Unassociated Document
Filed pursuant to Rule
424(b)(3)
Reg. No. 333-164048
CONFIDENTIAL
OFFERING MEMORANDUM
Common
Stock
China
Advanced Construction Materials Group, Inc., a Delaware corporation (the “Company,”
“we,” “us,” or
“our”), is
offering (the “Offering”)
for sale shares of Common Stock, par value $0.001 (the “Common
Stock”). Roth Capital Partners, LLC is acting as the
underwriter for the Offering
Attached
hereto is a draft of the prospectus supplement to the Company’s Registration
Statement on Form S-3, which was declared effective by the U.S. Securities and
Exchange Commission (the “Commission”)
on January 11, 2010. The draft prospectus supplement is being
provided to investors who have previously entered into confidentiality
arrangements regarding the Company and the Offering and is in substantially the
form which the Company expects to distribute to investors upon pricing of the
Offering. Disclosure regarding the terms of the Offering will be included
therein. Investors should read this draft document and the final prospectus
supplement and the documents incorporated by reference therein, including the
Company’s annual and quarterly reports filed with the Commission, carefully
before investing because this document contains important information about the
Company and risks related to an investment in the Company’s Common
Stock.
This
memorandum and the attached draft prospectus supplement (collectively, this
“Memorandum”)
is intended for the exclusive use of the recipient and the recipient's advisors,
and may not be reproduced or used for any other purpose or furnished to any
other party. By acceptance of this Memorandum, the recipient agrees
that he, she or it will not transmit or make this Memorandum and any documents
or other information supplied in connection with it available to anyone other
than the recipient’s business, legal or financial advisors and will not
reproduce in whole or in part this Memorandum.
This
Memorandum is being distributed to assist prospective investors in evaluating an
investment in the Common Stock. This Memorandum constitutes an offer only to the
person to whom it is delivered. No person may participate in the
offering except pursuant to the terms set forth in this Memorandum and subject
to the Company's approval.
No one,
except the Company’s officers and directors, is authorized to make statements or
furnish information not included in this Memorandum. Any information or
representation not contained in this Memorandum or not received from or made by
the Company’s officers and directors must not be relied upon as having been
authorized by us. Prospective investors are urged to request from the Company
any additional information that they may consider necessary to make an informed
investment decision or to verify the information set forth in this
Memorandum.
The
information contained in this Memorandum is as of February 22, 2010, and
delivery of this Memorandum at any time does not imply that the information
contained herein is correct as of any date subsequent to such date. Neither the
Company or Roth Capital Partners, LLC have an obligation to update this
Memorandum for events or circumstances arising after February 22,
2010.
Prospective
investors are not to construe the contents of this Memorandum as legal or
investment advice. Each investor must consult with his, her, or its own legal
counsel, accountant and investment representative as to legal, tax and related
matters concerning the Company or an investment therein.
Roth
Capital Partners, LLC
PROSPECTUS
SUPPLEMENT
(To
Prospectus dated December 28, 2009)
_________
Shares
China
Advanced Construction Materials Group, Inc.
Common
Stock
We are
offering to sell ______ shares of our common stock pursuant to this prospectus
supplement and the accompanying prospectus. Our common stock is quoted on the
Nasdaq Global Market under the symbol “CADC.” The last reported sale price of
our common stock on February [▪], 2010 was $[▪] per
share.
Investing in our common stock
involves a high degree of risk. Please read “Risk Factors” beginning on page
S-[▪] of this prospectus supplement and on
page 2 of the accompanying prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
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Per Share
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Total
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Public
Offering Price
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$ |
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$ |
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Underwriting
Discounts and Commissions
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$ |
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$ |
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Proceeds
to us (before expenses)
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$ |
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$ |
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Delivery
of the shares of common stock is expected to be made on or about February [▪], 2010. We have
granted the underwriter an option for a period of 30 days to purchase an
additional [▪] shares of our common
stock from us to cover overallotments, if any.
Sole
Book-Running Manager
Roth
Capital Partners
The date
of this prospectus supplement is February [▪],
2010
TABLE
OF CONTENTS
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Page
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Prospectus
Supplement
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About
this Prospectus Supplement
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Prospectus
Summary
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S-1
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Risk
Factors
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Forward-Looking
Statements
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Use
of Proceeds
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Capitalization
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Underwriting
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Legal
Matters
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Experts
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Incorporation
of Certain Information by Reference
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Prospectus
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About
this Prospectus
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1
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Use
of Terms
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1
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China
Advanced Construction Materials Group, Inc..
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1
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Risk
Factors
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2
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Forward-Looking
Statements
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2
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Use
of Proceeds
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2
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Description
of Capital Stock
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3
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Description
of Warrants
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6
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Description
of Debt Securities
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7
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Description
of Units
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14
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Plan
of Distribution
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15
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Legal
Matters
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16
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Experts
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16
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Where
You Can Find Additional Information
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17
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Incorporation
of Certain Information by Reference
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17
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ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is in two parts. The first part is the prospectus supplement, which
describes the specific terms of this offering and adds, updates and changes
information contained in the accompanying prospectus. The second part is the
accompanying prospectus, which gives more general information, some of which may
not apply to this offering. This prospectus supplement and the accompanying
prospectus are part of a registration statement that we filed with the
Securities and Exchange Commission, or the SEC, using a shelf registration
process, under which we may sell any combination of the securities described in
the accompanying prospectus from time to time.
This
prospectus supplement and the accompanying prospectus include important
information about us, our common stock and other information you should know
before investing. We urge you to read carefully this prospectus supplement and
the accompanying prospectus in their entirety, together with the information
described under the headings “Incorporation of Certain Information by Reference”
in this prospectus supplement and “Where You Can Find Additional Information” in
the accompanying prospectus.
You
should rely only on the information contained in or incorporated by reference
into this prospectus supplement and the accompanying prospectus. We and the
underwriter have not authorized anyone to provide you with other information. We
and the underwriter are not making an offer of these securities in any
jurisdiction where the offer is not permitted. You should assume that the
information contained in this prospectus supplement, the accompanying prospectus
and the documents we incorporate by reference is accurate only as of its
respective date or on the date which is specified in those documents. Our
business, financial condition, results of operations and prospects may have
changed since these dates.
Unless
otherwise indicated, all information in this prospectus supplement assumes no
exercise by the underwriter of its option to purchase up to [▪]
additional shares of common stock from us at the offering price to the
public less the underwriting discounts and commissions for a period of
30 days following the date of this prospectus supplement.
PROSPECTUS
SUMMARY
This
summary highlights information about us and the offering contained elsewhere in,
or incorporated by reference into, this prospectus supplement and the
accompanying prospectus. It is not complete and may not contain all the
information that may be important to you. You should carefully read the entire
prospectus supplement and the accompanying prospectus, as well as the
information incorporated by reference, before making an investment decision,
especially the information presented under the heading “Risk Factors” beginning
on page S-[▪] of this prospectus
supplement, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in our most recent Annual Report on Form 10-K and
Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2009,
and our consolidated financial statements which are incorporated by
reference.
Company
Overview
We are a
holding company whose China-based operating entities are primarily engaged in
the production and supply of a wide range of advanced ready-mix concrete
materials for large scale commercial, residential, and infrastructure
developments. Through these entities, we operate five (5) fixed concrete
manufacturing plants in Beijing and twelve (12) portable concrete plants located
throughout China near our seven (7) high speed railway projects. We lease the
land on which all of our plants are located, as well as substantially all of the
buildings on such land. We also lease substantially all of the
concrete manufacturing equipment at four (4) of the fixed plants, however, we
own substantially all of the concrete manufacturing equipment, including 119
concrete mixers and 18 pump trucks at one of the fixed plants and we
own all of the equipment and temporary removable structures at [all] of the
portable plants. In addition, we have technical and preferred
procurement agreements with five (5) independently owned concrete mixture
stations, three (3) in Beijing, one (1) in Shaanxi and one (1) in Sichuan,
pursuant to which we are paid by percentages of cost savings for technical
support provided to clients and of the sales price for projects we have to refer
to other stations due to the geographical location of our owned and leased
plants.
Our
manufacturing services are used primarily for our national high speed railway
projects; almost all of our general contract contractors on the high speed
railway projects supply the needed raw materials, which results in higher gross
margins for us and reduces our upfront capital investments needed to purchase
raw materials. We also produce ready-mix concrete at portable plants,
which can be dismantled and moved to new sites for new projects.
We were
founded as an unincorporated business on September 1, 2005, under the name TJS
Wood Flooring, Inc., and became a C corporation in the State of Delaware on
February 15, 2007. On April 29, 2008, we changed our name to China Advanced
Construction Materials Group, Inc. in connection with a reverse acquisition
transaction with Xin Ao Construction Materials, Inc. Prior to the reverse
acquisition, we were a development stage enterprise and had not yet generated
any revenues. From and after the reverse acquisition, our business became the
business of our indirect, wholly owned subsidiaries in the People’s Republic of
China.
We own
all of the issued and outstanding capital stock of Xin Ao Construction
Materials, Inc., or BVI-ACM, a British Virgin Islands corporation, which in turn
owns 100% of the outstanding capital stock of Beijing Ao Hang Construction
Materials Technology Co., Ltd., or China-ACMH, a company incorporated under the
laws of China. On November 28, 2007, China-ACMH entered into a series of
contractual agreements with Beijing Xin Ao Concrete Co., Ltd., or Xin Ao, a
company incorporated under the laws of China, and its two shareholders, in which
China-ACMH effectively took over management of the business activities of Xin Ao
and has the right to appoint all executives and senior management and the
members of the board of directors of Xin Ao. While we have no direct
equity ownership in Xin Ao, through these contractual agreements we receive the
economic benefits of Xin Ao’s operations and are entitled to consolidate the
financial results of operations and accounts of Xin Ao in our financial
statements under U.S. Generally Accepted Accounting Principles.
Our
Industry
According
to Global Insight, a leading provider of global economic and financial
intelligence, the global construction market has experienced a decrease over the
past 2 years, and a slow recovery expected only after 2011. Despite
the global construction market problems, however, the Chinese construction
market has maintained a double digit increase over the past 10 years, which
makes it one of the most dynamic markets in the world.
China is
among the world’s largest construction materials producers, ranking first in the
world’s annual output of cement, flat glass, building ceramic and ceramic
sanitary ware. According to Industrial Ceramics, Vol. 27, February 2007,
“[t]otal revenues for the Chinese construction materials market in 2006 was
approximately $171.5 billion,” and “[i]t is estimated that the total production
value will reach $294.8 billion by 2011, an average annual growth rate of 11.4%.
(Industrial Ceramics, Vol. 27, February 2007,” page 142). This information is
publicly available at www.technagroup.it/sample_IC.pdf. According
to the National Development and Reform Commission, or NDRC, profits by companies
in the construction materials market in China during the first five months of
2009 were approximately $6.16 billion, representing an increase of 13.7% over
the same period in 2008. The “Year 2009 First Five Months
Construction Material Industry Sector Analysis” is provided by the National
Development and Reform Commission (NDRC). The Chinese version of this
information is publicly available on NDRC’s website at http://yxj.ndrc.gov.cn/gjyx/cyyxdt/t20090722_292050.htm.
Construction
Demand in China
According
to the evaluation by Research Institute of Investment, National Development and
Research Commission, China’s November 2008 economic stimulus package, valued at
RMB 4 trillion (approximately US$593 billion), has had a material impact on the
construction industry, contributing to growth in the construction industry of
approximately RMB 594 billion in 2009. According to data prepared by the
National Bureau of Statistics of China, from January to April 2009, urban fixed
assets investment reached RMB3.7 trillion, up 30.5 percent year by year. Driven
by a series of policies on keeping growth and expanding domestic demand, we
believe that the construction industry in China will continue to
grow.
The
stimulus package has been and is expected to be used to finance programs, during
2009 and 2010 in 10 major areas, such as low-income housing, rural
infrastructure, water, electricity, transportation, the environment,
technological innovation and rebuilding disaster struck areas. The economic
stimulus package also focuses on infrastructure projects such as new railways,
roads, and airports. According to the Ministry of Railways, China doubled its
investment in railways to about RMB 600 billion (approximately US$87.8 billion)
for 2009 and 2010. Part of the new funds will go to building 5,148 km of new
lines, including five passenger-only high-speed lines. The ministry also plans
to start 70 other new projects, which will cost and estimated RMB 1.5 trillion
(approximately US$219.6 billion). By 2012 China is expected to have 110,000 km
of rail lines, including 13,000 km of passenger routes, of which, many will be
high-speed railways allowing trains to run between 200 and 350 km an hour.
Chinese version available at http://www.concrete365.com/news/2009/7-20/H142630705.htm).
The
Chinese Construction industry accounted for approximately 20% of the nominal
gross domestic product (GDP), contributing RMB 6,114 billion in
2008. The government stimulus package has helped to fuel growth in
construction and infrastructure development. The government’s continued
efforts to modernize the country’s infrastructure is exemplified by such massive
projects as the South-North Water Diversion — designed to redirect water to the
northern plains from Central and South China. This project, scheduled for
completion in 2050, is expected to result in annual cement consumption of over
one million metric tons.
China
accounts for half of all new building activity in the world and rapid expansion
is expected to continue to 2030 as up to 400 million citizens are expected to
move into urban areas.
China’s
Cement & Concrete Demand
In the
last four months of 2009, the country's cement output rose 13 percent from the
same period of 2008. The year to year growth was 3.1 percentage
points larger than that of a year ago. “Demand for cement in China is
forecast to rise 6.0 percent annually through 2012 to 1.8 billion metric tons.
Growth will be driven by rising, but decelerating, construction expenditures in
China. Further advances in cement manufacturing technology are also expected to
help stimulate sales by improving the quality of the product. Blended
cements are expected to account for about 90 percent of total sales in 2012,
reflecting the versatility of these types across a range of construction
applications, as well as their performance and/or price benefits over other
types of cement. Regional cement markets reflect differences in construction
expenditures, which in turn are driven by local trends in demographics,
industrial output and economic activity. Central and Eastern China are expected
to remain the largest cement market in China through 2012, fueled by increases
in regional construction expenditures. However, the cement markets in Northwest
and Southwest China are expected to grow at the faster pace, benefiting from the
government’s Great Western Development strategy, which aims to promote
investment in these areas. Consumption of cement in Central and Northern China
is also expected to perform above the national average, supported by high levels
of transportation infrastructure construction and booming urban markets in
Beijing and Tianjin.” (from Business Wire).
Residential
and non-residential buildings in China are increasingly requiring much more
concrete due to, among other reasons, the short supply of wood. China is
currently the largest consumption market of cement worldwide at over $200
billion annually. China’s cement consumption amounted to approximately 44% of
global demand in 2008 and are expected to be greater than current combined
consumption of India and the U.S. by 2010. According to the National Development
and Reform Commission, companies in the construction materials market in China
recognized a 92.6% increase in profits from 2005 to 2006. At the present rate,
it is presumed that China will continue to be an important player in the global
construction materials marketplace for at least the next two
decades.
As a
result of the government stimulus package, the demand for cement and concrete is
expected to be significantly increased in China in the following several
years.
