("CERCLA") was enacted in 1980.
These statutes regulate the disposed of hazardous waste and the clean-up of
chemicals that have been, or will be, subject to illegal disposal. The Toxic
Substance Control Act (hereinafter TOSCA) also governs aspects of chemical
disposal. The Clean Air Act and the Clean Water Act also control emissions
into the atmosphere and water systems (hereinafter these statutes are referred
to as PCS.)
The company believes that it is a) not in violation of the PCS and b) not
subject to the PCS because of the nature of the materials being utilized by
the Company at this time. However, existing environmental laws may be amended
and new laws may be enacted by Congress and state legislatures and new
environmental regulations may be issued by regulatory agencies. For these
reasons, the Company cannot predict the specific environmental control
requirements that it will face in the future.
Compliance with Federal, State and local provisions which have been enacted or
adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, may have a material
effect on the capital expenditures, earnings and competitive position of the
registrant and its subsidiaries.
Flame Retardants
PPA flame retardants are non-halogenated for health and safety concerns, and
they utilize coupling agents for maximum dispersion efficiency. The end
result allows the end user to: a) use lower cost resin than with alterative
flame retardants, b) run at 10 to 20% higher speed, and at lower temperatures,
and c) only PPA offers a concentrated compound that the customer can add at a
1:1 rate to achieve high resistance such as Vo.
PPA flame retardants are targeted for polyolefins only at this time. This
means high density polyethylene, low density polyethylene, and polypropylene.
With respect to cost, PPA materials cost will be $0.95 to $1.10 per pound of
compound for large volume purchases. This represents a distinct price
advantage over the competition which typically sells for $2.80 per pound and
requires as much as 45 weight percent in polyolefins to acheive 94 Vo. The
anticipated sales volume is 1% of the market for olefins (hydrocarbons
containing at least one double bond) is 10 MM lbs/yr. At the end of the first
year of operation, it will be easy to be at an annualized activity level of
between 10 to 20 MM lbs/yr. Business could grow to over 80 MM lbs/yr over the
next three years, although much more conservative numbers have been used in
the Company's financial projections in this, as in all, potential areas of
business.
PPA flame retardants offer U.L.94 Vo efficacy in 1/16" polypropylene at just
30 to 35 phr. PPA coupling agents are employed for their tremendous surface
activity which creates the following advantages:
1. The ability to use lower cost resin than with alternative flame
retardants;
2. The melt index is basically unaffected;
3. Manufacturing processes can run at 10 to 20% higher speeds, and at lower
temperatures; and,
4. PPA can offer a concentrated compound that the customer can add at a 1:1
rate to achieve high resistance such as Vo.
MARKETING
Having completed Research & Development work for fifteen coupling agents,
limited marketing and sales have commenced. Various powder and pellet forms
of these are also available. The current list of active customers includes
five plastics manufacturers. As a result of the sales effort PPA coupling
agents have been accepted in several different applications such as PVC pip
production and sporting goods production. Numerous trials on new uses for the
coupling agents are ongoing.
The reactive coalescent packages have proven successful in wood coatings and
architectural (used on buildings) applications. Regional, national and
international companies have shown interest in these products and testing by
these companies are also ongoing.
Marketing in these areas have to date been limited to direct mail to potential
customers and referrals through the personal business contacts of the
officers. The Company has recently employed two full time salesmen to expand
this effort with primary focus on printing inks. The Company intends to expand
these marketing efforts upon the successful conclusion of this Offering, See
"Use of Proceeds" by attendance at trade shows, advertising in trade journals
and by hiring additional sales personnel. The Company also plans to expand
marketing to Europe, especially with products that have significant
environmental impacts, such as paints and inks.
