AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 2003
REGISTRATION NO. 333-99673
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ELECTRIC FUEL CORPORATION
(Exact name of Registrant as specified in its charter)
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DELAWARE 95-4302784
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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MICHELLE BERKLEY
ELECTRIC FUEL CORPORATION ELECTRIC FUEL CORPORATION
632 BROADWAY 632 BROADWAY
NEW YORK, NEW YORK 10012 NEW YORK, NEW YORK 10012
TEL: (646) 654-2107 TEL: (646) 654-2107
FAX: (646)654-2187 FAX: (646) 654-2187
(Address, including ZIP code, and telephone (Address, including ZIP code, and
number, including area code, of Registrant's telephone number, including area
principal executive offices) code, of agent for service)
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COPIES OF ALL COMMUNICATIONS, INCLUDING COMMUNICATIONS SENT TO THE AGENT FOR
SERVICE, TO:
PETER H. EHRENBERG, ESQ YAAKOV HAR-OZ, ADV.
STEVEN M. SKOLNICK, ESQ. VICE PRESIDENT AND GENERAL COUNSEL
LOWENSTEIN SANDLER PC ELECTRIC FUEL LIMITED
65 LIVINGSTON AVENUE WESTERN INDUSTRIAL ZONE
ROSELAND, NEW JERSEY 07068 BEIT SHEMESH 99000, ISRAEL
TEL: (973) 597-2500 AND TEL: +(972-2) 990-6623
FAX: (973) 597-2400 FAX: +(972-2) 990-6688
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED JANUARY 21, 2003
ELECTRIC FUEL(R)
CORPORATION
3,250,000 SHARES
COMMON STOCK
This prospectus relates to the offer and sale of up to 3,250,000 shares of
the common stock of Electric Fuel Corporation from time to time by certain of
our stockholders listed in this prospectus.
The selling stockholders may offer their shares in public transactions on
the Nasdaq National Market at prevailing market prices or in negotiated private
transactions at negotiated prices. Our common stock is listed on the Nasdaq
National Market under the ticker symbol "EFCX." The last reported sale price for
our common stock on January 17, 2003 as quoted on the Nasdaq National Market was
$0.55 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 7 FOR VARIOUS RISKS THAT YOU SHOULD CONSIDER BEFORE YOU
PURCHASE ANY SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is , 2003
TABLE OF CONTENTS
PAGE
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Summary . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . 7
Information Regarding Forward-Looking Statements. . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . 17
Selling Stockholders . . . . . . . . . . . . . . . . . 17
Plan of Distribution . . . . . . . . . . . . . . . . . 17
Description of Capital Stock . . . . . . . . . . . . . 19
Legal Matters . . . . . . . . . . . . . . . . . . . . . 20
Experts . . . . . . . . . . . . . . . . . . . . . . . 20
Where You Can Find Additional Information . . . . . . . 20
Incorporation of Documents by Reference . . . . . . . 21
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Unless the context otherwise requires, references to us - Electric Fuel -
refer to Electric Fuel Corporation and our subsidiaries.
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SUMMARY
The following summary highlights some information from this prospectus. It
is not complete and does not contain all of the information that you should
consider before making an investment decision. You should read this entire
prospectus, including the "Risk Factors" section, the financial statements and
related notes and the other more detailed information appearing elsewhere or
incorporated by reference in this prospectus. Unless otherwise indicated, "we,"
"us," "our" and similar terms refer to Electric Fuel and its subsidiaries and
not to the selling stockholders.
Electric Fuel(R) is a registered trademark of Electric Fuel Corporation.
All company and product names mentioned may be trademarks or registered
trademarks of their respective holders.
ABOUT ELECTRIC FUEL CORPORATION
We are a world leader in primary and refuelable Zinc-Air fuel cell
technology, pioneering advancements in battery technology for defense and
security products and other military applications and for electric vehicles. We
also develop, manufacture and market advanced hi-tech multimedia and interactive
digital solutions for training of military, law enforcement and security
personnel, as well as using sophisticated lightweight materials and advanced
engineering processes to armor vehicles.
To fully utilize our technology for a wide selection of applications, we
operate in two business areas: Defense and Security Products and Electric
Vehicles.
RECENT DEVELOPMENTS
IES ACQUISITION
On August 2, 2002, we acquired substantially all the assets of I.E.S.
Electronics Industries U.S.A., Inc., a developer, manufacturer and marketer of
advanced hi-tech multimedia and interactive digital solutions for training of
military, law enforcement and security personnel. These systems are sold to
corporations, government agencies, and military and law enforcement
professionals around the world. See "- Defense and Security Products."