Demand
for Ready-Mixed Concrete
Construction
contractors are expected to continue to represent the largest market for cement,
accounting for an estimated one-third of total demand in 2012. However, we
believe that the ready-mix concrete market could exhibit the strongest growth in
the cement industry, and could possibly have near double-digit gains through
2012. Gains are expected to benefit from government regulations banning on-site
concrete and mortar mixing. Demand for cement used in concrete products is
expected to be driven by the increasing popularity of precast concrete with many
construction contractors. In addition, the phase-out of clay bricks will
heighten demand for concrete blocks. We anticipate that cement demand in the
ready-mixed concrete market will realize the strongest gains of any market
category through 2010, with an annual increase of 11.2%. Recognizing the
significant environmental impact created from the large-scale construction
activities undertaken in the past few decades, China’s government implemented
Decree #341 in 2004 which bans onsite concrete production in over 200 major
cities across China in order to reduce environmental damage from onsite cement
mixing and improve the quality of concrete used in construction.
Our
Competitive Strengths
We
believe that the following competitive strengths enable us to compete
effectively and to capitalize on the growth of the market for construction
materials in China:
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Large Scale
Contractor Relationships. We have contracts
with major construction contractors that are constructing key
infrastructure, commercial and residential projects. Our sales efforts
focus on large-scale projects and large customers that place large
recurring orders and present less credit risks to us. Our top five
customers accounted for approximately 15.95%, 32.03 % and 41.49% of the
Company’s sales for 1H FY2010 and the years ended June 30, 2009 and 2008,
respectively. The total accounts receivable from these customers amounted
to$3,784,153.42,
$3,624,793 and $3,584,879 as of December 31, 2009, June 30, 2009 and
2008.
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Experienced
Management. We believe that our management’s technological
knowledge and business relationships gives us the ability to secure major
infrastructure projects, which provides us with leverage to potentially
acquire less sophisticated operators, increase production volumes, and
implement quality standards and environmentally sensitive
policies.
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Innovation
Efforts. We strive to produce the most technically and
scientifically advanced products to our customers and maintain close
relationships with Tsinghua University, Xi’an University of Architecture
and Technology and Beijing Dongfangjianyu Institute of Concrete
Science & Technology which assist us with our research and development
activities. As a result of our relationships with these universities and
institute, we believe that we have realized an advantage over many of our
competitors by gaining access to a wide array of resources and
knowledge.
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Our
Growth Strategy
We are
committed to enhancing profitability and cash flows through the following
strategies:
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Capacity
Expansion via Building New Plants. We added nine portable stations
during the fiscal year 2009 in order to meet the requirements of existing
contracts and anticipated demand. We plan to add more portable stations in
2010 and 2011 as part of our long-term expansion plans due to very
attractive margins and high return on
investment.
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Mergers and
Acquisitions. We intend to capitalize on the challenges that
smaller companies are encountering in our industry by acquiring
complementary companies at favorable prices. We believe that buying rather
than building capacity is an option that may be attractive to us if
replacement costs are higher than purchase prices. We are currently
looking into acquiring smaller concrete manufacturers in China as part of
our expansion plans; further information will be reported when key details
have been confirmed. No Letters-of-Intent have been entered into or
specific targets identified at this
time.
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Vertical
Integration. We plan to acquire smaller companies within the
construction industry, develop more material recycling centers, and hire
additional highly qualified employees. In order to accomplish this, we may
be required to offer additional equity or debt securities. Certain of the
companies we may seek to acquire are suppliers of the raw materials we
purchase to manufacture our products. If we do acquire such companies we
will have greater control over our raw material
costs.
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Supply
Chain Efficiencies and Scale. We intend to streamline our supply
chain process and leveraging our economies of
scale.
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New Product
Offering. We plan to produce a lightweight aggregate concrete for
use in projects and to expand product offerings to include pre-cast
concrete.
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Recent
Developments
On
January 25, 2010, we announced that we entered into a definitive contract to
provide our ready-mix concrete service to the high-speed railway project between
Xi'an and Ankang, the largest city in southern Shanxi Province, in the form of
technical counseling for the production of 270,000 cubic meters of ready-mix
concrete. The duration of this project is estimated to be 20 months,
with associated revenues estimated to be $3 million, anticipated to result in an
estimated $800,000 in net income.
Corporate
Information
Our
principal executive offices are located at Yingu Plaza, 9 Beisihuanxi Road,
Suite 1708, Haidian District, Beijing 100080 China and our telephone number
at that address is +(86 10) 825 25361. Our principal website is located at
www.china-acm.com. The information on our website is not part of this prospectus
supplement or the accompanying prospectus.
The
following chart reflects our organizational structure as of the date of this
prospectus supplement.
Conventions
In this
prospectus supplement, unless otherwise indicated, references to
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“China”
and “PRC,” are to the People's Republic of
China,
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“China
ACM,” “the Company,” “we,” “our” and “us” refer to the combined business
of China Advanced Construction Materials Group, Inc. and its wholly-owned
subsidiary, BVI-ACM, along with BVI-ACM’s wholly-owned subsidiary,
China-ACMH, and its variable interest entity, Xin
Ao,
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“BVI-ACM,”
are to Xin Ao Construction Materials, Inc., a British Virgin Islands
corporation,
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“China-ACMH”
are to Beijing Ao Hang Construction Materials Technology Co., Ltd., a
company incorporated under the laws of China,
and
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“Xin
Ao” are to Beijing Xin Ao Concrete Co., Ltd., a company incorporated under
the laws of China.
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The
Offering
Shares
of Common Stock Offered by Us
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___________
shares, __________ shares if the underwriter exercises its over-allotment
option in full.
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Shares
of Common Stock to be Outstanding After the Offering
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___________
shares, ___________ shares if the underwriter exercises its over-allotment
option in full. (1)
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Nasdaq
Global Market Symbol
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CADC
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Use
of Proceeds
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We
intend to use the net proceeds from this offering for general corporate
purposes, including future capacity expansion, strategic acquisitions,
capital expenditure and research and development
expenditures. See “Use of Proceeds” in this prospectus
supplement.
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Dividend
Policy
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Our
board of directors does not intend to declare cash dividends on our common
stock for the foreseeable future.
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Risk
Factors
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See
“Risk Factors” beginning on page S-[▪] of this
prospectus supplement and on page 2 of the accompanying prospectus and
other information included or incorporated by reference in this prospectus
supplement and the accompanying prospectus.
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Transfer
Agent and Registrar
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American
Stock Transfer & Trust
Company
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(1)
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The
number of shares of common stock to be outstanding after this offering is
based on [▪] shares of
common stock outstanding on February [▪],
2010.
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Summary
Consolidated Financial Information
This
section presents our summary consolidated financial data and should be read in
conjunction with “Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our consolidated financial statements
and related notes included in our Annual Report on Form 10-K for the
year ended June 30, 2009 and “Item 1. Financial Statements” and
“Item 2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations” of our Quarterly Report on Form 10-Q for the period
ended December 31, 2009. The selected consolidated financial data in this
section is not intended to replace our consolidated financial
statements.
We
derived the statement of operations data, statement of cash flows data and
balance sheet data for the years ended June 30, 2009 and 2008 from the audited
consolidated financial statements and related notes included in our Annual
Report on Form 10-K for the year ended June 30, 2009. We derived the
statement of operations data and statement of cash flows data for the six months
ended December 31, 2009 and 2008, and the balance sheet data as of December 31,
2009 from our unaudited financial statements and related notes included in our
Quarterly Report on Form 10-Q for the period ended December 31,
2009. The unaudited interim period financial information, in our
opinion, includes all adjustments that are normal and recurring in nature and
necessary for a fair presentation for the periods shown. Results for the six
months ended December 31, 2009 are not necessarily indicative of the results to
be expected for the full fiscal year.
(In thousands, except per share data)
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Year Ended
June 30,
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Six Months Ended
December 31,
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2009
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2008
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2009
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2008
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(Unaudited)
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(Unaudited)
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Statement
of Operations Data:
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Revenue
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39,715 |
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27,565 |
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45,645 |
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15,965 |
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Cost
of revenue
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24,518 |
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20,799 |
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37,124 |
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9,321 |
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Gross
profit
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15,197 |
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6,766 |
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8,522 |
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6,644 |
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Selling,
general and administrative expenses
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1,718 |
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1,947 |
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2,052 |
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1,269 |
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Income
from operations
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13,479 |
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4,819 |
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6,469 |
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5,375 |
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Other
income (expense), net
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705 |
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1,357 |
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(1,699 |
) |
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304 |
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(Loss)
Income before provision for income taxes
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14,184 |
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6,177 |
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4,771 |
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|
|
5,679 |
|
Provision
for income taxes
|
|
|
2,115 |
|
|
|
1,012 |
|
|
|
1,349 |
|
|
|
1,575 |
|
Net
(loss) income
|
|
|
12,068 |
|
|
|
5,164 |
|
|
|
3,422 |
|
|
|
4,104 |
|
(Loss)
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
1.03 |
|
|
|
0.57 |
|
|
|
0.24 |
|
|
|
0.33 |
|
Diluted
|
|
|
0.86 |
|
|
|
0.56 |
|
|
|
0.22 |
|
|
|
0.29 |
|
Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
As
of June 30, 2009 and 2008
|
|
|
As
of December 31, 2009 and 2008
(Unaudited)
|
|
Working
capital
|
|
|
5,267 |
|
|
|
3,152 |
|
|
|
6,511 |
|
|
|
6,732 |
|
Current
assets
|
|
|
25,303 |
|
|
|
16,235 |
|
|
|
34,431 |
|
|
|
21,596 |
|
Total
assets
|
|
|
56,320 |
|
|
|
37,718 |
|
|
|
73,207 |
|
|
|
43,433 |
|
Current
liabilities
|
|
|
20,036 |
|
|
|
13,083 |
|
|
|
27,920 |
|
|
|
14,864 |
|
Total
liabilities
|
|
|
20,036 |
|
|
|
13,083 |
|
|
|
33,467 |
|
|
|
14,864 |
|
Stockholders’
equity
|
|
|
30,042 |
|
|
|
18,804 |
|
|
|
35,509 |
|
|
|
22,437 |
|
Statement
of Cash Flows Data:
|
|
For
the Years ended June 30, 2009 and 2008
|
|
|
For
the Six Months Ended December 31,
2009
and 2008 (Unaudited)
|
|
Net
cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities
|
|
|
3,361 |
|
|
|
5,111 |
|
|
|
1,056 |
|
|
|
1,063 |
|
Investing
Activities
|
|
|
(1,772 |
) |
|
|
(8,701 |
) |
|
|
(261 |
) |
|
|
(32 |
) |
Financing
Activities
|
|
|
137 |
|
|
|
4,377 |
|
|
|
(2,726 |
) |
|
|
275 |
|
RISK
FACTORS
Any
investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and all of the information
contained in this prospectus supplement and the accompanying prospectus before
deciding whether to purchase our common stock. In addition, you should carefully
consider, among other things, the matters discussed under “Risk Factors” in our
Annual Report on Form 10-K for the year ended June 30, 2009 and in other
documents that we subsequently file with the Securities and Exchange Commission,
all of which are incorporated by reference in this prospectus supplement and the
accompanying prospectus. The risks and uncertainties described below are not the
only risks and uncertainties we face. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial may also impair our
business operations. If any of the following risks actually occur, our business,
financial condition and results of operations would suffer. In that event, the
trading price of our common stock could decline, and you may lose all or part of
your investment in our common stock. The risks discussed below also include
forward-looking statements and our actual results may differ substantially from
those discussed in these forward-looking statements. See “Forward-Looking
Statements.”
Risks
Related to Our Business and Doing Business in China
Failure to comply
with PRC regulations relating to the establishment of offshore special purpose
companies by PRC residents may subject our PRC resident stockholders to personal
liability, limit our ability to acquire PRC companies or to inject capital into
our PRC subsidiaries, limit our PRC subsidiaries' ability to distribute profits
to us or otherwise materially adversely affect us.
In
October 2005, the PRC State Administration of Foreign Exchange, or SAFE, issued
the Notice on Relevant Issues in the Foreign Exchange Control over Financing and
Return Investment Through Special Purpose Companies by Residents Inside China,
generally referred to as Circular 75, which required PRC residents to register
with the competent local SAFE branch before establishing or acquiring control
over an offshore special purpose company, or SPV; under Notice 75, a “special
purpose company” refers to an offshore entity established or controlled,
directly or indirectly, by PRC residents for the purpose of seeking offshore
equity financing on the strength of the domestic assets or interests owned by
such PRC residents in onshore companies. Internal implementing guidelines issued
by SAFE, which became public in June 2007 (known as Notice 106), expanded the
reach of Circular 75 by (1) purporting to cover the establishment or acquisition
of control by PRC residents of offshore entities which merely acquire "control"
over domestic companies or assets, even in the absence of legal ownership; (2)
adding requirements relating to the source of the PRC resident's funds used to
establish or acquire the offshore entity; (3) covering the use of existing
offshore entities for offshore financings; (4) purporting to cover situations in
which an offshore SPV establishes a new subsidiary in China or acquires an
unrelated company or unrelated assets in China; and (5) making the domestic
affiliate of the SPV responsible for the accuracy of certain documents which
must be filed in connection with any such registration, notably, the business
plan which describes the overseas financing and the use of proceeds. Amendments
to registrations made under Circular 75 are required in connection with any
increase or decrease of capital, transfer of shares, mergers and acquisitions,
equity investment or creation of any security interest in any assets located in
China to guarantee offshore obligations, and Notice 106 makes the offshore SPV
jointly responsible for these filings. In the case of an SPV which was
established, and which acquired a related domestic company or assets, before the
implementation date of Circular 75, a retroactive SAFE registration was required
to have been completed before March 31, 2006; this date was subsequently
extended indefinitely by Notice 106, which also required that the registrant
establish that all foreign exchange transactions undertaken by the SPV and its
affiliates were in compliance with applicable laws and regulations. Failure to
comply with the requirements of Circular 75, as applied by SAFE in accordance
with Notice 106, may result in fines and other penalties under PRC laws for
evasion of applicable foreign exchange restrictions. Any such failure could also
result in the SPV's subsidiaries being impeded or prevented from distributing
their profits and the proceeds from any reduction in capital, share transfer or
liquidation to the SPV, or from engaging in other transfers of funds into or out
of China.
We have
asked our stockholders, who are PRC residents as defined in Circular 75 and
Notice 106, to register with the relevant branch of SAFE, as currently required,
in connection with their equity interests in us and our acquisitions of equity
interests in our PRC subsidiaries. Our PRC Residents stockholders, Mr. Han and
Mr. He have obtained the SAFE registration on September 29,
2007. However, we cannot provide any assurances that they have made
all necessary amendments to their registration to fully comply with, all
applicable registrations or approvals required by Circular 75 and Notice 106.
Moreover, because of uncertainty over how Circular 75 will be interpreted and
implemented, and how or whether SAFE will apply it to us, we cannot predict how
it will affect our business operations or future strategies. For example, our
present and prospective PRC subsidiaries' ability to conduct foreign exchange
activities, such as the remittance of dividends and foreign currency-denominated
borrowings, may be subject to compliance with Circular 75 and Notice 106 by our
PRC resident beneficial holders.
In
addition, such PRC residents may not always be able to complete the necessary
registration procedures required by Circular 75 and Notice 106. We also have
little control over either our present or prospective direct or indirect
stockholders or the outcome of such registration procedures. A failure by our
PRC resident beneficial holders or future PRC resident stockholders to comply
with Circular 75 and Notice 106, if SAFE requires it, could subject these PRC
resident beneficial holders to fines or legal sanctions, restrict our overseas
or cross-border investment activities, limit our subsidiaries' ability to make
distributions or pay dividends or affect our ownership structure, which could
adversely affect our business and prospects.
Under
the New Enterprise Income Tax, or EIT, Law, we may be classified as a "resident
enterprise" of China. Such classification will likely result in unfavorable tax
consequences to us and our non-PRC stockholders.