Additional Financing
The Company believes that the minimum proceeds of this Offering will
allow the Company to meet all of its presently planned future operations for
at least twelve months. However, the Company's anticipated development
projects may require a substantial amount of funds in order to fully develop
these proposed future products to their fullest potential. (See "USE OF
PROCEEDS" and "FINANCIAL STATEMENTS.") The proceeds of this Offering may be
inadequate to permit the Company to achieve its research objectives, and there
can be no assurance that the Company will be able to raise additional funds
when needed on terms acceptable to the Company, if at all. (See "RISK FACTORS
- - Additional Capital.")
SALES AND MARKETING
EMPLOYEES
The Company employs a President and an Executive Vice President for Scientific
Affairs. In addition, the Company employs one chemical technician, two
marketing representatives, one secretary and one part-time administrative
assistant. During the next twelve months the company anticipates opening
several production facilities requiring the acquisition of about one hundred
production personnel, plant management and technical sales representatives.
There can be no assurance that the Company will be able to hire such personnel
or if hired retain their service.
PROPRIETARY RIGHTS
The Company relies on a combination of patent and trade secret laws,
nondisclosure and other contractual agreements and technical measures to
protect its proprietary rights in its products. Despite these precautions,
unauthorized parties may attempt to copy aspects of the Company's products or
to obtain and use information that the Company regards as proprietary.
The Company believes that its products, trademark and other proprietary rights
do not infringe on the proprietary rights of third parties. There can be no
assurance, however, that third parties will not assert infringement claims
against the Company in the future. (See "RISK FACTORS - Proprietary Rights.")
FACILITIES
In the event that pending applications are not granted, or if subsequently
obtained patents are either invalidated or designed around, the Company would
be materially and adversely affected.
MANAGEMENT
The names of the Officers and Directors of the Company, their ages and
positions with the Company are as follows:
Name Age Position
Roger Fidler 46 President, Director
Gerald Sugerman 60 Executive Vice President,Secretary,
Treasurer Director
James Wright 64 Director
Albert Mersberg 56 Director
The above officers and directors will hold office until the next annual
meeting, or until their successors are elected and qualified.
MANAGEMENT
Roger L. Fidler Mr. Fidler has been President of the Company since inception.
He has been engaged in the private practice of law since 1983 and has held
several directorships in both private and public corporations. Mr. Fidler
holds degrees in Law (J.D.) from the University of South Carolina, Columbus,
South Carolina (1977), in Physics (M.S.) from the University of Illinois
Urbana, Illinois (1974) and a B.S. from Dickinson College (1972), Carlisle,
PA.
Gerald Sugerman, Ph.D. Dr. Sugerman has served as Executive Vice President
and a Secretary Director of the Company since inception. As PPA's Chief
Scientist he is in charge of all technical developments. From 1992 until 1994,
Dr. Sugerman was President of Pi-Tech Inc., a specialty chemical company. Dr.
Sugerman received his Ph.D. in organic chemistry from Fordham University in
1960, and holds several other degrees. He has authored over 100 papers and
holds more than fifty patents.
James Wright Mr. Wright has been a director since inception. Mr. Wright is a
retired businessman who until 1989 was a principal in a sand and gravel mining
company in New Jersey. Mr. Wright holds a Bachelor of Science degree in
Business Administration from Rider University (B.S. 1961), Lawrenceville, New
Jersey. Mr. Wright serves on the Audit Committee.
Albert Mersberg Mr. Mersberg became a director in September, 1997. He had
previously consulted for the Company from inception until November, 1996. He
is currently employed as Technical Manager of New Product Development by
Sampson Coatings, Inc of Richmond, VA where he has been employed since
December, 1996. Mr. Mersberg previously was employed by Lawrence McFadden Co.
In Philadelphia, PA from 1991 to 1996 in a similar capacity. He holds a B.S.
degree in Chemistry from the State University of New York at Bufalo.
RENUMERATION OF OFFICERS AND DIRECTORS
No officer of the Company has received compensation since inception in July,
1994 except Dr. Sugerman, Exec. V.P. of the Company. Directors are not
compensated for serving on the Board of Directors. No contingent forms of
remuneration, property, or other benefits were conferred during that period.