The consideration for the assets purchased consisted of (i) cash and
promissory notes in an aggregate amount of $4,800,000 ($3,000,000 in cash and
$1,800,000 in promissory notes (subsequently amended in December 2002 to
$1,650,000 in promissory notes in exchange for prepayment of $750,000), and (ii)
the issuance of a total of 3,250,000 shares of our common stock, which shares
are the subject of a voting agreement on the part of IES and certain of its
affiliated companies whereby IES has agreed, for a period of the greater of five
years or for so long as IES holds at least 500,000 of our shares, to vote the
shares in favor of (a) the election of Yehuda Harats and Robert S. Ehrlich as
directors, and (b) all proposals of management (except for proposals regarding
the nomination of individuals other than Yehuda Harats or Robert S. Ehrlich to
our Board) that relate to the operation or management of our business in the
ordinary course (and not against our interest), or that relate to acquisitions,
financings, stock option plans or business development (that are not against our
interest). The shares of our common stock owned by IES and its transferees being
registered for resale under this prospectus are being so registered pursuant to
registration rights that were granted to IES in connection with the above
transaction.
MDT ACQUISITION
On August 2, 2002, we purchased 51% of the issued and outstanding shares of
M.D.T. Protective Industries Ltd., a privately-held Israeli company that
specializes in using sophisticated lightweight materials and advanced
engineering processes to armor vehicles. See "- Defense and Security Products."
The consideration for the shares purchased consisted of (i) cash in the
aggregate amount of 5,814,000 New Israeli Shekels (NIS) (approximately
$1,240,000), and (ii) the issuance of an aggregate of 390,638 shares of our
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common stock. The shares of our common stock owned by MDT's shareholders
are being registered for resale by us in another registration statement being
filed by us pursuant to registration rights that were granted to MDT in
connection with the above transaction.
DISCONTINUATION OF RETAIL SALES OF CONSUMER BATTERY PRODUCTS
In September 2002, we made a decision in principle to discontinue retail
sales of our Instant Power consumer battery products because of the high costs
associated with consumer marketing and low volume manufacturing. We are using
our inventory to continue to fulfill all our existing contractual obligations,
online sales, and sales to OEMs and the military. The discontinuation of the
consumer retail products resulted in a one-time, pre-tax charge of approximately
$6.9 million in the third quarter of 2002, reflecting a write-down of inventory
and net fixed assets as well as costs associated with the reduction in our
workforce. Almost all these charges were non-cash impacting items.
CHANGES IN MANAGEMENT
In October 2002, we announced that Yehuda Harats, our president and CEO and
a member of our Board, had decided to resign from his positions with Electric
Fuel and its subsidiaries in order to pursue other interests. The Board of
Directors selected Robert S. Ehrlich, Chairman of the Board, to be the new
President and CEO. In December 2002, we came to an agreement with our former CEO
whereby we agreed to pay him $729,500 through the end of 2005 in satisfaction of
all our contractual and legal severance and other obligations to him, which was
approximately one-half of the amount we had accrued on our financial statements
in connection with such obligations.
PHASE III OF THE ELECTRIC VEHICLE PROGRAM
In October 2002, we received approval and funding from the United States
Federal Transit Administration (FTA) to begin Phase III of our American
all-electric transit bus demonstration project, which will focus on an
evaluation of the performance of zinc-air battery propulsion systems for transit
buses; the installation of new advanced ultra capacitors; and the implementation
of an advanced control system for auxiliaries.
SALE OF DEBENTURES
In December 2002, we issued and sold to three institutional investors (i)
an aggregate $3,500,000 principal amount of 9% Secured Convertible Debentures
due June 30, 2005; (ii) Series A Warrants to purchase an aggregate of 1,166,700
shares of our common stock at any time prior to December 31, 2007 at a price of
$0.84 per share; (iii) Series B Warrants to purchase an aggregate of 1,166,700
shares of our common stock at any time prior to December 31, 2007 at a price of
$0.89 per share; and (iv) Series C Warrants to purchase an aggregate of
1,166,700 shares of our common stock at any time prior to December 31, 2007 at a
price of $0.93 per share.
We are required to register the shares of common stock underlying the
debentures and the warrants with the Securities and Exchange Commission in a
registration statement on Form S-3.
Under the terms of our agreement with the purchasers of our debentures, we
granted the purchasers a security interest in the assets connected with our U.S.
operations, including our IES subsidiary, as well as in our stock of IES and our
other subsidiaries. We also committed ourselves to certain customary affirmative
and negative covenants
DEFENSE AND SECURITY PRODUCTS
INTERACTIVE USE-OF-FORCE TRAINING
Through our wholly-owned IES subsidiary, we provide specialized "use of
force" training for police, homeland security personnel and the military. We
offer products and services that allow organizations to train their personnel in
safe, productive, and realistic environments. We believe that our training
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systems offer more functionality, greater flexibility, unprecedented realism and
a wider variety of user interface options than competing products. Our systems
are sold to corporations, government agencies, military and law enforcement
professionals around the world. The simulators are currently used by some of the
worlds cutting-edge training academies, including (in the United States) the
Secret Service, the Bureau of Alcohol, Tobacco and Firearms, the Houston Police
Department, the Customs Service, the Border Patrol, the Bureau of Engraving and
Printing, the Coast Guard, the Federal Law Enforcement Training Centers, the
California Department of Corrections, the Detroit Police Department, the
Washington DC Metro Police and international users such as the Israeli Defense
Forces, the German National Police, the Royal Thailand Army, the Hong Kong
Police, the Russian Security Police, and over 400 other training departments
worldwide.