China
passed the New EIT Law and its implementing rules, both of which became
effective on January 1, 2008. Under the New EIT Law, an enterprise established
outside of China with “de facto management bodies” within China is considered a
“resident enterprise,” meaning that it can be treated in a manner similar to a
Chinese enterprise for enterprise income tax purposes. The implementing rules of
the New EIT Law define de facto management as “substantial and overall
management and control over the production and operations, personnel,
accounting, and properties” of the enterprise. In addition, a recent circular
issued by the State Administration of Taxation on April 22, 2009 regarding the
standards used to classify certain Chinese-invested enterprises controlled by
Chinese enterprises or Chinese group enterprises and established outside of
China as “resident enterprises” clarified that dividends and other income paid
by such "resident enterprises" will be considered to be PRC source income,
subject to PRC withholding tax, currently at a rate of 10%, when recognized by
non-PRC enterprise shareholders. This recent circular also subjects such
"resident enterprises" to various reporting requirements with the PRC tax
authorities.
In
addition, the recent circular mentioned above sets out criteria for determining
whether “de facto management bodies” are located in China for overseas
incorporated, domestically controlled enterprises. However, as this circular
only applies to enterprises established outside of China that are controlled by
PRC enterprises or groups of PRC enterprises, it remains unclear how the tax
authorities will determine the location of “de facto management bodies” for
overseas incorporated enterprises that are controlled by individual PRC
residents like us and some of our subsidiaries.
Therefore,
although substantially all of our management is currently located in the PRC, it
remains unclear whether the PRC tax authorities would require or permit our
overseas registered entities to be treated as PRC resident enterprises. We do
not currently consider our company to be a PRC resident enterprise. However, if
the PRC tax authorities determine that we are a “resident enterprise” for PRC
enterprise income tax purposes, a number of unfavorable PRC tax consequences
could follow. First, we may be subject to the enterprise income tax at a rate of
25% on our worldwide taxable income as well as PRC enterprise income tax
reporting obligations. In our case, this would mean that income such as interest
on offering proceeds and non-China source income would be subject to PRC
enterprise income tax at a rate of 25%. Second, although under the New EIT Law
and its implementing rules dividends paid to us from our PRC subsidiaries would
qualify as “tax-exempt income,” we cannot guarantee that such dividends will not
be subject to a 10% withholding tax, as the PRC foreign exchange control
authorities, which enforce the withholding tax, have not yet issued guidance
with respect to the processing of outbound remittances to entities that are
treated as resident enterprises for PRC enterprise income tax purposes. Finally,
it is possible that future guidance issued with respect to the new “resident
enterprise” classification could result in a situation in which a 10%
withholding tax is imposed on dividends we pay to our non-PRC stockholders and
with respect to gains derived by our non-PRC stockholders from transferring our
shares.
Dividends
declared and paid from pre-January 1, 2008 distributable profits are
grandfathered under the New EIT Law and are not subject to withholding
tax.
We
have limited insurance coverage for our operations in China.
The
insurance industry in China is still at an early stage of development. Insurance
companies in China offer limited insurance products. We have determined that the
risks of disruption or liability from our business, the loss or damage to our
property, including our facilities, equipment and office furniture, the cost of
insuring for these risks, and the difficulties associated with acquiring such
insurance on commercially reasonable terms make it impractical for us to have
such insurance. As a result, we do not have any business liability, disruption,
litigation or property insurance coverage for our operations in China except for
insurance on some company owned vehicles. Any uninsured occurrence of loss or
damage to property, or litigation or business disruption may result in the
incurrence of substantial costs and the diversion of resources, which could have
an adverse effect on our operating results.]
For
additional information regarding risks related to our business and doing
business in China, please see Item 1A of Part I of our Annual Report on Form
10-K for the year ended June 30, 2009.
We
are not current in our payment of social insurance and housing accumulation fund
for our employees and such shortfall may expose us to relevant administrative
penalties.
The PRC
laws and regulations require all employers in China to fully contribute their
own portion of the social insurance premium and housing accumulation fund for
their employees within a certain period of time. Failure to do so may expose the
employers to make rectification for the accrued premium and fund by the relevant
labor authority. Also, an administrative fine may be imposed on the employers as
well as the key management members. Xin Ao has failed to fully contribute the
social insurance premium and housing accumulation fund. Therefore, they may be
subject to the administrative punishment as mentioned above.
Our
operations may incur substantial liabilities to comply with environmental laws
and regulations.
Our
concrete manufacturing operations are subject to laws and regulations relating
to the release or disposal of materials into the environment or otherwise
relating to environmental protection. Applicable law required that we obtain an
environmental impact report and environmental approval from the environmental
protection administration prior to obtaining the business license and
construction enterprise qualification certificate for Xin
Ao. However, the local administration of industry and commerce and
the Beijing Municipal Construction Commission did not require Xin Ao to provide
the environmental impact report and environmental approval, and Xin Ao has not
received any notice of non-compliance nor has any fine or other penalty been
assessed. However, the environmental protection administration may in
the future require that Xin Ao provide the applicable report and apply for the
required environment approval. Our failure to have complied with the applicable
laws regarding delivery of the report may result in the assessment of
administrative, civil and criminal penalties, the incurrence of investigatory or
remedial obligations and the imposition of injunctive
relief. Resolution of these matters may require
considerable management time and expense. In addition, changes in
environmental laws and regulations occur frequently and any changes that result
in more stringent or costly manufacturing, storage, transport, disposal or
cleanup requirements could require us to make significant expenditures to reach
and maintain compliance and may otherwise have a material adverse effect on our
industry in general and on our own results of operations, competitive position
or financial condition.
We may be subject to fines and legal
sanctions if we or our Chinese employees fail to comply with PRC regulations
relating to employee stock options granted by overseas listed companies to PRC
citizens.
On
December 25, 2006, the People's Bank of China issued the Administration
Measures on Individual Foreign Exchange Control, and its Implementation Rules
were issued by the State Administration of Foreign Exchange (“SAFE”) on
January 5, 2007. Both took effect on February 1, 2007. Under these
regulations, all foreign exchange matters involved in an employee stock holding
plan, stock option plan or similar plan in which PRC citizens’ participation
requires approval from the SAFE or its authorized branch. On March 28,
2007, the SAFE issued the Application Procedure for Foreign Exchange
Administration for Domestic Individuals Participating in Employee Stock Holding
Plans or Stock Option Plans of Overseas Listed Companies, or Notice 78. Under
Notice 78, PRC individuals who participate in an employee stock option holding
plan or a stock option plan of an overseas listed company are required, through
a PRC domestic agent or PRC subsidiary of the overseas listed company, to
register with the SAFE and complete certain other procedures. We and our Chinese
employees who have been granted shares or stock options pursuant to our share
incentive plan are subject to Notice 78. However, in practice, there are
significant uncertainties with regard to the interpretation and implementation
of Notice 78. We are committed to complying with the requirements of Notice 78.
However, we cannot provide any assurance that we or our Chinese employees will
be able to qualify for or obtain any registration required by Notice 78. In
particular, if we and/or our Chinese employees fail to comply with the
provisions of Notice 78, we and/or our Chinese employees may be subject to fines
and legal sanctions imposed by the SAFE or other PRC government authorities, as
a result of which our business operations and employee option plans could be
materially and adversely affected.
SAFE
rules and regulations may limit our ability to convert and transfer the net
proceeds from this offering to Xin Ao, which may adversely affect the business
expansion of Xin Ao, and we may not be able to convert the net proceeds from
this offering into Renminbi to invest in or acquire any other PRC
companies.
On
August 29, 2008, SAFE promulgated Circular 142, a notice regulating the
conversion by a foreign-invested company of foreign currency into Renminbi by
restricting how the converted Renminbi may be used. The notice requires that the
registered capital of a foreign-invested company settled in Renminbi converted
from foreign currencies may only be used for purposes within the business scope
approved by the applicable governmental authority and may not be used for equity
investments within the PRC. In addition, SAFE strengthened its oversight of the
flow and use of the registered capital of a foreign-invested company settled in
Renminbi converted from foreign currencies. The use of such Renminbi capital may
not be changed without SAFE’s approval, and may not in any case be used to repay
Renminbi loans if the proceeds of such loans have not been used. Violations of
Circular 142 will result in severe penalties, such as heavy fines. As a result,
Circular 142 may significantly limit our ability to transfer the net
proceeds from this offering to Xin Ao through our subsidiary in the PRC, which
may adversely affect the business expansion of Xin Ao, and we may not be able to
convert the net proceeds from this offering into Renminbi to invest in or
acquire any other PRC companies.
The
discontinuation, reduction or delay of any of the preferential tax treatments
currently available to us in the PRC could materially and adversely affect our
business, financial condition and results of operations.
Prior to
January 1, 2008, under the old enterprises income tax law, Xin Ao was
subject to a 33% income tax rate, which was subject to certain tax holidays and
preferential tax rates. Under the new enterprise income tax law effective
January 1, 2008, or the New EIT Law, both foreign-invested enterprises and
domestic enterprises are subject to a unified 25% income tax rate. Under the New
EIT Law, preferential tax treatments will be granted to enterprises that conduct
business in certain encouraged sectors and to enterprises that qualify as “high
and new technology enterprises”, a status reassessed every three years. In
addition, an enterprise is entitled to a 0% value-added tax rate if it uses
recycled raw materials to manufacture its products. Xin Ao was recognized as a
high and new technology enterprise in 2009 and is entitled to a 15% preferential
income tax rate for the three-year period ending 2011. In addition, Xin
Ao uses recycled raw materials to manufacture its products and was entitled
to a 0% value-added tax rate from August 2007 to August 2009. However, we cannot
assure you that Xin Ao will be able to maintain its status as “high and new
technology enterprises” and/or as an enterprise for value-added tax exemption.
If Xin Ao fails to continue to qualify or fails to receive an updated approvals,
our income tax and value-added tax expenses would increase, which would
have a material adverse effect on our net income and results of
operations.
Risks
Related to Our Corporate Structure
We
rely on contractual arrangements with Xin Ao and its shareholders for our
operations in the PRC, which may not be as effective in providing control over
Xin Ao as direct ownership.
We have
no equity ownership interest in Xin Ao, and rely on contractual arrangements
with Xin Ao and its two shareholders to control and operate Xin
Ao. We describe these arrangements in more detail under “Item 13.
Certain Relationships and Related Transactions, and Director Independence –
Reorganization Related Transactions” in our Annual Report on Form 10-K,
incorporated by reference herein. These contractual arrangements may
not be as effective in providing control over Xin Ao as direct ownership would
be. For example, Xin Ao could fail to take actions required for our business
despite its contractual obligation to do so. If Xin Ao, or any of its
shareholders, fails to perform their respective obligations under agreements
with us, we may have to incur substantial costs and resources to enforce such
arrangements and may have to rely on legal remedies under PRC law, including
seeking specific performance or injunctive relief, and claiming damages, which
may not be effective. In addition, we may not be able to renew these agreements
with Xin Ao and its shareholders when they expire. Our contractual arrangements
with Xin Ao are governed by PRC law and provide for the resolution of disputes
through arbitration in the PRC. Accordingly, these contracts would be
interpreted in accordance with PRC law and any disputes would be resolved in
accordance with PRC legal procedures. The legal environment in the PRC is not as
developed as in the United States and uncertainties in the Chinese legal system
could limit our ability to enforce these contractual arrangements. In the event
that we are unable to enforce these contractual arrangements, our business,
financial condition and results of operations could be materially and adversely
affected.
If
the PRC government determines that the contractual arrangements that establish
the structure for operating our business do not comply with applicable
regulations, our business could be adversely affected.
The
government of the PRC restricts share exchanges between PRC companies and
offshore entities. Consequently, we acquired our business in the PRC through
contractual arrangements with Xin Ao. Although we believe we comply with current
regulations of the PRC, we cannot assure you that our current ownership and
operating structure would not be found to be in violation of any current or
future PRC laws or regulations or other regulatory requirements and policies. If
the PRC government determines that our structure or operating arrangements do
not comply with applicable law, it could:
|
–
|
revoke
our business and operating licenses, require us to discontinue or restrict
our operations;
|
|
–
|
restrict
our right to collect revenues;
|
|
–
|
require
us to restructure our operations;
|
|
–
|
impose
additional conditions or requirements with which we may not be able to
comply;
|
|
–
|
impose
restrictions on our business operations or on our customers; or
|
|
–
|
take
other regulatory or enforcement actions against us that could be harmful
to our business.
|
In
addition, the equity pledge among China-ACMH and Xin Ao and Xin Ao’s
shareholders has not been registered and may be deemed to be invalid under PRC
law.
The
controlling shareholder of Xin Ao may have potential conflicts of interest with
us, which may adversely affect our business.
Mr.
Xianfu Han and Mr. He Weili, our Chairman and CEO and Vice Chairman and COO,
respectively, are the controlling shareholders of Xin Ao and also a beneficial
owners of our common stock. They are also directors of both Xin Ao and us.
Conflicts of interests among their roles as shareholders, officers and directors
of both Xin Ao and us may arise. We cannot assure you that when conflicts of
interests arise, they will act in the best interests of our company or that
conflicts of interests will be resolved in our favor. In addition, they may
breach or cause Xin Ao to breach or refuse to renew the existing contractual
arrangements that allow us to receive economic benefits from Xin Ao. Currently,
we do not have existing arrangements to address potential conflicts of interests
between Messrs. Han and He and us. We rely on Messrs. Han and He to abide by the
laws of Delaware, which provide that directors owe fiduciary duties to us,
requiring them to act in good faith and in our best interests and not to use
their positions for personal gains. If we cannot resolve any conflicts of
interests or disputes between us and Messrs. Han and He, in their capacities as
the controlling shareholders of Xin Ao, we would have to rely on legal
proceedings, which could result in disruption of our business.
Our
contractual arrangements with Xin Ao may be subject to scrutiny by the PRC tax
authorities and we could be required to pay additional taxes, which could
substantially reduce our consolidated net income and the value of your
investment.
We could
face material and adverse tax consequences if the PRC tax authorities determine
that our contractual arrangements with Xin Ao were not priced at arm’s length
for purposes of determining tax liabilities. If the PRC tax authorities
determine that these contracts were not entered into on an arm’s-length basis,
they may adjust our income and expenses for PRC tax purposes in the form of a
transfer pricing adjustment. A transfer pricing adjustment could result in a
reduction, for PRC tax purposes, of deductions recorded by Xin Ao, which could
adversely affect us by increasing the tax liabilities of Xin Ao. This increased
tax liability could further result in late payment fees and other penalties to
Xin Ao for underpaid taxes. Any payments we make under these arrangements or
adjustments in payments under these arrangements that we may decide to make in
the future will be subject to the same risk. Prices for such services will be
set prospectively and therefore we do not know whether any of the payments to be
made under the contracts will or will not be considered at arm’s length for
purposes of determining tax liabilities.
Pledge
rights for a pledge of equity may not be created until it is registered with the
relevant administration for industry and commerce pursuant to the China Property
Rights Law.
To
guarantee the performance of contract obligations of Xin Ao and its registered
shareholders, as applicable, under the contractual arrangement, China-ACMH
entered into an equity pledge agreement with Xin Ao and each of
its registered shareholders under which they pledge their equity
interest in Xin Ao to China-ACMH. According to the Property Rights Law, which
became effective as of October 1, 2007, pledge rights for a pledge of equity are
created at the time of the processing of the registration of the pledge by the
relevant administration for industry and commerce. The shareholders of Xin Ao
who are obligated to register the pledge under the Equity Pledge Agreement, are
filing an application for the pledge registration. The pledge registration has
not been completed as of the date of this prospectus supplement.