The Company has entered into a written employment and assignment agreements
with Gerald Sugerman and Roger Fidler. Pursuant to these Agreements, Mr.
Sugerman assigned his rights to any and all technologies and improvements
thereto to the products presently marketed by the Company and which he may
develop from time to time while employed by the Company. The capacity and
annual salaries for key management is set forth below.
Summary Compensation Table
Annual Compensation Long Term
Name & Position Salary/yr. Bonus Other(1) Compensation
Roger Fidler $120,000 -0- -0- -0-
President
Gerald Sugerman $120,000 -0- -0- -0-
Executive Vice
President;
Director
(1) Mr. Fidler's contract provides for sale commissions which have not been
earned to the date of this Prospectus. Mr. Sugerman's contract provides for
5% of sales to a maximum of $350,000, and 2% thereafter.
STOCK OPTION INFORMATION
The following table sets forth certain information with respect to the value
of stock options held by the Named Executive Officer for the fiscal year ended
June 30, 1997.
Fiscal Year-End Option Value Table
Number Of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Acquired Options On June 30, 1997 June
30,1997($)(1)(2)(3)
On Exercise Value Realized Exercisable Unexercisable Exercisable Unexercisable
Roger Fidler -0- -0- 425,000 -0- 2,100,000 -0-
Gerald Sugerman -0- -0- 850,000 -0- 4,200,000 -0-
___________
(1) Based upon an assumed initial public offering price of $6.00 per share of
Common Stock.
(2) Options are in-the-money if the fair market value of the Common Stock
exceeds the exercise price.
(3) Represents the total gain which would be realized if all the in-the-money
options beneficially held at December 31, 1995 were exercised, determined by
multiplying the number of shares underlying the options by the difference
between the per share option exercise price and $6.00, the fair market price
as of the initial public offering date, as determined by the offering price.
EMPLOYEE STOCK OPTION PLAN INFORMATION
The Company has adopted a Stock Grant Program and a Stock Option Program. The
Stock Grant Program provides for the issuance to officers, directors and key
employees stock grants as determined by the Board of Directors. The recipient
must continue employment with the Company for two years after the grant is
made or forfeit the stock. The stock option program is also available for
officers, directors and key employees and permits the Board to issue options
which are exercisable in equal amounts over a five year period. Any unvested
options expire upon the termination of employment with the Company. To the
date of this Prospectus, no stock options have been issued pursuant to the
Stock Option Program and no grants were made under the Stock Grant Plan.
CERTAIN TRANSACTIONS
The Company was organized primarily through the efforts of Roger Fidler
and incorporated on July 22, 1994 under the laws of the State of New Jersey.
On July 29, 1994, the Company's Board of Directors approved the issuance of 75
shares each to Mr. Fidler and James Wright as consideration for organizational
expenses and services valued at $100 each.
On August 3, 1994, an agreement was made by which the Company acquired certain
license rights in return for the assumption of an certain liabilities and the
issuance of 360 Shares to Gerald Sugerman.
Effective November 1, 1994, the Company entered into a two year
employment contract with Gerald Sugerman which provides for salary of $120,000
per annum. In June, 1996 the Company entered into a five year employment
agreement with Dr. Sugerman requiring the payment of $10,000 per month plus 5%
royalty on sales he makes up to a maximum salary of $350,000. In addition, he
receives life insurance equal to twice his annual salary, disability
insurance, vacation pay, and sick leave. On February 6, 1996,
the Company entered into an employment agreement with Roger Fidler by which
Mr. Fidler's salary would be set by B/D from time to time. On January 1, 1998
this salary will commence at the rate of $10,000 per month. In addition, Mr.
Fidler receives commission on gross sales of between 10% and 15% on sales
initiated by him.