Our interactive training systems range from the powerful Range 3000
use-of-force simulator system to the multi-faceted A2Z Classroom Training
system. The Range 3000 line of simulators addresses the entire use of force
training continuum in law enforcement, allowing the trainee to use posture,
verbalization, soft hand skills, impact weapons, chemical spray, low-light
electronic weapons and lethal force in a scenario based classroom environment.
The A2Z Classroom Trainer provides the trainer with real time electronic
feedback from every student through wireless handheld keypads. The combination
of interactivity and instant response assures that learning takes place in less
time with higher retention.
VEHICLE ARMORING
Through our majority-owned MDT subsidiary, we specialize in using
state-of-the-art lightweight ceramic materials, special ballistic glass and
advanced engineering processes to fully armor vans and cars. MDT is a leading
supplier to the Israeli military, Israeli special forces and special services.
MDT's products are proven in intensive battlefield situations and under actual
terrorist attack conditions, and are designed to meet the demanding requirements
of governmental and private sector customers worldwide.
ZINC-AIR FUEL CELLS AND BATTERIES
We believe that our Zinc-Air batteries provides the highest energy and
power density combination available today in the defense market, making them
particularly appropriate where long missions are required and low weight is
important.
Our line of existing battery products for the military and defense sectors
includes Advanced Zinc-Air Power Packs (AZAPPs) utilizing our most advanced
cells (which have specific energy of 400 watt-hours per kilogram), a line of
super-lightweight AZAPPs that feature the same 400 Wh/kg cell technology in
smaller cells, and our new, high-power Zinc-Air Power Packs (ZAPPs), which offer
extended-use portable power using our commercial Zinc-Air cell technology. Our
AZAPPs have received a National Stock Number (a Department of Defense catalog
number assigned to products authorized for use by the U.S. military), making our
AZAPPs available for purchase by all units of the U.S. Armed Forces.
We are continuing to expand the development of other advanced uses of our
battery technology for applications that demand high energy and light weight. We
also produce water-activated lifejacket lights for commercial aviation and
marine applications, and will pursue further development of the safety products
business.
ELECTRIC VEHICLE
Our Electric Vehicle effort, conducted through our subsidiary Electric Fuel
Transportation Corp., continues to focus on obtaining and implementing
demonstration projects in the U.S. and Europe, and on building broad industry
partnerships that can lead to eventual commercialization of the Zinc-Air energy
system. This approach supports our long-term strategy of achieving widespread
implementation of the Electric Fuel Zinc-Air energy system for electric vehicles
in large commercial and mass transit vehicle fleets. Our all-electric bus,
powered by our Zinc-Air fuel cell technology, has demonstrated a world-record
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127-mile range under rigorous urban conditions, and we have successfully
demonstrated our vehicle in "on-the-road" programs in Germany, Sweden, Italy,
Israel and the United States, most recently in public tests in Las Vegas, Nevada
(in November 2001), and in Washington, D.C., on Capitol Hill, with the
participation of certain members of the United States Senate (in March 2002). We
intend to strengthen existing relationships and to develop new networks of
strategic alliances with fleet operators, companies engaged in energy production
and transportation, automobile manufacturers and others in order to establish
the infrastructure necessary for further development and commercialization of
the Electric Fuel Zinc-Air system.
FACILITIES
We were incorporated in Delaware in 1990. Our principal executive offices
are located at 632 Broadway, New York, New York 10012, and our telephone
number is (646) 654-2107. Our Internet address is www.electric-fuel.com .
INFORMATION ON OUR WEBSITE DOES NOT CONSTITUTE PART OF THIS PROSPECTUS.
The offices and facilities of our two of our principal subsidiaries,
Electric Fuel Limited (EFL) and MDT, are located in Israel (in Beit Shemesh and
Lod, respectively, both of which are within Israel's pre-1967 borders). We
conduct research and development activities through EFL, and most of our senior
management is located at EFL's facilities. We also conduct development and
production activities at IES's offices in Littleton, Colorado, and at our new
production facility in Auburn, Alabama, which builds and tests advanced
batteries for the defense market.
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER INFORMATION IN THIS
PROSPECTUS IN ADDITION TO OUR FINANCIAL STATEMENTS BEFORE INVESTING IN OUR
COMMON STOCK. IN ADDITION TO THE FOLLOWING RISKS, THERE MAY ALSO BE RISKS THAT
WE DO NOT YET KNOW OF OR THAT WE CURRENTLY THINK ARE IMMATERIAL THAT MAY ALSO
IMPAIR OUR BUSINESS OPERATIONS. THE TRADING PRICE OF OUR COMMON STOCK COULD
DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR
INVESTMENT.