Failure
of registration of the pledge could allow the shareholders of Xin Ao to dishonor
their pledge and re-pledge the equity interests to another person or another
party. Before completion of the pledge registration, we rely on these
shareholders to abide by the contracts laws of China and honor their contracts
with China-ACMH. We cannot assure that we will be able to get its equity pledge
registration processed by the relevant administration for industry and commerce,
and if we are unable to do so, the effectiveness of the pledge may
affected.
Risks
Related to This Offering
The price of our common stock may
fluctuate significantly, which could negatively affect us and holders of our
common stock.
The
trading price of our common stock may fluctuate significantly in response to a
number of factors, many of which are beyond our control. For instance, if our
financial results are below the expectations of securities analysts and
investors, the market price of our common stock could decrease, perhaps
significantly. Other factors that may affect the market price of our common
stock include announcements relating to significant corporate transactions;
fluctuations in our quarterly and annual financial results; operating and stock
price performance of companies that investors deem comparable to us; and changes
in government regulation or proposals relating to us. In addition, since the
middle of 2008, the U.S. securities markets have experienced significant price
and volume fluctuations. These fluctuations often have been unrelated to the
operating performance of companies in these markets. Market fluctuations and
broad market, economic and industry factors may negatively affect the price of
our common stock, regardless of our operating performance. You may not be able
to sell your shares of our common stock at or above the public offering price,
or at all. Any volatility of or a significant decrease in the market price of
our common stock could also negatively affect our ability to make acquisitions
using common stock. Further, if we were to be the object of securities class
action litigation as a result of volatility in our common stock price or for
other reasons, it could result in substantial costs and diversion of our
management’s attention and resources, which could negatively affect our
financial results.
There
may be future sales or other dilution of our equity, which may adversely affect
the market price of our common stock.
Except as
described under the heading “Underwriting” below, we are not restricted from
issuing additional common stock, up to a total of 74,000,000 shares, including
any securities that are convertible into or exchangeable for, or that represent
the right to receive, common stock. The issuance of any additional shares of
common stock or securities convertible into, exchangeable for or that represent
the right to receive common stock or the exercise of such securities could be
substantially dilutive to holders of our common stock. Holders of shares of our
common stock have no preemptive rights that entitle holders to purchase their
pro rata share of any offering of shares of any class or series. The market
price of our common stock could decline as a result of sales of shares of our
common stock made after this offering or the perception that such sales could
occur. Because our decision to issue securities in any future offering will
depend on market conditions and other factors beyond our control, we cannot
predict or estimate the amount, timing or nature of our future offerings. Thus,
our shareholders bear the risk of our future offerings reducing the market price
of our common stock and diluting their interests in us.
Our
shares of common stock are very thinly traded, and there can be no assurance
that there will be an active market for our shares of common stock in the
future.
Our
shares of common stock are very thinly traded, and the price if traded may not
reflect our value. There can be no assurance that there will be an active market
for our shares of common stock in the future. The market liquidity will be
dependent on the perception of our operating business and any steps that our
management might take to bring us to the awareness of investors. There can be no
assurance given that there will be any awareness generated. Consequently,
investors may not be able to liquidate their investment or liquidate it at a
price that reflects the value of the business. If a more active market should
develop, the price may be highly volatile. Because there may be a low price for
our shares of common stock, many brokerage firms may not be willing to effect
transactions in the securities. Even if an investor finds a broker willing to
effect a transaction in the shares of our common stock, the combination of
brokerage commissions, transfer fees, taxes, if any, and any other selling
costs may exceed the selling price. Further, many lending institutions will not
permit the use of such shares of common stock as collateral for any
loans.
We
do not intend to pay dividends on shares of our common stock for the foreseeable
future, but if we intend to do so our holding company structure may limit the
payment of dividends to our stockholders.
We have
no direct business operations, other than our ownership of our subsidiaries.
While we have no current intention of paying dividends, should we decide in the
future to do so, as a holding company, our ability to pay dividends and meet
other obligations depends upon the receipt of dividends or other payments from
our operating subsidiaries and other holdings and investments. In addition, our
operating subsidiaries, from time to time, may be subject to restrictions on
their ability to make distributions to us, including as a result of restrictive
covenants in loan agreements, restrictions on the conversion of local currency
into U.S. dollars or other hard currency and other regulatory restrictions as
discussed below. If future dividends are paid in RMB, fluctuations in the
exchange rate for the conversion of RMB into U.S. dollars may reduce the amount
received by U.S. stockholders upon conversion of the dividend payment into U.S.
dollars.
Chinese
regulations currently permit the payment of dividends only out of accumulated
profits as determined in accordance with Chinese accounting standards and
regulations. Our subsidiaries in China are also required to set aside a portion
of their after tax profits according to Chinese accounting standards and
regulations to fund certain reserve funds. Currently, our subsidiaries in China
are the only sources of revenues or investment holdings for the payment of
dividends. If they do not accumulate sufficient profits under Chinese accounting
standards and regulations to first fund certain reserve funds as required by
Chinese accounting standards, we will be unable to pay any
dividends.
If
the China Securities Regulatory Commission, or CSRC, or another Chinese
regulatory agency, determines that CSRC approval is required in connection with
this offering, this offering may be delayed or cancelled, or we may become
subject to penalties.
On August
8, 2006, six Chinese regulatory agencies, including the Ministry of Commerce,
the State Assets Supervision and Administration Commission, the State
Administration for Taxation, the State Administration for Industry and Commerce,
CSRC and the State Administration of Foreign Exchange, jointly issued the
Regulation on Mergers and Acquisitions of Domestic Companies by Foreign
Investors, or the New M&A Rule, which became effective on September 8, 2006.
This new regulation, among other things, has certain provisions that require
offshore special purpose vehicles formed for the purpose of acquiring Chinese
domestic companies and directly or indirectly established or controlled by
Chinese entities or individuals, to obtain the approval of the CSRC prior to
publicly listing their securities on an overseas stock market. On September 21,
2006, the CSRC published on its official website a notice specifying the
documents and materials that are required to be submitted for obtaining CSRC
approval. It is not clear how the provisions in the new regulation regarding the
offshore listing and trading of the securities of a special purpose vehicle
apply to us. We believe, based on the interpretation of the new regulation and
the practice experience of our Chinese legal counsel, Beijing Ruidu Law Firm,
that CSRC approval is not required for this offering. Since the new regulation
has only recently been adopted, there remains some uncertainty as to how this
regulation will be interpreted or implemented. If the CSRC or another Chinese
regulatory agency subsequently determines that the CSRC’s approval is required
for this offering, we may face sanctions by the CSRC or another Chinese
regulatory agency. If this happens, these regulatory agencies may impose fines
and penalties on our operations in China, limit our operating privileges in
China, delay or restrict the repatriation of our net proceeds from this offering
into China, restrict or prohibit payment or remittance of dividends to us or
take other actions that could have a material adverse effect on our business,
financial condition, results of operations, reputation and prospects, as well as
the trading price of our shares of common stock. The CSRC or other Chinese
regulatory agencies may also take actions requiring us, or making it advisable
for us, to delay or cancel this offering before settlement and delivery of the
shares being offered by us.
We
may use these proceeds in ways with which you may not agree.
We have
considerable discretion in the application of the proceeds of this offering. You
will not have the opportunity, as part of your investment decision, to assess
whether the proceeds are being used in a manner agreeable to you. You must rely
on our judgment regarding the application of the net proceeds of this offering.
The net proceeds may be used for corporate purposes that do not improve our
profitability or increase the price of our shares. The net proceeds may also be
placed in investments that do not produce income or that lose
value.
Material
weaknesses and other control deficiencies relating to our internal control over
financial reporting could result in errors in our reported results and could
have a material adverse effect on our operations, investor confidence in our
business and the trading prices of our securities.
Our
internal control over financial reporting has been insufficient to allow us to
accurately report our financial results in a timely manner.
Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal
control over financial reporting is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting can also be
circumvented by collusion or improper management override. Because of such
limitations, there is a risk that material misstatements will not be prevented
or detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process, and it is possible to design into the process safeguards to
reduce, though not eliminate, the risk.
Management’s
assessment of our internal control over financial reporting as of December 31,
2009 concluded that our internal control over financial reporting was not
effective and that material weaknesses existed. Until these material weaknesses
and other control deficiencies are remediated, they could lead to errors in our
reported financial results and could have a material adverse effect on our
operations, investor confidence in our business and the trading prices of our
securities.
As
described in our Quarterly Report on Form 10-Q for the six months ended December
31, 2009, incorporated herein by reference, we are currently in the process of
remediating our identified material weaknesses. Management’s continuing
evaluation and work to enhance our internal control over financial reporting
will require the dedication of additional resources and management time and
expense. If we fail to establish and maintain adequate internal control over
financial reporting, including any failure to implement remediation measures and
enhancements for internal controls, or if we experience difficulties in their
implementation, our business, financial condition and operating results could be
harmed.
Any
material weakness or unsuccessful remediation could affect investor confidence
in the accuracy and completeness of our financial statements. As a result, our
ability to obtain any additional financing, or additional financing on favorable
terms, could be materially and adversely affected, which in turn could
materially and adversely affect our business, our strategic alternatives, our
financial condition and the market value of our securities. In addition,
perceptions of us among customers, lenders, investors, securities analysts and
others could also be adversely affected. Current material weaknesses or any
weaknesses or deficiencies identified in the future could also hurt confidence
in our business and the accuracy and completeness of our financial statements,
and adversely affect our ability to do business with these groups.
We can
give no assurances that the measures we have taken to date, or any future
measures we may take, will remediate the material weaknesses identified or that
any additional material weaknesses will not arise in the future due to our
failure to implement and maintain adequate internal control over financial
reporting. In addition, even if we are successful in strengthening our controls
and procedures, those controls and procedures may not be adequate to prevent or
identify irregularities or ensure the fair and accurate presentation of our
financial statements included in our periodic reports filed with the
SEC.
FORWARD-LOOKING
STATEMENTS
Statements
contained in this prospectus supplement and the accompanying prospectus,
including the documents that are incorporated by reference, that are not
historical facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange
Act. Also, when we use any of the words “anticipate,” “assume,”
“believe,” “estimate,” “expect,” “intend,” or similar expressions, we are making
forward-looking statements. These forward-looking statements are not
guaranteed and are based on our present intentions and on our present
expectations and assumptions. These statements, intentions,
expectations and assumptions involve risks and uncertainties, some of which are
beyond our control, that could cause actual results or events to differ
materially from those we anticipate or project. These statements
include, among other things, statements relating to:
|
·
|
our
expectations regarding the market for our cement products and
services;
|
|
·
|
our
expectations regarding the continued growth of the cement
industry;
|
|
·
|
our
beliefs regarding the competitiveness of our
products;
|
|
·
|
our
expectations regarding the expansion of our manufacturing
capacity;
|
|
·
|
our
expectations with respect to increased revenue growth and our ability to
achieve profitability resulting from increases in our production
volumes;
|
|
·
|
our
future business development, results of operations and financial
condition;
|
|
·
|
competition
from other manufacturers of cement
products;
|
|
·
|
the
loss of any member of our management
team;
|
|
·
|
our
ability to integrate acquired subsidiaries and operations into existing
operations;
|
|
·
|
market
conditions affecting our equity
capital;
|
|
·
|
our
ability to successfully implement our selective acquisition
strategy;
|
|
·
|
changes
in general economic conditions; and
|
|
·
|
changes
in accounting rules or the application of such
rules.
|
Also,
forward-looking statements represent our estimates and assumptions only as of
the date of this prospectus supplement or as indicated in the statement.
Forward-looking statements included in the accompanying prospectus speak only as
of the date of the prospectus. You should not place undue reliance on
these forward-looking statements, as events described or implied in such
statements may not occur.
Except as
required by law, we assume no obligation to update any forward-looking
statements publicly, or to update the reasons actual results could differ
materially from those anticipated in any forward-looking statements, even if new
information becomes available in the future.
USE
OF PROCEEDS
We
estimate that the net proceeds from this offering will be approximately $___________ million,
after deducting the underwriting discount and other estimated expenses of this
offering payable by us. We intend to use the net proceeds from this
offering for general corporate purposes, including future capacity expansion,
strategic acquisitions, capital expenditure and research and development
expenditures.
CAPITALIZATION
The
following table sets forth a summary of our capitalization on a historical basis
as of December 31, 2009. The table also summarizes our capitalization
on an as adjusted basis assuming: (1) the completion of this offering at an
offering price of $____ per
share, the last reported sale price for our common stock reported on the Nasdaq
Global Market on ____ , 2010;
(2) net proceeds to us from this offering of $____ after payment of
estimated underwriting discounts and commissions and estimated expenses totaling
$______; and (3)
the intended application of the net proceeds of this offering as described under
“Use of Proceeds.”
You
should read this table in conjunction with the information contained in
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our unaudited consolidated financial statements, including the
related notes, contained in our Quarterly Report on Form 10-Q for the
period ended December 31, 2009, all of which are incorporated by reference in
this prospectus supplement.
|
|
As of December 31, 2009
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
(in thousands)
|
|
|
|
(unaudited)
|
|
Cash
|
|
$ |
1,696 |
|
|
$ |
|
|
Debt:
|
|
|
|
|
|
|
|
|
Short-term
debt
|
|
|
146 |
|
|
|
|
|
Long-term
debt
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REDEEMABLE
CONVERTIBLE PREFERRED STOCK ($0.001 par value, 788,000 shares issued and
outstanding as of December 31, 2009, net of discount for the
amount of $375,843 as of December 31, 2009 and ___ as
adjusted
|
|
|
4,231 |
|
|
|
|
|
Shareholders’
equity: Preferred stock $0.001 par value, 1,000,000 shares authorized,
788,000 issued and outstanding as of December 31, 2009 , and classified
outside shareholders' equity (see above), liquidation preference of $8.00
per share and accrued dividends as of December 31, 2009
|
|
|
- |
|
|
|
|
|
Common
stock, $0.001 par value, authorized 74,000,000 shares authorized,
11,550,040 issued and outstanding as of December 31, 2009 actual and ___ shares as
adjusted
|
|
|
13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid
in capital
|
|
|
17,735
|
|
|
|
|
|
Contribution
receivable
|
|
|
- |
|
|
|
|
|
Retained
earnings
|
|
|
11,591 |
|
|
|
|
|
Statutory
reserves
|
|
|
3,545
|
|
|
|
|
|
Accumulated
other comprehensive income
|
|
|
2,625 |
|
|
|
|
|
Total
shareholders’ equity
|
|
$ |
35,508 |
|
|
$ |
|
|
UNDERWRITING
We have
entered into an underwriting agreement with Roth Capital Partners, LLC with
respect to the shares subject to this offering. Subject to certain conditions,
we have agreed to sell to the underwriter, and the underwriter has agreed to
purchase from us [__] shares of our
common stock.
The
underwriting agreement provides that the obligation of the underwriter to
purchase the shares offered hereby is subject to certain conditions and that the
underwriter is obligated to purchase all of the shares of common stock offered
hereby if any of the shares are purchased. In no event shall the
maximum compensation to be received by the underwriter in connection with this
offering exceed 8% of the gross proceeds received by us.
If the
underwriter sells more shares than the above number, the underwriter has an
option for 30 days to buy up to an additional [__] shares from us at
the public offering price, less the underwriting commissions and discounts, to
cover these sales.
The
underwriter proposes to offer to the public the shares of common stock purchased
pursuant to the underwriting agreement at the public offering price on the cover
page of this prospectus. After the shares are released for sale to the public,
the underwriter may change the offering price and other selling terms at various
times.