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to the share
ownership, both before and after the prospective closing of the offering made
hereby, of the Company's common stock by its officers and directors, both
individually and as a group, and by the present record and/or beneficial
owners of more than 5% of the outstanding amount of such stock:
Number of Percentage(2) Percentage(2)
Name Shares of shares of shares
Owned Owned Prior After
to Offering Offering
Gerald
Sugerman(1) 1,825,000 75.9% 53.6%
8 Cambridge Dr
Allendale, NJ 07401
Roger Fidler(1) 500,000 25.3% 16.8%
400 Grove Street
Glen Rock, NJ 07452
James Wright 75,000 4.78 2.9
244C Mayflower Way
Jamesburg, NJ 08831
Officers
and Directors
as a Group(3) 1,125,000 82.3% 60.1%
_________________
(1)Gives effect to 425,000 and 850,000 shares underlying options held by
Fidler and Sugerman, respectively.
(2) Does not give effect to (i)up to 1,000,000 shares of Common Stock issuable
upon the exercise of the Class A Unit Warrants; (ii) the common stock
underlying the Underwriter's Over Allotment Option (150,000 shares); and (iii)
the common shares underlying the Underwriter's Warrant Units (200,000 shares).
See "Underwriting" and "Certain Transactions."
DESCRIPTION OF SECURITIES
Preferred Stock
The authorized capital stock of the Company consists in part of 1,000,000
shares of Preferred Stock, $100 par value per share (the "Preferred Stock").
The Company's present issued and outstanding number of Preferred shares is
3,461. The holders of Preferred Stock have preference as to liquidation,
receive a 5% dividend, and may have their shares redeemed by the Company at
par value plus accrued dividends during a five year period.
Common Stock
The authorized capital stock of the Company consists of, in part,
10,000,000 shares of Common Stock, without par value (the "Common Stock").
The Company's present issued and outstanding number of common shares is
1,555,000. The holders of Common Stock have equal ratable rights to
dividends from funds legally available therefor, when, as and if declared by
the Board of Directors of the Company; are entitled to share ratably in all of
the assets of the Company available for distribution to holders of Common
stock upon liquidation, dissolution or winding up of the affairs of the
Company; do not have preemptive, subscription or conversion rights and there
are no redemption or sinking fund provisions applicable thereto. Such shares
are entitled to one vote per share on all matters which stockholders may vote
on at all meetings of shareholders. All shares of Common Stock now
outstanding are fully paid and nonassessable and all shares of Common Stock
which are the subject of this Offering, when issued, will be fully paid and
nonassessable.
Non-Cumulative Voting
The holders of shares of Common Stock of the Company do not have
cumulative voting rights. Thus, the holders of more than 50% of such
outstanding shares, voting for the election of directors, can elect all of the
directors to be elected, and in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors. If the
shares offered hereby are sold, the present shareholders will own
approximately 60.9% of the Company's outstanding shares. If the options held
by management were exercised, the present shareholders would own 73.9% of the
Company's outstanding shares, and in either event, will remain in a position
to elect all of the members of the Board of Directors. Further, Mr.
Sugerman, Executive Vice President of the Company, exercised his options only,
he would own approximately 53.6% of the Company's Common Stock and would
therefore control the Company. (See "Principal Shareholders").
Transfer Agent and Registrar
The Company has chosen Liberty Transfer Company of Huntington, New York as its
transfer agent.
Reports to Shareholders
The Company intends to furnish its shareholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year, commencing with the next fiscal year. In addition, the
Company may, from time to time, issue unaudited interim reports and financial
statements.
Dividends
The payment by the Company of dividends, if any, in the future rests
within the discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other relevant factors. The Company has not
paid any dividends to date and does not anticipate that it will be in a
position to pay any dividends in the foreseeable future.