BUSINESS-RELATED RISKS
WE HAVE HAD A HISTORY OF LOSSES AND MAY INCUR FUTURE LOSSES.
We were incorporated in 1990 and began our operations in 1991. We have
funded our operations principally from funds raised in each of the initial
public offering of our common stock in February 1994; through subsequent public
and private offerings of our common stock and securities convertible into shares
of our common stock; research contracts and supply contracts; funds received
under research and development grants from the Government of Israel; and sales
of Instant Power batteries, Instant Power chargers, and lifejacket lights. We
incurred significant operating losses for the years ended December 31, 1997,
1998, 1999, 2000 and 2001 and during the first nine months of 2002, and expect
to continue to incur significant operating losses in 2002. Additionally, as of
September 30, 2002, we had an accumulated deficit of approximately $96.3
million. These losses may increase as we expand our research and development
activities and establish production facilities, and these losses may fluctuate
from quarter to quarter. There can be no assurance that we will ever achieve
profitability or that our business will continue to exist. Additionally, because
we do not presently meet the transaction requirements for filing registration
statements for primary offerings of our securities on the simpler Form S-3
registration statement, raising capital through sales of our securities may be
more difficult in the future than it has been in the past.
WE NEED SIGNIFICANT AMOUNTS OF CAPITAL TO OPERATE AND GROW OUR BUSINESS.
We require substantial funds to conduct the necessary research, development
and testing of our products; to establish commercial scale manufacturing
facilities; and to market our products. We continue to seek additional funding,
including through the issuance of equity or debt securities. However, there can
be no assurance that we will obtain any such additional financing in a timely
manner or on acceptable terms. If additional funds are raised by issuing equity
securities, stockholders may incur further dilution. If additional funding is
not secured, we will have to modify, reduce, defer or eliminate parts of our
anticipated future commitments and/or programs.
Additionally, both our agreement with IES and our agreement with MDT are
governed by Israeli law, which differs in certain respects from American law,
although we do not believe that these differences materially adversely affect
our rights or remedies under these agreements.
OUR EXISTING INDEBTEDNESS MAY ADVERSELY AFFECT OUR ABILITY TO OBTAIN
ADDITIONAL FUNDS AND MAY INCREASE OUR VULNERABILITY TO ECONOMIC OR BUSINESS
DOWNTURNS.
Our indebtedness, including the aggregate principal amount of the
debentures sold by us in December 2002, aggregated approximately $3.5 million as
of December 31, 2002. Accordingly, we are subject to the risks associated with
indebtedness, including:
- we must dedicate a portion of our cash flows from operations to pay debt
service costs and, as a result, we have less funds available for
operations, future acquisitions of consumer receivable portfolios, and
other purposes;
- it may be more difficult and expensive to obtain additional funds through
financings, if available at all;
- we are more vulnerable to economic downturns and fluctuations in interest
rates, less able to withstand competitive pressures and less flexible in
reacting to changes in our industry and general economic conditions; and
- if we default under any of our existing debt instruments or if our
creditors demand payment of a portion or all of our indebtedness, we may
not have sufficient funds to make such payments.
The occurrence of any of these events could materially adversely affect our
results of operations and financial condition and adversely affect our stock
price.
The agreements governing the terms of our debentures contain numerous
affirmative and negative covenants that limit the discretion of our management
with respect to certain business matters and place restrictions on us. Our
ability to comply with these and other provisions of such agreements may be
affected by changes in economic or business conditions or other events beyond
our control. A failure to comply with the obligations contained in these
agreements could result in an event of default under such agreements which could
result in an acceleration of the debentures and the acceleration of debt under
other instruments evidencing indebtedness that may contain cross-acceleration or
cross-default provisions. If the indebtedness under the debentures or other
indebtedness were to be accelerated, there can be no assurance that our assets
would be sufficient to repay in full such indebtedness.
WE HAVE PLEDGED A SUBSTANTIAL PORTION OF OUR ASSETS TO SECURE OUR
BORROWINGS.
The debentures are secured by a substantial portion of our assets. If we
default under the indebtedness secured by our assets, those assets would be
available to the secured creditor to satisfy our obligations to the secured
creditor, which could materially adversely affect our results of operations and
financial condition and adversely affect our stock price.
WE MAY NOT BE SUCCESSFUL IN OPERATING A NEW BUSINESS.
Prior to the IES and MDT acquisitions, our primary business was the
marketing and sale of products based on primary and refuelable Zinc-Air fuel
cell technology and advancements in battery technology for defense and security
products and other military applications, electric vehicles and consumer
electronics. As a result of the IES and MDT acquisitions, a substantial
component of our business will be the marketing and sale of hi-tech multimedia
and interactive digital solutions for training military, law enforcement and
security personnel and sophisticated lightweight materials and advanced
engineering processes used to armor vehicles. These are new businesses for us
and our management group has limited experience operating these types of
businesses. Although we have retained the management personnel at IES and MDT,
we cannot assure that such personnel will continue to work for us or that we
will be successful in managing this new business. If we are unable to
successfully operate these new businesses, especially the business of IES, our
business, financial condition and results of operations could be materially
impaired.