The
following table summarizes the compensation and estimated expenses we will pay:
|
|
Per Share
|
|
|
Total
|
|
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
|
Without
Over-allotment
|
|
|
With
Over-allotment
|
|
Underwriting
discounts and commissions paid by us
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Expenses
payable by us
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
We have
agreed to reimburse the underwriter for certain out-of-pocket expenses incurred
by it with respect to this offering, which amount is included in “Expenses
Payable by us” above.
We have
agreed not to offer, sell, contract to sell or otherwise issue any shares of
common stock or securities exchangeable or convertible into common stock,
without the prior written consent of the underwriter, for a period of 90 days,
subject to an 18 day extension under certain circumstances, following the date
of this prospectus, subject to certain exceptions. In addition, our officers,
directors and Greg Goldberg have entered into lock-up agreements with the
underwriter. Under those lock-up agreements, subject to exceptions, those
holders of such stock may not, directly or indirectly, offer, sell, contract to
sell, pledge or otherwise dispose of or hedge any common stock or securities
convertible into or exchangeable for shares of common stock, or publicly
announce to do any of the foregoing, without the prior written consent of the
underwriter, for a period of 90 days, subject to an 18 day extension under
certain circumstances, from the date of this prospectus. This consent may be
given at any time without public notice.
Pursuant
to the underwriting agreement, we have agreed to indemnify the underwriter
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments which the underwriter or such other indemnified
parties may be required to make in respect of any such liabilities.
The
underwriter and its affiliates have provided, and may in the future provide,
various investment banking, commercial banking and other financial services for
us for which services they have received, and may receive in the future,
customary fees. No such services were performed or will be performed
during the 180-day period preceding the filing of this prospectus supplement or
the 90-day period following the consummation of this offering.
Our
common stock is traded on the Nasdaq Global Market under the symbol
“CADC.”
In
connection with the offering the underwriter may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange Act.
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·
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Stabilizing
transactions permit bids to purchase the underlying security so long as
the stabilizing bids do not exceed a specified maximum.
|
|
·
|
Over-allotment
involves sales by the underwriter of shares in excess of the number of
shares the underwriter is obligated to purchase, which creates a syndicate
short position. The short position may be either a covered short position
or a naked short position. In a covered short position, the number of
shares over-allotted by the underwriter is not greater than the number of
shares that they may purchase in the over-allotment option. In a naked
short position, the number of shares involved is greater than the number
of shares in the over-allotment option. The underwriter may close out any
covered short position by either exercising its over-allotment option
and/or purchasing shares in the open market.
|
|
·
|
Syndicate
covering transactions involve purchases of the common stock in the open
market after the distribution has been completed in order to cover
syndicate short positions. In determining the source of shares to close
out the short position, the underwriter will consider, among other things,
the price of shares available for purchase in the open market as compared
to the price at which they may purchase shares through the over-allotment
option. A naked short position occurs if the underwriter sells more shares
than could be covered by the over-allotment option. This
position can only be closed out by buying shares in the open market. A
naked short position is more likely to be created if the underwriter is
concerned that there could be downward pressure on the price of the shares
in the open market after pricing that could adversely affect investors who
purchase in the offering.
|
|
·
|
Penalty
bids permit the representative to reclaim a selling concession from a
syndicate member when the common stock originally sold by the syndicate
member is purchased in a stabilizing or syndicate covering transaction to
cover syndicate short
positions.
|
These
stabilizing transactions, syndicate covering transactions and penalty bids may
have the effect of raising or maintaining the market price of our common stock
or preventing or retarding a decline in the market price of the common stock. As
a result the price of our common stock may be higher than the price that might
otherwise exist in the open market. These transactions may be discontinued at
any time.
This
prospectus supplement and the accompanying prospectus may be made available in
electronic format on Internet sites or through other online services maintained
by the underwriter participating in the offering or by its affiliates. In those
cases, prospective investors may view offering terms online and prospective
investors may be allowed to place orders online. Other than the prospectus
supplement and the accompanying prospectus in electronic format, the information
on the underwriter’s or our website and any information contained in any other
website maintained by the underwriter or by us is not part of the prospectus
supplement, the accompanying prospectus or the registration statement of which
this prospectus supplement and the accompanying prospectus form a part, has not
been approved and/or endorsed by us or the underwriter in its capacity as an
underwriter and should not be relied upon by investors.
LEGAL
MATTERS
The
validity of the issuance of the shares of common stock offered hereby will be
passed upon for us by Pillsbury Winthrop Shaw Pittman LLP, Washington,
D.C. Loeb & Loeb LLP, New York, NY, will pass upon certain legal
matters for the underwriters. Legal matters as to PRC law will be passed upon
for us by Broad Bright, Beijing, China, and for the underwriter by Han Kun Law
Offices, Beijing, China. Pillsbury Winthrop Shaw Pittman LLP may rely
upon Broad & Bright, Beijing, China, with respect to matters governed by
PRC law. Loeb & Loeb LLP may rely on Han Kun Law Offices,
Beijing, China, with respect to matters governed by PRC law.
EXPERTS
The
financial statements of China Advanced Construction Materials Group, Inc.
appearing in China Advanced Construction Materials Group, Inc.’s Annual Report
on Form 10-K for the year ended June 30, 2009 have been audited by Frazer Frost,
LLP (a successor entity of Moore Stephens Wurth Frazer and Torbet, LLP),
independent registered public accounting firm, as set forth in their reports
thereon, included therein, and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and
auditing.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
We are
“incorporating by reference” specified documents that we file with the SEC,
which means that we can disclose important information to you by referring you
to those documents that are considered part of this prospectus. Later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference into this prospectus the documents
listed below and any future filings made with the SEC (other than any portion of
such filings that are furnished under applicable SEC rules rather than filed)
under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act, including
filings made on or after the date hereof and until termination of the offering
to which this prospectus relates:
|
·
|
Our
Annual Report on Form 10-K for the fiscal year ended June 30, 2009, filed
September 28, 2009;
|
|
·
|
Our
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2009, filed on November 16, 2009;
|
|
·
|
Our
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,
2009, filed on February 9, 2010;
|
|
·
|
The
description of our common stock, $0.001 par value per share, contained in
our Registration Statement on Form 8-A, filed on October 30, 2009 pursuant
to Section 12(b) of the Exchange Act, as amended;
and
|
|
·
|
Our
Current Reports on Form 8-K filed on August 3, 2009, August 17, 2009,
October 9, 2009, January 7, 2010, January 22, 2010, January 29, 2010 and
February 8, 2010.
|
Any
statement contained in a document incorporated or deemed to be incorporated by
reference into this prospectus supplement will be deemed to be modified or
superseded for purposes of this prospectus supplement to the extent that a
statement contained in this prospectus supplement or any other subsequently
filed document that is deemed to be incorporated by reference into this
prospectus supplement modifies or supersedes the statement. Any statement so
modified or superseded will not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
Our
filings with the SEC, including our Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those
reports, are available free of charge on our website at http://www.watg.cn as
soon as reasonably practicable after they are filed with, or furnished to, the
SEC. Our website and the information contained on that site, or connected to
that site, are not incorporated into and are not a part of this prospectus
supplement. You may also obtain a copy of these filings at no cost by writing or
telephoning us at the following address:
China
Advanced Construction Materials Group, Inc.
1515
Broadway, 11th Floor
New York,
NY 10036
Attention:
Investor Relations
Telephone:
+(86) 10 82525361
Except
for the documents incorporated by reference as noted above, we do not
incorporate into this prospectus supplement any of the information included in
our website.
$75,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Warrants
Units
We may
offer, issue and sell from time to time our common stock, preferred stock, debt
securities, warrants or units up to $75,000,000 or its equivalent in any other
currency, currency units, or composite currency or currencies in one or more
issuances. We may offer and sell the securities separately, together or as
units, in separate classes or series, in amounts, at prices and on terms to be
determined at the time of sale. This prospectus provides a general description
of offerings of these securities that we may undertake.
Each time
we sell our securities pursuant to this prospectus, we will provide the specific
terms of such offering in a supplement to this prospectus. The prospectus
supplement may also add, update, or change information contained in this
prospectus. You should read this prospectus and the accompanying prospectus
supplement, together with additional information described under the heading
“Where You Can Find More Information” and “Information Incorporated by
Reference,” before you make your investment decision.
This
prospectus may not be used to offer or sell our securities unless accompanied by
a prospectus supplement. The information contained or incorporated in this
prospectus or in any prospectus supplement is accurate only as of the date of
this prospectus, or such prospectus supplement, as applicable, regardless of the
time of delivery of this prospectus or any sale of our securities.
Our
common stock is listed on the NASDAQ Global Market under the symbol “CADC”. On
December 24, 2009, the last reported per share sale price of our common stock
was $4.50.
The
aggregate market value of our outstanding common stock held by non-affiliates is
$25,749,161
based on 12,710,971
shares of outstanding common stock, of which 3,901,388
are held by non-affiliates, and a per share price of $6.60 based on the closing
sale price of our common stock on November 11, 2009. We have not offered any
securities pursuant to General Instruction I.B.6. of Form S-3 during the prior
12 calendar month period that ends on and includes the date of this
prospectus.
We may
offer securities through underwriting syndicates managed or co-managed by one or
more underwriters, through agents, or directly to purchasers. The
prospectus supplement for each offering of securities will describe the plan of
distribution for that offering. For general information about the
distribution of securities offered, please see “Plan of Distribution” in this
prospectus.
See
the “Risk Factors” section of our filings with the SEC and the applicable
prospectus supplement for certain risks that you should consider before
investing in our securities.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus or
any prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
The date
of this prospectus is January 11, 2010
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
|
1
|
|
|
USE
OF TERMS
|
1
|
|
|
CHINA
ADVANCED CONSTRUCTION MATERIALS GROUP, INC.
|
1
|
|
|
RISK
FACTORS
|
2
|
|
|
FORWARD-LOOKING
STATEMENTS
|
2
|
|
|
USE
OF PROCEEDS
|
2
|
|
|
DESCRIPTION
OF CAPITAL STOCK
|
3
|
|
|
DESCRIPTION
OF WARRANTS
|
6
|
|
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DESCRIPTION
OF DEBT SECURITIES
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DESCRIPTION
OF UNITS
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PLAN
OF DISTRIBUTION
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LEGAL
MATTERS
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EXPERTS
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WHERE
YOU CAN FIND ADDITIONAL INFORMATION
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INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
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ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, using a “shelf” registration process. Under
this shelf registration process, we may sell our securities described in this
prospectus in one or more offerings up to a total dollar amount of $75,000,000.
Each time we offer our securities, we will provide you with a supplement to this
prospectus that will describe the specific amounts, prices and terms of the
securities we offer. The prospectus supplement may also add, update or change
information contained in this prospectus. This prospectus, together with
applicable prospectus supplements and the documents incorporated by reference in
this prospectus and any prospectus supplements, includes all material
information relating to this offering. Please read carefully both this
prospectus and any prospectus supplement together with additional information
described below under “Where You Can Find More Information” and “Information
Incorporated by Reference.”
You
should rely only on the information contained in or incorporated by reference in
this prospectus and any applicable prospectus supplement. We have not authorized
anyone to provide you with different or additional information. If anyone
provides you with different or inconsistent information, you should not rely on
it. The information contained in this prospectus is accurate only as of the date
of this prospectus, regardless of the time of delivery of this prospectus or any
sale of securities described in this prospectus. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted. You
should assume that the information appearing in this prospectus or any
prospectus supplement, as well as information we have previously filed with the
SEC and incorporated by reference, is accurate as of the date on the front of
those documents only. Our business, financial condition, results of operations
and prospects may have changed since those dates. This prospectus may not be used to
consummate a sale of our securities unless it is accompanied by a prospectus
supplement.
USE
OF TERMS
Except as
otherwise indicated by the context, all references in this prospectus to (i)
“China ACM,” “we,” “us,” “our,” “our Company,” or “the Company” are to China
Advanced Construction Materials Group, Inc., a Delaware corporation, and its
consolidated subsidiaries; (ii) “Securities Act” are to the Securities Act of
1933, as amended; and (iii) “Exchange Act” means the Securities Exchange Act of
1934, as amended.
When used
in this report, the terms “China ACM”, “Company”, “we”, “our”, and “us” refer to
China Advanced Construction Materials Group, Inc. (a Delaware corporation) and
its wholly-owned subsidiaries Xin Ao Construction Materials, Inc. and Beijing Ao
Hang Construction Materials Technology Co., Ltd., as well as Beijing Xin Ao
Concrete Co., Ltd., the Company’s variable interest entity
CHINA
ADVANCED CONSTRUCTION MATERIALS GROUP, INC.
We are a
holding company whose China-based operating subsidiaries are primarily engaged
in the production of advanced construction materials for large scale commercial,
residential, and infrastructure developments. We are primarily focused on
producing and supplying a wide range of advanced ready-mix concrete materials
for highly technical, large scale, and environmentally-friendly construction
projects.
Together
with our subsidiaries, we provide materials and services through our network of
seven ready-mixed concrete plants throughout Beijing and eleven portable
concrete plants located in various provinces all over China in supporting our
high speed railway projects during the first quarter of fiscal year 2010. We own
one concrete plant and its related equipment, lease three plants. In
addition, we have technical and preferred procurement agreements with three
independently owned concrete mixture stations, pursuant to which we are paid by
percentages of cost savings for technical support provided to clients and of
sales price for projects we refer to other stations due to the geographical
location of our owned and leased plants.
Our
manufacturing services are used primarily for our national high speed railway
projects; almost all of our general contract contractors on the high speed
railway projects supply the needed raw materials, which results in higher gross
margins for us and reduces our upfront capital investments needed to purchase
raw materials. We also produce ready-mix concrete at portable plants,
which can be dismantled and moved to new sites for new
projects.
We were
founded as an unincorporated business on September 1, 2005, under the name TJS
Wood Flooring, Inc., and became a C corporation in the State of Delaware on
February 15, 2007. On April 29, 2008, we changed our name to China Advanced
Construction Materials Group, Inc. in connection with a reverse acquisition
transaction with Xin Ao Construction Materials, Inc. Prior to the reverse
acquisition, we were a development stage enterprise and had not yet generated
any revenues. From and after the reverse acquisition, our business became the
business of our indirect, wholly owned subsidiaries in the People’s Republic of
China.
The
address of our principal executive office in China is Yingu Plaza, 9 Beisihuanxi
Road, Suite 1708, Haidian District, Beijing 100080 China, and our telephone
number is +(86 10) 825 25361. We maintain a website
at www.china-acm.com that contains information about our
Company, though no information contained on our website is part of this
prospectus.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Prior to making a
decision about investing in our securities, you should carefully consider the
specific risk factors discussed in the sections entitled “Risk Factors”
contained in our most recent Annual Report on Form 10-K filed on September 28,
2009 and in any applicable prospectus supplement and our other filings with the
SEC and incorporated by reference in this prospectus, together with all of the
other information contained in this prospectus, or any applicable prospectus
supplement. Additional risks and uncertainties not presently known to
us, or that we currently view as immaterial, may also impair our business. If
any of the risks or uncertainties described in our SEC filings or any prospectus
supplement or any additional risks and uncertainties actually occur, our
business, financial condition and results of operations could be materially and
adversely affected. In that case, the trading price of our securities could
decline and you might lose all or part of your investment.
FORWARD-LOOKING
STATEMENTS
This
prospectus contains or incorporates forward-looking statements within the
meaning of section 27A of the Securities Act and section 21E of the Exchange
Act. These forward-looking statements are management’s beliefs and assumptions.