UNDERWRITING
The Underwriters named below (the "Underwriters"), for whom Kenneth
Jerome & Company, Inc. is acting as Representative, have severally agreed,
subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement") to purchase from the Company and the Company has
agreed to sell to the Underwriters on a firm commitment basis, the respective
number of units of Common Stock and Redeemable Warrants as set forth opposite
their names:
Underwriter Number of Units
Kenneth Jerome & Company, Inc............ 1,000,000
Total.................................... 1,000,000
The Underwriters are committed to purchase all the Securities offered
hereby, if any of such Securities are purchased. The Underwriting Agreement
provides that the obligations of the several Underwriters are subject to
conditions precedent specified therein.
The Company has been advised by the Representative that the Underwriters
propose initially to offer the Securities to the public at the public offering
prices set forth on the cover page of this Prospectus and to certain dealers
less concessions of not in excess of $0.60 per unit. Such dealers may reallow
a concession not in excess of $0.60 per unit to other dealers. After the
commencement of this Offering, the public offering prices, concessions and
reallowances may be changed by the Representative.
The Representative has advised the Company that it does not anticipate
sales to discretionary accounts by the Underwriters to exceed ten (10%)
percent of the total number of Securities offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payment that the Underwriters may be required to make. The Company has also
agreed to pay to the Representative an expense allowance on a non-accountable
basis equal to three percent (3%) of the gross proceeds derived from the sale
of the Securities underwritten.
The Underwriters have been granted an option by the Company, exercisable
within 45 days after the date of this Prospectus, to purchase up to an
additional 150,000 units at the initial public offering price per unit offered
hereby, less underwriting discounts and the expense allowance. Such option may
be exercised only for the purpose of covering over-allotments, if any,
incurred in the sale of the Securities offered hereby. To the extent such
option is exercised in whole or in part, each Underwriter will have a firm
commitment, subject to certain conditions, to purchase the number of the
additional units proportionate to its initial commitment.
The holders of 1,500,000 outstanding shares of Common Stock, including
all of the Company's directors, officers and principal stockholders, directly
or indirectly, offer to sell, contract to sell, sell, transfer, assign,
encumber, grant an option to purchase, pledge or otherwise dispose of any
beneficial interest in such securities for a period of 13 months following the
date of this Prospectus without the prior written consent of the
Representative. An appropriate legend shall be marked on the face of the
certificates representing all of such securities.
The Company has agreed that, for three years after the date of this
Prospectus, it will use its best efforts to cause one individual designated by
the Representative, if any, to be elected to the Company's Board of Directors.
Such individual may be a director, officer, employee or affiliate of the
Representative. In the event the Representative elects not to designate a
person to serve on the Company's Board of Directors, the Representative may
designate a person to attend meetings of the Board of Directors.
Prior to this Offering, there has been no public market for the
Securities. Consequently, the initial public offering prices of the Securities
and the terms of the Redeemable Warrants have been arbitrarily determined by
negotiations between the Company and the Representative and are not
necessarily related to the Company's asset value, net worth or other
established criteria of value. The factors considered in such negotiations, in
addition to prevailing market conditions, include the history of and prospects
for the industry in which the Company competes, an assessment of the Company's
management, the prospects of the Company, its capital structure and certain
other factors as were deemed relevant.
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a
copy of each such agreement which is filed as an exhibit to the Registration
Statement.
The Company also agreed to indemnify the Representative against certain
liabilities, including liabilities under the Securities Act, or to contribute
to related payments that the Representative may be required to make. In
addition, the Company granted the Representative, for a period of five years
commencing on the final closing of this offering a right of first refusal to
be the managing underwriter or placement agent for any securities to be
offered by the Company.