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WE CANNOT ASSURE YOU OF MARKET ACCEPTANCE OF OUR MILITARY ZINC-AIR BATTERY
PRODUCTS AND ELECTRIC VEHICLE TECHNOLOGY.
Our batteries for the defense industry and a signal light powered by
water-activated batteries for use in life jackets and other rescue apparatus are
the only commercial Zinc-Air battery products we currently have available for
sale. Significant resources will be required to develop and produce additional
consumer products utilizing this technology on a commercial scale. Additional
development will be necessary in order to commercialize our technology and each
of the components of the Electric Fuel System for electric vehicles and defense
products. We cannot assure you that we will be able to successfully develop,
engineer or commercialize our Zinc-Air energy system, or that we will be able to
develop products for commercial sale or that, if developed, they can be produced
in commercial quantities or at acceptable costs or be successfully marketed. The
likelihood of our future success must be considered in light of the risks,
expenses, difficulties and delays frequently encountered in connection with the
operation and development of a relatively early stage business and with
development activities generally.
We believe that public pressure and government initiatives are important
factors in creating an electric vehicle market. However, there can be no
assurance that there will be sufficient public pressure or that further
legislation or other governmental initiatives will be enacted, or that current
legislation will not be repealed, amended, or have its implementation delayed.
In addition, we are subject to the risk that even if an electric fuel vehicle
market develops, a different form of zero emission or low emission vehicle will
dominate the market. In addition, we cannot assure you that other solutions to
the problem of containing emissions created by internal combustion engines will
not be invented, developed and produced. Any other solution could achieve
greater market acceptance than electric vehicles. The failure of a significant
market for electric vehicles to develop would have a material adverse effect on
our ability to commercialize this aspect of our technology. Even if a
significant market for electric vehicles develops, there can be no assurance
that our technology will be commercially competitive within that market.
OUR ACQUISITION STRATEGY INVOLVES VARIOUS RISKS.
Part of our strategy is to grow through the acquisition of companies that
will complement our existing operations or provide us with an entry into markets
we do not currently serve. Growth through acquisitions involves substantial
risks, including the risk of improper valuation of the acquired business and the
risk of inadequate integration. There can be no assurance that suitable
acquisition candidates will be available, that we will be able to acquire or
manage profitably such additional companies or that future acquisitions will
produce returns that justify our investments therein. In addition, we may
compete for acquisition and expansion opportunities with companies that have
significantly greater resources than we do. Furthermore, acquisitions could
disrupt our ongoing business, distract the attention of our senior managers,
make it difficult to maintain our operational standards, controls and procedures
and subject us to contingent and latent risks that are different, in nature and
magnitude, than the risks we currently face.
We may finance future acquisitions with cash from operations or additional
debt or equity financings. There can be no assurance that we will be able to
generate internal cash or obtain financing from external sources or that, if
available, such financing will be on terms acceptable to us. The issuance of
additional common stock to finance acquisitions may result in substantial
dilution to our stockholders. Any debt financing may significantly increase our
leverage and may involve restrictive covenants which limit our operations.
WE MAY NOT SUCCESSFULLY INTEGRATE OUR NEW ACQUISITIONS.
In light of our recent acquisitions of IES and MDT, our success will depend
in part on our ability to manage the combined operations of these companies and
to integrate the operations and personnel of these companies along with our
other subsidiaries and divisions into a single organizational structure. There
can be no assurance that we will be able to effectively integrate the operations
of our subsidiaries and divisions and our newly-acquired businesses into a
single organizational structure. Integration of these operations could also
place additional pressures on our management as well as on our key technical
resources. The failure to successfully manage this integration could have an
adverse material effect on us.
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If we are successful in acquiring additional businesses, we may experience
a period of rapid growth that could place significant additional demands on, and
require us to expand, our management, resources and management information
systems. Our failure to manage any such rapid growth effectively could have a
material adverse effect on our financial condition, results of operations and
cash flows.
IF WE ARE UNABLE TO MANAGE OUR GROWTH, OUR OPERATING RESULTS WILL BE
IMPAIRED.
We are currently experiencing a period of growth and development activity
which could place a significant strain on our personnel and resources. Our
activity has resulted in increased levels of responsibility for both existing
and new management personnel. Many of our management personnel have had limited
or no experience in managing growing companies. We have sought to manage our
current and anticipated growth through the recruitment of additional management
and technical personnel and the implementation of internal systems and controls.
However, our failure to manage growth effectively could adversely affect our
results of operations.
WE WILL NEED TO DEVELOP THE EXPERIENCE TO MANUFACTURE CERTAIN OF OUR
PRODUCTS IN COMMERCIAL QUANTITIES AND AT COMPETITIVE PRICES.