In addition, other written or oral statements that constitute forward-looking
statements are based on current expectations, estimates and projections about
the industry and markets in which we operate and statements may be made by or on
our behalf. Words such as “should,” “could,” “may,” “expect,” “anticipate,”
“intend,” “plan,” “believe,” “seek,” “estimate,” variations of such words and
similar expressions are intended to identify such forward-looking statements.
These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict. There are a
number of important factors that could cause our actual results to differ
materially from those indicated by such forward-looking statements.
We
describe material risks, uncertainties and assumptions that could affect our
business, including our financial condition and results of operations, under
“Risk Factors” and may update our descriptions of such risks, uncertainties and
assumptions in any prospectus supplement. We base our forward-looking statements
on our management’s beliefs and assumptions based on information available to
our management at the time the statements are made. We caution you that actual
outcomes and results may differ materially from what is expressed, implied or
forecast by our forward-looking statements. Accordingly, you should be careful
about relying on any forward-looking statements. Reference is made in particular
to forward-looking statements regarding growth strategies, financial results,
product and service development, competitive strengths, intellectual property
rights, litigation, mergers and acquisitions, market acceptance or continued
acceptance of our products and services, accounting estimates, financing
activities, ongoing contractual obligations and sales efforts. Except as
required under the federal securities laws and the rules and regulations of the
SEC, we do not have any intention or obligation to update publicly any
forward-looking statements after the distribution of this prospectus, whether as
a result of new information, future events, changes in assumptions, or
otherwise.
USE
OF PROCEEDS
Unless
specified otherwise in the applicable prospectus supplement, we expect to use
the net proceeds we receive from the sale of the securities offered by this
prospectus and the accompanying prospectus supplement for general corporate
purposes, which may include, among other things:
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research
and development expenditures; and
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The
precise amount and timing of the application of such proceeds will depend upon
our funding requirements and the availability and cost of other
capital. Pending any specific application, we may initially invest
funds in short-term marketable securities or apply them to the reduction of
short-term indebtedness. Additional information on the use of net proceeds from
the sale of securities covered by this prospectus may be set forth in the
prospectus supplement relating to the specific offering.
DESCRIPTION
OF CAPITAL STOCK
Our
Articles of Incorporation authorizes us to issue 74,000,000 shares of common
stock, $0.001 par value per share, and 1,000,000 shares of preferred stock,
$0.001 par value per share. As of December
24, 2009, there were 12,710,971
shares of common stock, and 560,125
shares of preferred stock, outstanding.
Common
Stock. Each outstanding share of common stock entitles the holder thereof
to one vote per share on all matters. Our bylaws provide that elections for
directors shall be by a plurality of votes. Stockholders do not have preemptive
rights to purchase shares in any future issuance of our common stock. Upon our
liquidation, dissolution or winding up, and after payment of creditors and
preferred stockholders, if any, our assets will be divided pro-rata on a
share-for-share basis among the holders of the shares of common
stock.
The
holders of shares of our common stock are entitled to dividends out of funds
legally available when and as declared by our board of directors. Our board of
directors has never declared a dividend and does not anticipate declaring a
dividend in the foreseeable future. Should we decide in the future to pay
dividends, as a holding company, our ability to do so and meet other obligations
depends upon the receipt of dividends or other payments from our operating
subsidiaries and other holdings and investments. In addition, our operating
subsidiaries, from time to time, may be subject to restrictions on their ability
to make distributions to us, including as a result of restrictive covenants in
loan agreements, restrictions on the conversion of local currency into U.S.
dollars or other hard currency and other regulatory restrictions. In the event
of our liquidation, dissolution or winding up, holders of our common stock are
entitled to receive, ratably, the net assets available to stockholders after
payment of all creditors.
Preferred
Stock. Our board of directors it authorized to issue up to
1,000,000 shares of preferred stock in one or more classes or series within a
class as may be determined by our board of directors, who may establish, from
time to time, the number of shares to be included in each class or series, may
fix the designation, powers, preferences and rights of the shares of each such
class or series and any qualifications, limitations or restrictions thereof. Any
preferred stock so issued by the board of directors may rank senior to the
common stock with respect to the payment of dividends or amounts upon
liquidation, dissolution or winding up of us, or both. Moreover, under certain
circumstances, the issuance of preferred stock or the existence of the unissued
preferred stock might tend to discourage or render more difficult a merger or
other change of control.
There are
560,125
shares of Series A Convertible Preferred Stock, or Series A Preferred Stock,
currently issued and outstanding. The Certificate of Designations for the Series
A Preferred Stock filed with the Secretary of State of Delaware on June 9, 2008,
provides that:
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the
value of the Series A Preferred Stock is $8.00 per
share;
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the
Series A Preferred Stock shall rank senior to all classes of common stock
of the Company in regards to liquidation, dissolution and winding up of
the affairs of the Company;
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the
holders of the Series A Preferred Stock are entitled to receive cumulative
dividends on each share of Series A Preferred Stock, payable in cash, at
an annual rate of 9%;
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each
share of Series A Preferred Stock is convertible, at the option of the
holder, into four shares of the Company’s common
stock;
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each
share of Series A Preferred Stock will automatically convert into shares
of the Company’s common stock, based on the if the closing price of the
Company’s common stock on the Company’s principal securities exchange
exceeds $5.00 per share for any 20 of the past 30 consecutive trading days
and the average trading volume is no less than 100,000 shares per day
during such period;
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upon
the second anniversary of the issuance date of the Series A Preferred
Stock, the Company shall redeem all of the outstanding shares of Series A
Preferred Stock at an amount equal to $8.00 per share plus all accrued
dividends unpaid thereon; and
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the
holders of Series A Preferred Stock will vote together with the holders of
common stock on all matters and not as a separate class, and each share of
Series A Preferred Stock shall have a number of votes equal to the number
of shares of common stock then issuable upon conversion. Our board of
directors is authorized, without action by the shareholders, to issue
preferred stock from time to time with dividend, liquidation, conversion,
voting, and other rights and restrictions as it may
determine. Shares of preferred stock may be issued in one or
more classes or series within a class as may be determined by our board of
directors, who may also establish the number of shares to be included in
each class or series. Any preferred stock so issued by the board of
directors may rank senior to the common stock with respect to the payment
of dividends or amounts upon liquidation, dissolution or winding up of us,
or both.
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Unless
provided in a supplement to this prospectus, the shares of our preferred stock
to be issued will have no preemptive rights. If preferred stock is offered by
us, the prospectus supplement will describe the terms of the preferred stock,
including the following if applicable to the particular offering:
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number
of shares of preferred stock to be issued and the offering price of the
preferred stock;
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the
title and stated value of the preferred
stock;
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dividend
rights, including dividend rates, periods, or payment dates, or methods of
calculation of dividends applicable to the preferred
stock;
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the
date from which distributions on the preferred stock shall accumulate, if
applicable;
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right
to convert the preferred stock into a different type of
security;
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voting
rights attributable to the preferred
stock;
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rights
and preferences upon our liquidation or winding up of our
affairs;
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the
procedures for any auction and remarketing, if any, for the preferred
stock;
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the
provisions for a sinking fund, if any, for the preferred
stock;
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any
listing of the preferred stock on any securities
exchange;
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the
terms and conditions, if applicable, upon which the preferred stock will
be convertible into our common stock, including the conversion price (or
manner of calculation thereof);
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a
discussion of federal income tax considerations applicable to the
preferred stock;
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the
relative ranking and preferences of the preferred stock as to distribution
rights (including whether any liquidation preference as to the preferred
stock will be treated as a liability for purposes of determining the
availability of assets for distributions to holders of stock ranking
junior to the shares of preferred stock as to distribution
rights);
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any
limitations on issuance of any series of preferred stock ranking senior to
or on a parity with the series of preferred stock being offered as to
distribution rights and rights upon the liquidation, dissolution or
winding up or our affairs; and
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any
other specific terms, preferences, rights, limitations or restrictions of
the preferred stock.
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Anti-Takeover
Provisions of Delaware Law and Charter Provisions
We are
subject to Section 203 of the Delaware General Corporation Law, which
prohibits a publicly-held Delaware corporation from engaging in a “business
combination,” except under certain circumstances, with an “interested
stockholder” for a period of three years following the date such person became
an “interested stockholder” unless:
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before
such person became an interested stockholder, the board of directors of
the corporation approved either the business combination or the
transaction that resulted in the interested stockholder becoming an
interested stockholder;
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upon
the consummation of the transaction that resulted in the interested
stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding shares held by directors who
also are officers of the corporation and shares held by employee stock
plans; or
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at
or following the time such person became an interested stockholder, the
business combination is approved by the board of directors of the
corporation and authorized at a meeting of stockholders by the affirmative
vote of the holders of 66 2/3% of the outstanding voting stock of the
corporation which is not owned by the interested
stockholder.
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The term
“interested stockholder” generally is defined as a person who, together with
affiliates and associates, owns, or, within the three years prior to the
determination of interested stockholder status, owned, 15% or more of a
corporation’s outstanding voting stock. The term “business combination” includes
mergers, asset or stock sales and other similar transactions resulting in a
financial benefit to an interested stockholder. Section 203 makes it more
difficult for an “interested stockholder” to effect various business
combinations with a corporation for a three-year period. The existence of this
provision would be expected to have an anti-takeover effect with respect to
transactions not approved in advance by our board of directors, including
discouraging attempts that might result in a premium over the market price for
the shares of common stock held by stockholders.
The
ability of the board of directors to issue shares of preferred stock and to set
the voting rights, preferences and other terms thereof, without further
stockholder action, may be deemed to have anti-takeover effect and may
discourage takeover attempts not first approved by the board of directors,
including takeovers which stockholders may deem to be in their best interests.
If takeover attempts are discouraged, temporary fluctuations in the market price
of our common stock, which may result from actual or rumored takeover attempts,
may be inhibited. These provisions, together with the ability of our board of
directors to issue preferred stock without further stockholder action, including
adoption of a stockholders rights plan using preferred stock rights, could
also delay or frustrate the removal of incumbent directors or the assumption of
control by stockholders, even if the removal or assumption would be beneficial
to our stockholders. These provisions could also discourage or inhibit a merger,
tender offer or proxy contests, even if favorable to the interests of
stockholders, and could depress the market price of our common
stock. In addition, our bylaws may be amended by action of the board
of directors.
Transfer
Agent
The
transfer agent and registrar for our common stock is Action Stock Transfer
Corp., located in Salt Lake City, Utah. Their mailing address is 7069 Highland
Drive, Suite 300, Salt Lake City, UT, 84121. Their phone number is
801.274.7088.
DESCRIPTION
OF WARRANTS
We may
issue warrants for the purchase of common stock, preferred stock and/or debt
securities in one or more series. We may issue warrants independently or
together with common stock, preferred stock and/or debt securities, and the
warrants may be attached to or traded separate and apart from these securities.
Each series of warrants will be issued under a warrant agreement all as set
forth in the prospectus supplement. A copy of the form of warrant agreement,
including any form of warrant certificates representing the warrants, reflecting
the provisions to be included in the warrant agreements and/or warrant
certificates that will be entered into with respect to particular offerings of
warrants, will be filed as an exhibit to a Form 8-K to be incorporated into the
registration statement of which this prospectus constitutes a part prior to the
issuance of any warrants.
The
applicable prospectus supplement or term sheet will describe the terms of the
warrants offered thereby, any warrant agreement relating to such warrants and
the warrant certificates, including but not limited to the
following:
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the
offering price or prices;
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the
aggregate amount of securities that may be purchased upon exercise of such
warrants and minimum number of warrants that are
exercisable;
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the
currency or currency units in which the offering price, if any, and the
exercise price are payable;
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the
number of securities, if any, with which such warrants are being offered
and the number of such warrants being offered with each
security;
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the
date on and after which such warrants and the related securities, if any,
will be transferable separately;
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the
amount of securities purchasable upon exercise of each warrant and the
price at which the securities may be purchased upon such exercise, and
events or conditions under which the amount of securities may be subject
to adjustment;
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the
date on which the right to exercise such warrants shall commence and the
date on which such right shall
expire;
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the
circumstances, if any, which will cause the warrants to be deemed to be
automatically exercised;
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any
material risk factors, if any, relating to such
warrants;
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the
identity of any warrant agent; and
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any
other terms of such warrants (which shall not be inconsistent with the
provisions of the warrant
agreement).
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Each
warrant will entitle the holder to purchase a principal amount of common stock,
preferred stock and/or debt securities at an exercise price as shall in each
case be set forth in, or calculable from, the prospectus supplement relating to
those warrants. Warrants may be exercised at the times set forth in
the prospectus supplement relating to such warrants. After the close of business
on the expiration date (or any later date to which the expiration date may be
extended by us), unexercised warrants will become void. Subject to any
restrictions and additional requirements that may be set forth in the prospectus
supplement relating thereto, warrants may be exercised by delivery to the
Company or its warrant agent of the certificate evidencing the warrants properly
completed and duly executed and of payment as provided in the prospectus
supplement of the amount required to purchase the debt securities or shares of
common stock, shares of preferred stock, or depositary shares purchasable upon
such exercise. The exercise price will be the price applicable on the date of
payment in full, as set forth in the prospectus supplement relating to the
warrants. Upon receipt of the payment and the certificate representing the
warrants to be exercised properly completed, duly executed and properly
delivered as indicated in the prospectus supplement, we will, as soon as
practicable, issue and deliver the debt securities or shares of common stock,
shares of preferred stock, or depositary shares purchasable upon such exercise.
If fewer than all of the warrants represented by that certificate are exercised,
a new certificate will be issued for the remaining amount of
warrants.
Prior to
the exercise of any warrants, holders of such warrants will not have any rights
of holders of the securities purchasable upon such exercise, including the right
to receive payments of dividends, if any, on the securities purchasable upon
such exercise, statutory appraisal rights or the right to vote such underlying
securities.
Prospective
purchasers of warrants should be aware that material U.S. federal income tax,
accounting and other considerations may be applicable to instruments such as
warrants.
DESCRIPTION
OF DEBT SECURITIES
The
following is a summary of the general terms of the debt securities that we may
issue. We will file a prospectus supplement that may contain additional
terms when we issue debt securities. The terms presented here, together with the
terms in a related prospectus supplement, will be a description of the material
terms of the debt securities. You should also read the indenture under which the
debt securities are to be issued. We have filed a form of indenture governing
different types of debt securities with the SEC as an exhibit to the
registration statement of which this prospectus is a part. All capitalized terms
have the meanings specified in the indenture.
We may
issue, from time to time, debt securities, in one or more series, that will
consist of senior debt, senior subordinated debt or subordinated debt. We refer
to the subordinated debt securities and the senior subordinated debt securities
together as the subordinated securities. The debt securities that we may offer
will be issued under an indenture between us and an entity, identified in the
applicable prospectus supplement, as trustee. Debt securities, whether senior,
senior subordinated or subordinated, may be issued as convertible debt
securities or exchangeable debt securities. The following is a summary of the
material provisions of the indenture filed as an exhibit to the registration
statement of which this prospectus is a part.
As
you read this section, please remember that for each series of debt securities,
the specific terms of your debt security as described in the applicable
prospectus supplement will supplement and, if applicable, may modify or replace
the general terms described in the summary below. The statement we
make in this section may not apply to your debt security.
General
Terms of the Indenture
The
indenture does not limit the amount of debt securities that we may issue. It
provides that we may issue debt securities up to the principal amount that we
may authorize and may be in any currency or currency unit that we may designate.