The Company will also sell to the Representative warrants (the "Underwriter's
Warrants") to purchase up to 100,000 Units at a price $7.20 per Units. The
Underwriter's Warrants will be exercisable for a period of four years
commencing one year after the Effective Date of this Offering, at an initial
per Unit exercise price of 120% of the offering price per Share. The
Underwriter's Warrants cannot be transferred, assigned or hypothecated for one
year from the date of their issuance, except that they may be assigned, in
whole or in part, to any successor, officer or partner of the Underwriter (or
to officers and partners of any such successor or partner). The Underwriter's
Warrants will contain anti-dilution provisions providing for appropriate
adjustment of the exercise price and number of Shares which may purchased upon
exercise upon the occurrence of certain events. The anti-dilution provisions
of the Underwriter's Warrants generally are triggered by the issuance of
Common Stock (or securities convertible or exchangeable into common stock) by
the Company at prices below the market price of the Common Stock at the time
of such issuance (subject to certain exceptions), as well as stock splits,
stock dividends and other similar dilutive events in which the Company
increases its outstanding stock without receiving additional consideration.
The Company has agreed that it will, upon request of the Representative within
the four-year period commencing one year from the Effective Date, register the
Underwriter's Warrants and the underlying securities once at the Company's
expense. The Company has also agreed, during the four-year period commencing
one year from the Effective Date, to register on a "piggy-back" basis, and on
an unlimited number of occasions, the Underwriter's Warrants and the
underlying securities whenever the Company files a Registration Statement.
See "RISK FACTORS - Underwriter's Warrants."
Holders of four percent (4%) or more of the Company's outstanding shares have
agreed not to sell, grant any option for sale, or otherwise dispose of,
directly or indirectly, any shares of the Company's Common Stock or other
securities of the Company for a period of twelve months from the date of the
consummation of the Offering.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby are being passed
upon for the Company by Roger L. Fidler, Esq., 400 Grove Street, Glen Rock,
New Jersey 07452. Mr. Fidler is the beneficial owner of 75,000 shares of the
Company's Common Stock and from inception until now was and is a director and
president of the Company. The Underwriter is represented by Steven I.
Gutstein, Esq., 276 Fifth Avenue, New York, New York 10001.
EXPERTS
The financial statements of PPA Technologies, Inc. for the years ending June
30, 1996 and June 30, 1995 included elsewhere in this Prospectus have been
included herein and in reliance upon the report of Thomas P. Monahan, CPA, an
independent certified public accountant, appearing elsewhere herein, and upon
the authority of said firm as an expert in accounting and auditing.
ADDITIONAL INFORMATION
The Company will not become subject to the reporting requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 until
completion of this Offering. The Company has filed with the Securities and
Exchange Commission (the "Commission"), Washington, D.C. 20549, a Registration
Statement on Form S-1, including amendments thereto, under the Act with
respect to Securities offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules filed therewith, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Securities offered hereby,
reference is hereby made to such registration statement and to the exhibits
and schedules filed therewith. Statements contained in the Prospectus
regarding the contents of any contract or other document referred to are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or other document filed as an exhibit to the registration
statement, each such statement being deemed to be qualified in its entirety by
such reference. The registration statement, including all exhibits and
schedules thereto, may be inspected without charge at the principal office of
the Commission, Public Reference Room, 450 Fifth Street, N.W., Washington,
D.C. 20549-1004, and at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and at 7 World Trade Center, Suite 1300, New York, New
York 10048 and copies of all or any part thereof may be obtained from such
offices upon the payment of prescribed fees.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers.
The By-Laws of the Company provide for indemnification of officers and
directors to the maximum extent allowed by the law of New Jersey, set forth in
greater detail below.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and persons controlling
the registrant pursuant to the foregoing provisions or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
Article VII of the By-Laws of the Company provide for the maximum
indemnification allowed by the law of the State of New Jersey as follows:
"Every person who is or was a director, officer, employee or agent of the
Corporation, or of any corporation which he has served as such at the request
of the Corporation, shall be indemnified by the Corporation to the fullest
extent permitted by law against all expenses and liabilities reasonably
incurred by or imposed upon him, in connection with any proceeding to which he
may be made, or threatened to be made, a party, or in which he may become
involved by reason of his being or having been a director, officer, employee
or agent of the Corporation, or such other corporation, at the time the
expense or liabilities are incurred."