We currently have limited experience in manufacturing in commercial
quantities and have, to date, produced only limited quantities of military
batteries and components of the batteries for electric vehicles. In order for us
to be successful in the commercial market, these products must be manufactured
to meet high quality standards in commercial quantities at competitive prices.
The development of the necessary manufacturing technology and processes will
require extensive lead times and the commitment of significant amounts of
financial and engineering resources, which may not be available to us. We cannot
assure you that we will successfully develop this technology or these processes.
Moreover, we cannot assure you that we will be able to successfully implement
the quality control measures necessary for commercial manufacturing.
SOME OF THE COMPONENTS OF OUR TECHNOLOGY AND OUR PRODUCTS POSE POTENTIAL
SAFETY RISKS WHICH COULD CREATE POTENTIAL LIABILITY EXPOSURE FOR US.
Some of the components of our technology and our products contain elements
that are known to pose potential safety risks. Also, because electric vehicle
batteries contain large amounts of electrical energy, they may cause injuries if
not handled properly. In addition to these risks, and although we incorporate
safety procedures in our research, development and manufacturing processes,
there can be no assurance that accidents in our facilities will not occur. Any
accident, whether occasioned by the use of all or any part of our products or
technology or by our manufacturing operations, could adversely affect commercial
acceptance of our products and could result in significant production delays or
claims for damages resulting from injuries. Any of these occurrences would
materially adversely affect our operations and financial condition.
WE MAY FACE PRODUCT LIABILITY CLAIMS.
To date, there have been no material claims or threatened claims against us
by users of our products, including the products manufactured by MDT, based on a
failure of our products to perform as specified. In the event that any claims
for substantial amounts were to be asserted against us, they could have a
materially adverse effect on our financial condition and results of operations.
We maintain general product liability insurance. However, there is no assurance
that the amount of our insurance will be sufficient to cover potential claims or
that the present amount of insurance can be maintained at the present level of
cost, or at all.
SOME OF OUR BUSINESS IS DEPENDENT ON GOVERNMENT CONTRACTS.
Most of IES's customers to date have been in the public sector of the U.S.,
including the federal, state and local governments, and in the public sectors of
a number of other countries. A significant decrease in the overall level or
allocation of defense spending or law enforcement in the U.S. or other countries
could have a material adverse effect on our future results of operations and
financial condition.
9
Sales to public sector customers are subject to a multiplicity of detailed
regulatory requirements and public policies as well as to changes in training
and purchasing priorities. Contracts with public sector customers may be
conditioned upon the continuing availability of public funds, which in turn
depends upon lengthy and complex budgetary procedures, and may be subject to
certain pricing constraints. Moreover, U.S. government contracts and those of
many international government customers may generally be terminated for a
variety of factors when it is in the best interests of the government and
contractors may be suspended or debarred for misconduct at the discretion of the
government. There can be no assurance that these factors or others unique to
government contracts or the loss or suspension of necessary regulatory licenses
will not have a material adverse effect on our future results of operations and
financial condition.
OUR FIELDS OF BUSINESS ARE HIGHLY COMPETITIVE.
The competition to develop defense and security products and electric
vehicle battery systems, and to obtain funding for the development of these
products, is, and is expected to remain, intense.
Our defense and security products compete with other manufacturers of
specialized training systems, including Firearms Training Systems, Inc., a
producer of interactive simulation systems designed to provide training in the
handling and use of small and supporting arms. In addition, we compete with
manufacturers and developers of armor for cars and vans, including O'Gara-Hess &
Eisenhardt, a division of Armor Holdings, Inc.
Our battery technology competes with other battery technologies, as well as
other Zinc-Air technologies. The competition in this area of our business
consists of development stage companies, major international companies and
consortia of such companies, including battery manufacturers, automobile
manufacturers, energy production and transportation companies, consumer goods
companies and defense contractors. Many of our competitors have financial,
technical, marketing, sales, manufacturing, distribution and other resources
significantly greater than ours.
Various battery technologies are being considered for use in electric
vehicles and defense and safety products by other manufacturers and developers,
including the following: lead-acid, nickel-cadmium, nickel-iron, nickel-zinc,
nickel-metal hydride, sodium-sulfur, sodium-nickel chloride, zinc-bromine,
lithium-ion, lithium-polymer, lithium-iron sulfide, primary lithium,
rechargeable alkaline and Zinc-Air. Additionally, some manufacturers of primary
alkaline batteries offer alkaline battery packs for cellphone users.
If we are unable to compete successfully in each of our operating areas,
especially in the defense and security products area of our business, our
business and results of operations could be materially adversely affected.
FAILURE TO RECEIVE REQUIRED REGULATORY PERMITS OR TO COMPLY WITH VARIOUS
REGULATIONS TO WHICH WE ARE SUBJECT COULD ADVERSELY AFFECT OUR BUSINESS.