We may, without the consent of the holders of any series, increase the
principal amount of securities in that series in the future, on the same terms
and conditions and with the same CUSIP numbers as that series. Except for the
limitations on consolidation, merger and sale of all or substantially all
of our assets contained in the indenture, the terms of the indenture do not
contain any covenants or other provisions designed to give holders of any debt
securities protection against changes in our operations, financial condition or
transactions involving us.
We may
issue the debt securities issued under the indenture as “discount securities,”
which means they may be sold at a discount below their stated principal amount.
These debt securities, as well as other debt securities that are not issued at a
discount, may be issued with “original issue discount”, or OID, for U.S. federal
income tax purposes because of interest payment and other characteristics.
Material U.S. federal income tax considerations applicable to debt securities
issued with original issue discount will be described in more detail in any
applicable prospectus supplement.
The
applicable prospectus supplement for a series of debt securities that we issue
will describe, among other things, the following terms of the offered debt
securities:
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the
title and authorized denominations of the series of debt
securities;
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any
limit on the aggregate principal amount of the series of debt
securities;
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whether
such debt securities will be issued in fully registered form without
coupons or in a form registered as to principal only with coupons or in
bearer form with coupons;
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whether
issued in the form of one or more global securities and whether all or a
portion of the principal amount of the debt securities is represented
thereby;
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the
price or prices at which the debt securities will be
issued;
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the
date or dates on which principal is
payable;
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the
place or places where and the manner in which principal, premium or
interest, if any, will be payable and the place or places where the debt
securities may be presented for transfer and, if applicable, conversion or
exchange;
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interest
rates, and the dates from which interest, if any, will accrue, and the
dates when interest is payable and the
maturity;
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the
right, if any, to extend the interest payment periods and the duration of
the extensions;
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our
rights or obligations to redeem or purchase the debt
securities;
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any
sinking fund or other provisions that would obligate us to repurchase or
otherwise redeem some or all of the debt
securities;
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conversion
or exchange provisions, if any, including conversion or exchange prices or
rates and adjustments
thereto;
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the
currency or currencies of payment of principal or
interest;
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the
terms applicable to any debt securities issued at a discount from their
stated principal amount;
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the
terms, if any, under which any debt securities will rank junior to any of
our other debt;
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whether
and upon what terms the debt securities may be defeased, if different from
the provisions set forth in the
indenture;
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if
the amount of payments of principal or interest is to be determined by
reference to an index or formula, or based on a coin or currency other
than that in which the debt securities are stated to be payable, the
manner in which these amounts are determined and the calculation agent, if
any, with respect thereto;
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the
provisions, if any, relating to any collateral provided for the debt
securities;
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if
other than the entire principal amount of the debt securities when issued,
the portion of the principal amount payable upon acceleration of maturity
as a result of a default on our
obligations;
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the
events of default and covenants relating to the debt securities that are
in addition to, modify or delete those described in this
prospectus;
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the
nature and terms of any security for any secured debt securities;
and
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any
other specific terms of any debt
securities.
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The
applicable prospectus supplement will present material U.S. federal income tax
considerations for holders of any debt securities and the securities exchange or
quotation system on which any debt securities are to be listed or
quoted.
Senior
Debt Securities
Payment
of the principal of, premium and interest, if any, on senior debt securities
will rank on a parity with all of our other secured/unsecured and unsubordinated
debt.
Senior
Subordinated Debt Securities
Payment
of the principal of, premium and interest, if any, on senior subordinated debt
securities will be junior in right of payment to the prior payment in full of
all of our unsubordinated debt, including senior debt securities and any credit
facility. We will state in the applicable prospectus supplement relating to any
senior subordinated debt securities the subordination terms of the securities as
well as the aggregate amount of outstanding debt, as of the most recent
practicable date, that by its terms would be senior to the senior subordinated
debt securities. We will also state in such prospectus supplement limitations,
if any, on issuance of additional senior debt.
Subordinated
Debt Securities
Payment
of the principal of, premium and interest, if any, on subordinated debt
securities will be subordinated and junior in right of payment to the prior
payment in full of all of our senior debt, including our senior debt securities
and senior subordinated debt securities. We will state in the applicable
prospectus supplement relating to any subordinated debt securities the
subordination terms of the securities as well as the aggregate amount of
outstanding indebtedness, as of the most recent practicable date, that by its
terms would be senior to the subordinated debt securities. We will also state in
such prospectus supplement limitations, if any, on issuance of additional senior
indebtedness.
Conversion
or Exchange Rights
Debt
securities may be convertible into or exchangeable for other securities,
including, for example, shares of our equity securities. The terms and
conditions of conversion or exchange will be stated in the applicable prospectus
supplement. The terms will include, among others, the following:
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the
conversion or exchange price;
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the
conversion or exchange period;
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provisions
regarding the ability of us or the holder to convert or exchange the debt
securities;
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events
requiring adjustment to the conversion or exchange price;
and
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provisions
affecting conversion or exchange in the event of our redemption of the
debt securities.
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Consolidation,
Merger or Sale
We cannot
consolidate or merge with or into, or transfer or lease all or substantially all
of our assets to, any person, and we cannot permit any other person to
consolidate with or merge into us, unless (1) we will be the continuing
corporation or (2) the successor corporation or person to which our assets
are transferred or leased is a corporation organized under the laws of the
United States, any state of the United States or the District of Columbia and it
expressly assumes our obligations under the debt securities and the indenture.
In addition, we cannot complete such a transaction unless immediately after
completing the transaction, no event of default under the indenture, and no
event which, after notice or lapse of time or both, would become an event of
default under the indenture, shall have occurred and be continuing. When the
person to whom our assets are transferred or leased has assumed our obligations
under the debt securities and the indenture, we shall be discharged from all our
obligations under the debt securities and the indenture except in limited
circumstances.
This
covenant would not apply to any recapitalization transaction, a change of
control of us or a highly leveraged transaction, unless the transaction or
change of control were structured to include a merger or consolidation or
transfer or lease of all or substantially all of our assets.
Events
of Default
The term
“Event of Default,” when used in the indenture, unless otherwise indicated,
means any of the following:
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failure
to pay interest for 30 days after the date payment is due and
payable;
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failure
to pay principal or premium, if any, on any debt security when due, either
at maturity, upon any redemption, by declaration or
otherwise;
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failure
to make sinking fund payments when
due;
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failure
to perform other covenants for 60 days after notice that performance
was required;
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events
in bankruptcy, insolvency or reorganization relating to us;
or
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any
other Event of Default provided in the applicable officer’s certificate,
resolution of our board of directors or the supplemental indenture under
which we issue a series of debt
securities.
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An Event
of Default for a particular series of debt securities does not necessarily
constitute an Event of Default for any other series of debt securities issued
under the indenture.
If an
Event of Default with respect to any series of senior debt securities occurs and
is continuing, then either the trustee for such series or the holders of a
majority in aggregate principal amount of the outstanding debt securities of
such series, by notice in writing, may declare the principal amount of and
interest on all of the debt securities of such series to be due and payable
immediately; provided, however, unless otherwise provided in the applicable
prospectus supplement, if such an Event of Default occurs and is continuing with
respect to more than one series of senior debt securities under the indenture,
the trustee for such series or the holders of a majority in aggregate principal
amount of the outstanding debt securities of all such series of senior debt
securities of equal ranking (or, if any of such senior debt securities are
discount securities, such portion of the principal amount as may be specified in
the terms of that series), voting as one class, may make such declaration of
acceleration as to all series of such equal ranking and not the holders of the
debt securities of any one of such series of senior debt
securities.
If an
Event of Default with respect to any series of subordinated securities occurs
and is continuing, then either the trustee for such series or the holders of a
majority in aggregate principal amount of the outstanding debt securities of
such series, by notice in writing, may declare the principal amount of and
interest on all of the debt securities of such series to be due and payable
immediately; provided, however, unless otherwise provided in the applicable
prospectus supplement, if such an Event of Default occurs and is continuing with
respect to more than one series of subordinated securities under the indenture,
the trustee for such series or the holders of a majority in aggregate principal
amount of the outstanding debt securities of all such series of subordinated
securities of equal ranking (or, if any of such subordinated securities are
discount securities, such portion of the principal amount as may be specified in
the terms of that series), voting as one class, may make such declaration of
acceleration as to all series of equal ranking and not the holders of the debt
securities of any one of such series of subordinated securities.
The
holders of not less than a majority in aggregate principal amount of the debt
securities of all affected series of equal ranking may, after satisfying certain
conditions, rescind and annul any of the above-described declarations and
consequences involving such series.
If an
Event of Default relating to events in bankruptcy, insolvency or reorganization
of us occurs and is continuing, then the principal amount of all of the debt
securities outstanding, and any accrued interest, will automatically become due
and payable immediately, without any declaration or other act by the trustee or
any holder.
The
indenture imposes limitations on suits brought by holders of debt securities
against us. Except for actions for payment of overdue principal or interest, no
holder of debt securities of any series may institute any action against us
under the indenture unless:
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the
holder has previously given to the trustee written notice of default and
continuance of such default;
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the
holders of not less than a majority in principal amount of the outstanding
debt securities of the affected series of equal ranking have requested
that the trustee institute the
action;
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the
requesting holders have offered the trustee reasonable indemnity for
expenses and liabilities that may be incurred by bringing the
action;
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the
trustee has not instituted the action within 60 days of the request;
and
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the
trustee has not received inconsistent direction by the holders of a
majority in principal amount of the outstanding debt securities of the
affected series of equal ranking.
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We will
be required to file annually with the trustee a certificate, signed by one of
our officers, stating whether or not the officer knows of any default by us in
the performance, observance or fulfillment of any condition or covenant of the
indenture.
Registered
Global Securities and Book Entry System
The debt
securities of a series may be issued in whole or in part in book-entry form and
may be represented by one or more fully registered global securities or in
unregistered form with or without coupons. We will deposit any registered global
securities with a depositary or with a nominee for a depositary identified in
the applicable prospectus supplement and registered in the name of such
depositary or nominee. In such case, we will issue one or more registered global
securities denominated in an amount equal to the aggregate principal amount
of all of the debt securities of the series to be issued and represented by such
registered global security or securities. This means that we will not issue
certificates to each holder.
Unless
and until it is exchanged in whole or in part for debt securities in definitive
registered form, a registered global security may not be transferred except as a
whole:
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by
the depositary for such registered global security to its
nominee;
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by
a nominee of the depositary to the depositary or another nominee of the
depositary; or
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by
the depositary or its nominee to a successor of the depositary or a
nominee of the successor.
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The
prospectus supplement relating to a series of debt securities will describe the
specific terms of the depositary arrangement involving any portion of the series
represented by a registered global security. We anticipate that the following
provisions will apply to all depositary arrangements for registered debt
securities:
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ownership
of beneficial interests in a registered global security will be limited to
persons that have accounts with the depositary for such registered global
security, these persons being referred to as “participants,” or persons
that may hold interests through
participants;
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upon
the issuance of a registered global security, the depositary for the
registered global security will credit, on its book-entry registration and
transfer system, the participants’ accounts with the respective principal
amounts of the debt securities represented by the registered global
security beneficially owned by the
participants;
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any
dealers, underwriters, or agents participating in the distribution of the
debt securities represented by a registered global security will designate
the accounts to be credited; and
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ownership
of beneficial interest in such registered global security will be shown
on, and the transfer of such ownership interest will be effected only
through, records maintained by the depositary for such registered global
security for interests of participants, and on the records of participants
for interests of persons holding through
participants.
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The laws
of some states may require that specified purchasers of securities take physical
delivery of the securities in definitive form. These laws may limit the ability
of those persons to own, transfer or pledge beneficial interests in registered
global securities.
So long
as the depositary for a registered global security, or its nominee, is the
registered owner of such registered global security, the depositary or such
nominee, as the case may be, will be considered the sole owner or holder of the
debt securities represented by the registered global security for all purposes
under the indenture. Except as stated below, owners of beneficial interests in a
registered global security:
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will
not be entitled to have the debt securities represented by a registered
global security registered in their
names;
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will
not receive or be entitled to receive physical delivery of the debt
securities in the definitive form;
and
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will
not be considered the owners or holders of the debt securities under the
relevant indenture.
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Accordingly,
each person owning a beneficial interest in a registered global security must
rely on the procedures of the depositary for the registered global security and,
if the person is not a participant, on the procedures of a participant through
which the person owns its interest, to exercise any rights of a holder under the
indenture.
We
understand that under existing industry practices, if we request any action of
holders or if an owner of a beneficial interest in a registered global security
desires to give or take any action that a holder is entitled to give or take
under the indenture, the depositary for the registered global security would
authorize the participants holding the relevant beneficial interests to give or
take the action, and the participants would authorize beneficial owners owning
through the participants to give or take the action or would otherwise act upon
the instructions of beneficial owners holding through them.
We will
make payments of principal and premium, if any, and interest, if any, on debt
securities represented by a registered global security registered in the name of
a depositary or its nominee to the depositary or its nominee, as the case may
be, as the registered owners of the registered global security. None of us, the
trustee or any other agent of ours or the trustee will be responsible or liable
for any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in the registered global security or for
maintaining, supervising or reviewing any records relating to the beneficial
ownership interests.
We expect
that the depositary for any debt securities represented by a registered global
security, upon receipt of any payments of principal and premium, if any, and
interest, if any, in respect of the registered global security, will immediately
credit participants’ accounts with payments in amounts proportionate to their
respective beneficial interests in the registered global security as shown on
the records of the depositary. We also expect that standing customer
instructions and customary practices will govern payments by participants to
owners of beneficial interests in the registered global security held through
the participants, as is now the case with the securities held for the accounts
of customers in bearer form or registered in “street name.” We also expect that
any of these payments will be the responsibility of the
participants.
If the
depositary for any debt securities represented by a registered global security
is at any time unwilling or unable to continue as depositary or stops being a
clearing agency registered under the Exchange Act, we will appoint an eligible
successor depositary. If we fail to appoint an eligible successor depositary
within 90 days, we will issue the debt securities in definitive form in
exchange for the registered global security. In addition, we may at any time and
in our sole discretion decide not to have any of the debt securities of a series
represented by one or more registered global securities. In that event, we will
issue debt securities of the series in a definitive form in exchange for all of
the registered global securities representing the debt securities. The trustee
will register any debt securities issued in definitive form in exchange for a
registered global security in the name or names as the depositary, based upon
instructions from its participants, shall instruct the trustee.
We may
also issue bearer debt securities of a series in the form of one or more global
securities, referred to as “bearer global securities.” The prospectus supplement
relating to a series of debt securities represented by a bearer global security
will describe the applicable terms and procedures. These will include the
specific terms of the depositary arrangement and any specific procedures for the
issuance of debt securities in definitive form in exchange for a bearer global
security, in proportion to the series represented by a bearer global
security.
Discharge,
Defeasance and Covenant Defeasance
We can
discharge or decrease our obligations under the indenture as stated
below.
We may
discharge obligations to holders of any series of debt securities that have not
already been delivered to the trustee for cancellation and that have either
become due and payable or are by their terms to become due and payable, or are
scheduled for redemption, within sixty (60) days. We may effect a discharge
by irrevocably depositing with the trustee cash or U.S. government obligations,
as trust funds, in an amount certified to be enough to pay when due, whether at
maturity, upon redemption or otherwise, the principal of, premium and interest,
if any, on the debt securities and any mandatory sinking fund
payments.