ITEM 25. Other Expenses of Issuance and Distribution
The expenses payable by the Registrant in connection with the issuance
and distribution of the securities being registered (other than underwriting
discounts) are estimated as follows:
Registration Fee-Securities and
Exchange Commission..................... $ 5,025.20
NASD Fee ................................... 1,500.00
Transfer Agent's Fee and Expenses .......... 2,000.00
Legal Fees and Expenses .................... 100,000.00
Blue Sky Fees and Expenses ................. 15,000.00
Printing Expenses (including securities) ... 25,000.00
Miscellaneous .............................. 25,000.00
Total.............................. $165,000.00
Estimated.
ITEM 26. Recent Sales of Unregistered Securities
The following sales made by the issuer within the past three years were
made under circumstances not involving any public offering, and which were
exempt from the registration requirements of the Securities Act of 1933, as
amended, by reason of Section 4(2) thereof and/or the Rules and Regulations
promulgated thereunder, specifically, Rule 504, Regulation D:
Purchaser Security Amount Date Consideration
Robert Kaplon Common 30,000 shares 3/15/95 $ 300
Gary Metzger Common 25,000 shares 6/30/96 $50,000
AMCO Plastics Common 12,500 shares 11/30/96 $25,000
An Lou Chang Common 30,000 shares 07/01/97 $60,000
Eve Chang Debt $60,000 note 07/01/97 $60,000
Carl D. Fraley Debt $50,000 note 07/01/97 $50,000
Ray Beeler Debt $50,000 note 07/01/97 $50,000
Henry MacUga Debt $25,000 note 07/01/97 $25,000
Haskell Bernat Debt $25,000 note 07/01/97 $25,000
Edward Santangelo Debt $25,000 note 07/01/97 $25,000
Martin Santangelo Debt $25,000 note 07/01/97 $25,000
David Schotz Debt $25,000 note 07/01/97 $25,000
Lois S. MacUga Debt $12,500 note 07/01/97 $12,500 Aaron
Lehman Debt $12,500 note 07/01/97 $12,500
David Lipson Debt $12,500 note 07/01/97 $12,500
ITEM 27. Exhibits and Financial Statement Schedules
1.(a) Form of Underwriting Agreement
(b) Form of Selected Dealers Agreement
3.(a) Registrant's Certificate of Incorporation
(b) Amendment to Certificate of Incorporation
(c) Registrant's By-Laws
4.(a) Specimen Security Certificate
(b) Form of Warrant
(c) Form of Underwriter's Warrant
(e) Form of Warrant Agreement
5.(a) Consent and Opinion of Roger Fidler*
10. Material Contracts
(a) Employment Agreement between the Company
and Gerald Sugerman
(b) Employment Agreement between the Company
and Roger Fidler
(c) Lease
24.(a) Consent of Thomas Monahan, Certified Public
Accountant
* To be filed by Amendment
ITEM 28. Undertakings
The undersigned Registrant hereby undertakes that:
(A) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
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; and,
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement, including
(but not limited to) any addition or deletion of a managing underwriter.
(B) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(C) To remove from registration, by means of a post-effective
amendment to the Registration Statement, any of the securities offered hereby
which are not sold pursuant to the terms of this offering.
(D) Will provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in
such names are required by the underwriter to permit prompt delivery to each
purchaser.
(E) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the small business issuer of expenses
incurred or paid by a director, officer or controlling person of the small
business issuer 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 small business issuer will, unless in the
opinion of its counsel 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hackensack and State of New Jersey,
on the _th day of October, 1997.
PPA TECHNOLOGIES, INC.
BY:
Roger Fidler, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
/S/ ROGER FIDLER
President, November 12, 1997 Roger Fidler
Director
/S/ GERRY SUGERMAN
Director, November 12, 1997 Gerry Sugerman
Treasurer, Secretary
/S/ JAMES WRIGHT
Director, November 12, 1997 James Wright
/S/ ALBERT MERSBERG
Director, November 12, 1997 Albert Mersberg