Regulations in Europe, Israel, the United States and other countries impose
various controls and requirements relating to various components of our
business. While we believe that our current and contemplated operations conform
to those regulations, we cannot assure you that we will not be found to be in
non-compliance. We have applied for, and received, the necessary permits under
the Israel Dangerous Substances Law, 5753-1993, required for the use of
potassium hydroxide and zinc metal. However, there can be no assurance that
changes in these regulations or the adoption of new regulations will not impose
costly compliance requirements on us, subject us to future liabilities, or
restrict our ability to operate our business.
OUR BUSINESS IS DEPENDENT ON PATENTS AND OTHER PROPRIETARY RIGHTS THAT MAY
BE DIFFICULT TO PROTECT AND COULD AFFECT OUR ABILITY TO COMPETE EFFECTIVELY.
Our ability to compete effectively will depend on our ability to maintain
the proprietary nature of our technology and manufacturing processes through a
combination of patent and trade secret protection, non-disclosure agreements and
licensing arrangements. We hold patents, or patent applications, covering
elements of our technology in the United States and in Europe. In addition, we
have patent applications pending in the United States and in foreign countries,
10
including the European Community, Israel and Japan. We intend to continue to
file patent applications covering important features of our technology. We
cannot assure you, however, that patents will issue from any of these pending
applications or, if patents issue, that the claims allowed will be sufficiently
broad to protect our technology. In addition, we cannot assure you that any of
our patents will not be challenged or invalidated, that any of our issued
patents will afford protection against a competitor or that third parties will
not make infringement claims against us.
Litigation, or participation in administrative proceedings, may be
necessary to protect our proprietary rights. This type of litigation can be
costly and time consuming and could divert company resources and management
attention to defend our rights, and this could harm us even if we were to be
successful in the litigation. The invalidation of patents owned by or licensed
to us could have a material adverse effect on our business. In addition, patent
applications filed in foreign countries are subject to laws, rules and
procedures that differ from those of the United States. Therefore, there can be
no assurance that foreign patent applications related to patents issued in the
United States will be granted. Furthermore, even if these patent applications
are granted, some foreign countries provide significantly less patent protection
than the United States. In the absence of patent protection, and despite our
reliance upon our proprietary confidential information, our competitors may be
able to use innovations similar to those used by us to design and manufacture
products directly competitive with our products. In addition, no assurance can
be given that others will not obtain patents that we will need to license or
design around. To the extent any of our products are covered by third-party
patents, we could require a license under such patents to develop and market our
patents.
Despite our efforts to safeguard and maintain our proprietary rights, we
may not be successful in doing so. In addition, competition is intense, and
there can be no assurance that our competitors will not independently develop or
patent technologies that are substantially equivalent or superior to our
technology. Moreover, in the event of patent litigation, we cannot assure you
that a court would determine that we were the first creator of inventions
covered by our issued patents or pending patent applications or that we were the
first to file patent applications for those inventions. If existing or future
third-party patents containing broad claims were upheld by the courts or if we
were found to infringe third party patents, we may not be able to obtain the
required licenses from the holders of such patents on acceptable terms, if at
all. Failure to obtain these licenses could cause delays in the introduction of
our products or necessitate costly attempts to design around such patents, or
could foreclose the development, manufacture or sale of our products. We could
also incur substantial costs in defending ourselves in patent infringement suits
brought by others and in prosecuting patent infringement suits against
infringers.
We also rely on trade secrets and proprietary know-how that we seek to
protect, in part, through non-disclosure and confidentiality agreements with our
customers, employees, consultants, strategic partners and potential strategic
partners. We cannot assure you that these agreements will not be breached, that
we would have adequate remedies for any breach or that our trade secrets will
not otherwise become known or be independently developed by competitors.
WE HAVE UNDERGONE RECENT MANAGEMENT CHANGES.
In October 2002, Yehuda Harats, who had been our CEO since the inception of
our company, resigned from his positions with us in order to pursue other
interests. Our Board of Directors selected our long-time Chairman of the Board,
Robert S. Ehrlich, to be our new President and CEO. Our success will depend to
some extent on our ability to quickly and smoothly execute the change in
leadership as a result of this change of CEO.
WE ARE DEPENDENT ON KEY PERSONNEL AND OUR BUSINESS WOULD SUFFER IF WE FAIL
TO RETAIN THEM.
We are highly dependent on certain members of our management and
engineering staff, and the loss of the services of one or more of these persons
could adversely affect us. We are especially dependent on the services of our
Chairman, President and Chief Executive Officer, Robert S. Ehrlich. The loss of
Mr. Ehrlich could have a material adverse effect on us. We are party to an
employment agreement with Mr. Ehrlich, which agreement expires at the end of
2003. We do not have key-man life insurance on Mr. Ehrlich.
11
THERE ARE RISKS INVOLVED WITH THE INTERNATIONAL NATURE OF OUR BUSINESS.