Unless
otherwise provided in the applicable prospectus supplement, we may also
discharge any and all of our obligations to holders of any series of debt
securities at any time, which we refer to as defeasance. We may also be released
from the obligations imposed by any covenants of any outstanding series of debt
securities and provisions of the indenture, and we may omit to comply with those
covenants without creating an event of default under the trust declaration,
which we refer to as covenant defeasance. We may effect defeasance and covenant
defeasance only if, among other things:
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we
irrevocably deposit with the trustee cash or U.S. government obligations,
as trust funds, in an amount certified to be enough to pay at maturity, or
upon redemption, the principal, premium and interest, if any, on all
outstanding debt securities of the
series;
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we
deliver to the trustee an opinion of counsel from a nationally recognized
law firm to the effect that the holders of the series of debt securities
will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the defeasance or covenant defeasance and that
defeasance or covenant defeasance will not otherwise alter the holders’
U.S. federal income tax treatment of principal, premium and interest, if
any, payments on the series of debt securities;
and
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in
the case of subordinated debt securities, no event or condition shall
exist that, based on the subordination provisions applicable to the
series, would prevent us from making payments of principal of, premium and
interest, if any, on any of the applicable subordinated debt securities at
the date of the irrevocable deposit referred to above or at any time
during the period ending on the 91st day after the deposit
date.
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In the
case of a defeasance by us, the opinion we deliver must be based on a ruling of
the Internal Revenue Service issued, or a change in U.S. federal income tax law
occurring, after the date of the indenture, since such a result would not occur
under the U.S. federal income tax laws in effect on such date.
Although
we may discharge or decrease our obligations under the indenture as described in
the two preceding paragraphs, we may not avoid, among other things, our duty to
register the transfer or exchange of any series of debt securities, to replace
any temporary, mutilated, destroyed, lost or stolen series of debt securities or
to maintain an office or agency in respect of any series of debt
securities.
Modification
of the Indenture
The
indenture provides that we and the trustee may enter into supplemental
indentures without the consent of the holders of debt securities
to:
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secure
any debt securities and provide the terms and conditions for the release
or substitution of the security;
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evidence
the assumption by a successor corporation of our
obligations;
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add
covenants for the protection of the holders of debt
securities;
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add
any additional events of default;
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cure
any ambiguity or correct any inconsistency or defect in the
indenture;
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add
to, change or eliminate any of the provisions of the indenture in a manner
that will become effective only when there is no outstanding debt security
which is entitled to the benefit of the provision as to which the
modification would apply;
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establish
the forms or terms of debt securities of any
series;
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eliminate
any conflict between the terms of the indenture and the Trust Indenture
Act of 1939;
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evidence
and provide for the acceptance of appointment by a successor trustee and
add to or change any of the provisions of the indenture as is necessary
for the administration of the trusts by more than one trustee;
and
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make any other provisions with
respect to matters or questions arising under the indenture that will not
be inconsistent with any provision of the indenture as long as the new
provisions do not adversely affect the interests of the holders of any
outstanding debt securities of any series created prior to the
modification.
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The
indenture also provides that we and the trustee may, with the consent of the
holders of not less than a majority in aggregate principal amount of debt
securities of all series of senior debt securities or of Subordinated Securities
of equal ranking, as the case may be, then outstanding and affected, voting as
one class, add any provisions to, or change in any manner, eliminate or modify
in any way the provisions of, the indenture or modify in any manner the rights
of the holders of the debt securities. We and the trustee may not, however,
without the consent of the holder of each outstanding debt security affected
thereby:
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extend
the final maturity of any debt
security;
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reduce
the principal amount or premium, if
any;
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reduce
the rate or extend the time of payment of
interest;
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reduce
any amount payable on redemption or impair or affect any right of
redemption at the option of the holder of the debt
security;
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change
the currency in which the principal, premium or interest, if any, is
payable;
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reduce
the amount of the principal of any debt security issued with an original
issue discount that is payable upon acceleration or provable in
bankruptcy;
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alter
provisions of the relevant indenture relating to the debt securities not
denominated in U.S. dollars;
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impair
the right to institute suit for the enforcement of any payment on any debt
security when due;
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if
applicable, adversely affect the right of a holder to convert or exchange
a debt security; or
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reduce
the percentage of holders of debt securities of any series whose consent
is required for any modification of the
indenture.
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The
indenture provides that the holders of not less than a majority in aggregate
principal amount of the then outstanding debt securities of any and all affected
series of equal ranking, by notice to the relevant trustee, may on behalf of the
holders of the debt securities of any and all such series of equal ranking waive
any default and its consequences under the indenture except:
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a
continuing default in the payment of interest on, premium, if any, or
principal of, any such debt security held by a non-consenting holder;
or
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a
default in respect of a covenant or provision of the indenture that cannot
be modified or amended without the consent of the holder of each
outstanding debt security of each series
affected.
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Concerning
the Trustee
The
indenture provides that there may be more than one trustee under the indenture,
each for one or more series of debt securities. If there are different trustees
for different series of debt securities, each trustee will be a trustee of a
trust under the indenture separate and apart from the trust administered by any
other trustee under that indenture.
Except as
otherwise indicated in this prospectus or any prospectus supplement, any action
permitted to be taken by a trustee may be taken by such trustee only on the one
or more series of debt securities for which it is the trustee under the
indenture. Any trustee under the indenture may resign or be removed from one or
more series of debt securities. All payments of principal of, premium and
interest, if any, on, and all registration, transfer, exchange, authentication
and delivery of, the debt securities of a series will be effected by the trustee
for that series at an office designated by the trustee.
If the
trustee becomes a creditor of ours, the indenture places limitations on the
right of the trustee to obtain payment of claims or to realize on property
received in respect of any such claim as security or otherwise. The trustee may
engage in other transactions. If it acquires any conflicting interest relating
to any duties concerning the debt securities, however, it must eliminate the
conflict or resign as trustee.
The
holders of a majority in aggregate principal amount of any and all affected
series of debt securities of equal ranking then outstanding will have the right
to direct the time, method and place of conducting any proceeding for exercising
any remedy available to the trustee concerning the applicable series of debt
securities, provided that the direction:
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would
not conflict with any rule of law or with the relevant
indenture;
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would
not be unduly prejudicial to the rights of another holder of the debt
securities;
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and
would not involve any trustee in personal
liability.
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The
indenture provides that in case an Event of Default shall occur, not be cured
and be known to any trustee, the trustee must use the same degree of care as a
prudent person would use in the conduct of his or her own affairs in the
exercise of the trustee’s power. The trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
of the holders of the debt securities, unless they shall have offered to the
trustee security and indemnity satisfactory to the trustee.
No
Individual Liability of Incorporators, Stockholders, Officers or
Directors
The
indenture provides that no incorporator and no past, present or future
stockholder, officer or director of ours or any successor corporation in their
capacity as such shall have any individual liability for any of our obligations,
covenants or agreements under the debt securities or the indenture.
Governing
Law
The
indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.
DESCRIPTION
OF UNITS
We may
issue units comprised of one or more of the other securities described in this
prospectus in any combination. Each unit will be issued so that the holder of
the unit is also the holder of each security included in the unit. Thus, the
holder of a unit will have the rights and obligations of a holder of each
included security. The unit agreement under which a unit is issued may provide
that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date.
The
applicable prospectus supplement may describe:
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the
designation and terms of the units and of the securities comprising the
units, including whether and under what circumstances those securities may
be held or transferred separately;
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any
provisions for the issuance, payment, settlement, transfer or exchange of
the units or of the securities comprising the units;
and
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any
additional terms of the governing unit
agreement.
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The
applicable prospectus supplement will describe the terms of any
units.
PLAN
OF DISTRIBUTION
We may
sell the securities offered by this prospectus in any one or more of the
following ways from time to time:
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directly
to investors, including through a specific bidding, auction or other
process;
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to
investors through agents;
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to
or through brokers or dealers;
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to
the public through underwriting syndicates led by one or more managing
underwriters;
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to
one or more underwriters acting alone for resale to investors or to the
public; and
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through
a combination of any such methods of
sale.
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We may
also sell and distribute the securities offered by this prospectus from time to
time in one or more transactions, including in “at the market offerings” within
the meaning of Rule 415(a)(4) of the Securities Act, to or through a market
maker or into an existing trading market, on an exchange or
otherwise. We may sell our securities through a rights offering,
forward contracts or similar arrangements.
The
accompanying prospectus supplement will set forth the terms of the offering and
the method of distribution and will identify any firms acting as underwriters,
dealers or agents in connection with the offering, including:
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the
name or names of any underwriters, dealers or
agents;
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the
purchase price of the securities and the proceeds to us from the
sale;
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any
over-allotment options under which underwriters may purchase additional
securities from us;
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any
underwriting discounts and other items constituting compensation to
underwriters, dealers or agents;
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any
public offering price;
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any
discounts or concessions allowed or reallowed or paid to dealers;
and
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any
securities exchange or market on which the securities offered in the
prospectus supplement may be
listed.
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Only
those underwriters identified in such prospectus supplement are deemed to be
underwriters in connection with the securities offered in the prospectus
supplement. Any underwritten offering may be on a best efforts or a firm
commitment basis.
The
distribution of the securities may be effected from time to time in one or more
transactions at a fixed price or prices, which may be changed, at varying prices
determined at the time of sale, or at prices determined as the applicable
prospectus supplement specifies. The securities may be sold through a rights
offering, forward contracts or similar arrangements. In any distribution of
subscription rights to stockholders, if all of the underlying securities are not
subscribed for, we may then sell the unsubscribed securities directly to third
parties or may engage the services of one or more underwriters, dealers or
agents, including standby underwriters, to sell the unsubscribed securities to
third parties.
In
connection with the sale of the securities, underwriters, dealers or agents may
be deemed to have received compensation from us in the form of underwriting
discounts or commissions and also may receive commissions from securities
purchasers for whom they may act as agent. Underwriters may sell the securities
to or through dealers, and the dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or commissions from
the purchasers for whom they may act as agent.
We will
provide in the applicable prospectus supplement information regarding any
underwriting discounts or other compensation that we pay to underwriters or
agents in connection with the securities offering, and any discounts,
concessions or commissions which underwriters allow to dealers. Underwriters,
dealers and agents participating in the securities distribution may be deemed to
be underwriters, and any discounts and commissions they receive and any profit
they realize on the resale of the securities may be deemed to be underwriting
discounts and commissions under the Securities Act. Underwriters and their
controlling persons, dealers and agents may be entitled, under agreements
entered into with us, to indemnification against and contribution toward
specific civil liabilities, including liabilities under the Securities
Act.
Unless
otherwise specified in the related prospectus supplement, each series of
securities will be a new issue with no established trading market, other than
shares of common stock, which are listed on the Nasdaq Capital Market. Any
common stock sold pursuant to a prospectus supplement will be listed on the
Nasdaq Capital Market, subject to official notice of issuance. We may elect to
list any series of debt securities or preferred stock, on an exchange, but we
are not obligated to do so. It is possible that one or more underwriters may
make a market in the securities, but such underwriters will not be obligated to
do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of, or the trading market for, any
offered securities.
In
connection with an offering, the underwriters may purchase and sell securities
in the open market. These transactions may include short sales, stabilizing
transactions and purchases to cover positions created by short sales. Short
sales involve the sale by the underwriters of a greater number of securities
than they are required to purchase in an offering. Stabilizing transactions
consist of bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the securities while an offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a particular
underwriter repays to the underwriters a portion of the underwriting discount
received by it because the underwriters have repurchased securities sold by or
for the account of that underwriter in stabilizing or short-covering
transactions. These activities by the underwriters may stabilize, maintain or
otherwise affect the market price of the securities. As a result, the price of
the securities may be higher than the price that otherwise might exist in the
open market. If these activities are commenced, they may be discontinued by the
underwriters at any time. Underwriters may engage in overallotment. If any
underwriters create a short position in the securities in an offering in which
they sell more securities than are set forth on the cover page of the applicable
prospectus supplement, the underwriters may reduce that short position by
purchasing the securities in the open market.
Underwriters,
dealers or agents that participate in the offer of securities, or their
affiliates or associates, may have engaged or engage in transactions with and
perform services for, us or our affiliates in the ordinary course of business
for which they may have received or receive customary fees and reimbursement of
expenses.
LEGAL
MATTERS
The
validity of the securities offered by this prospectus will be passed upon for us
by Pillsbury Winthrop Shaw Pittman LLP.
EXPERTS
The
consolidated financial statements of the Company as of September 30, 2009
(unaudited) and 2008 (unaudited) and for the years ended June 30, 2009
and 2008 incorporated in this prospectus by reference have been audited by the
accounting firm of Moore Stephens Wurth Frazer and Torbet, LLP, independent
registered public accounting firm, and are incorporated in reliance upon their
report dated September 22, 2009, given upon such firm’s authority as experts in
auditing and accounting.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the securities offered in this offering.
This prospectus does not contain all of the information set forth in the
registration statement. For further information with respect to us and the
securities offered in this offering, we refer you to the registration statement
and to the attached exhibits. With respect to each such document filed as
an exhibit to the registration statement, we refer you to the exhibit for a more
complete description of the matters involved.
You may
inspect our registration statement and the attached exhibits and schedules
without charge at the public reference facilities maintained by the SEC at 100 F
Street, N.E., Washington, D.C. 20549. You may obtain copies of all or any
part of our registration statement from the SEC upon payment of prescribed fees.
You may obtain information on the operation of the public reference room by
calling the SEC at 1-800-SEC-0330.
Our SEC
filings, including the registration statement and the exhibits filed with the
registration statement, are also available from the SEC’s website at
www.sec.gov, which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the
SEC.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC
allows us to “incorporate by reference” in this prospectus certain of the
information we file with the SEC. This means we can disclose important
information to you by referring you to another document that has been filed
separately with the SEC. The information incorporated by reference is considered
to be part of this prospectus, and will modify and supersede the information
included in this prospectus to the extent that the information included as
incorporated by reference modifies or supersedes the existing information. Any
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus. We incorporate by reference
the documents listed below and all additional documents that we file with the
SEC under the terms of Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act,
that are made after the initial filing date of the registration statement of
which this prospectus is a part and before the termination of any offering of
securities offered by this prospectus.
|
·
|
Our
Annual Report on Form 10-K for the fiscal year ended June 30, 2009, filed
September 28, 2009;
|
|
·
|
Our
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30,
2009, filed on November 16, 2009;
|
|
·
|
The
description of our common stock, $0.001 par value per share, contained in
our Registration Statement on Form 8-A, filed on October 30, 2009,
pursuant to Section 12(b) of the Exchange Act, as amended;
and
|
|
·
|
Our
Current Reports on Form 8-K, as
follows:
|
Form
|
|
Filed On
|
8-K
|
|
August
3, 2009
|
8-K
|
|
August
17, 2009
|
8-K
|
|
October
9, 2009
|
Any
statement made in this prospectus concerning the contents of any contract,
agreement or other document is only a summary of the actual document. You may
obtain a copy of any document summarized in this prospectus and any or all of
the information that has been incorporated by reference in this prospectus at no
cost by writing or calling us at our mailing address and telephone number:
Xianfu Han, China Advanced Construction Materials Group, Inc., Yingu Plaza, 9
Beisihuanxi Road, Suite 1708, Haidian District, Beijing 100080 China,
telephone: +(86 10) 825 25361. Each statement regarding a contract, agreement or
other document is qualified in its entirety by reference to the actual
document.
You may
read and copy all materials that we have filed with the SEC at the SEC’s Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. Additionally, all reports and documents that we have filed with
the SEC can be obtained from the SEC’s Internet Site at http://www.sec.gov, or
by visiting our website at www.china
-acm.com.
_________
Shares
China
Advanced Construction Materials Group, Inc.
Common
Stock
_______________
PROSPECTUS
SUPPLEMENT
February
__, 2010
_______________
Roth
Capital Partners