A significant portion of our sales are made to customers located outside
the U.S., primarily in Europe and Asia. In 2001, 2000 and 1999, 66.0%, 29.9% and
12.6%, respectively, of our revenues, including the revenues of IES and MDT on a
pro forma basis, were derived from sales to customers located outside the U.S.
We expect that our international customers will continue to account for a
substantial portion of our revenues in the near future. Sales to international
customers may be subject to political and economic risks, including political
instability, currency controls, exchange rate fluctuations, foreign taxes,
longer payment cycles and changes in import/export regulations and tariff rates.
In addition, various forms of protectionist trade legislation have been and in
the future may be proposed in the U.S. and certain other countries. Any
resulting changes in current tariff structures or other trade and monetary
policies could adversely affect our sales to international customers.
WE MAY BE SUBJECT TO INCREASED UNITED STATES TAXATION.
We believe that Electric Fuel and our wholly-owned Israeli subsidiary EFL
will be treated as personal holding companies for purposes of the personal
holding company (PHC) rules of the Internal Revenue Code of 1986. Under the PHC
rules, a PHC is subject to a special 39.6% tax on its "undistributed PHC
income," in addition to regular income tax. We believe that Electric Fuel and
EFL have not had any material undistributed PHC income. However, no assurance
can be given that Electric Fuel and EFL will not have undistributed PHC income
in the future.
Approximately 24.1% of the stock of EFL was beneficially owned (directly or
indirectly by application of certain attribution rules) as of December 31, 2002
by four United States citizens: Leon S. Gross, Austin W. Marxe and David M.
Greenhouse, and Robert S. Ehrlich (information with respect to the stockholdings
of Messrs. Marxe and Greenhouse is based on a Schedule 13G filed with the
Securities and Exchange Commission on February 11, 2002). If more than 50% of
either (i) the voting power of our stock, or (ii) the total value of our stock,
is ever acquired or deemed to be acquired by five or fewer individuals
(including, if applicable, those individuals who currently own an aggregate of
24.1% of our shares) who are United States citizens or residents, EFL would
satisfy the foreign personal holding company (FPHC) stock ownership test under
the Internal Revenue Code, and we could be subject to additional U.S. taxes
(including PHC tax) on any "undistributed FPHC income" of EFL. We believe that
EFL has not had any material undistributed FPHC income. However, no assurance
can be given that EFL will not become a FPHC and have undistributed FPHC income
in the future.
INVESTORS SHOULD NOT PURCHASE OUR COMMON STOCK WITH THE EXPECTATION OF
RECEIVING CASH DIVIDENDS.
We currently intend to retain any future earnings for funding growth and,
as a result, do not expect to pay any cash dividends in the foreseeable future.
MARKET-RELATED RISKS
THE PRICE OF OUR COMMON STOCK IS VOLATILE.
The market price of our common stock has been volatile in the past and may
change rapidly in the future. The following factors, among others, may cause
significant volatility in our stock price:
- Announcements by us, our competitors or our customers;
- The introduction of new or enhanced products and services by us or our
competitors;
- Changes in the perceived ability to commercialize our technology compared
to that of our competitors;
- Rumors relating to our competitors or us;
- Actual or anticipated fluctuations in our operating results; and
- General market or economic conditions.
12
IF OUR SHARES WERE TO BE DELISTED, OUR STOCK PRICE MIGHT DECLINE FURTHER
AND WE MIGHT BE UNABLE TO RAISE ADDITIONAL CAPITAL.
One of the continued listing standards for our stock on the Nasdaq National
Market is the maintenance of a $1.00 bid price. Our stock price has recently
traded as low as $0.50 per share and closed as low as $0.52 per share, and as of
the date of this prospectus, it is currently trading below $1.00, and has been
since October 18, 2002. On December 6, 2002, Nasdaq notified us of our failure
to meet the continued listing standards, and informed us that unless our stock
closes for ten consecutive trading days with a bid price in excess of $1.00
during the following 90-day "grace period" (that is, prior to March 6, 2003),
Nasdaq would notify us of intent to delist our stock from the Nasdaq National
Market. Should Nasdaq notify us of intent to delist our stock, we would have the
opportunity to appeal this notification, although there can be no assurances
that this appeal would be resolved favorably.
There can be no assurance that our common stock will remain listed on the
Nasdaq National Market. If our common stock were to be delisted from the Nasdaq
National Market, we might apply to be listed on the Nasdaq SmallCap market;
however, there can be no assurance that we would be approved for listing on the
Nasdaq SmallCap market, which has the same $1.00 minimum bid and other similar
requirements as the Nasdaq National Market. If we were to move to the Nasdaq
SmallCap market, current Nasdaq regulations would extend our initial grace
period to 180 days, and give us the opportunity to obtain an additional 180-day
grace period if we meet certain net income, shareholders' equity or market
capitalization criteria. While our stock would continue to trade on the
over-the-counter bulletin board following any delisting from the Nasdaq, any
such delisting of our common stock could have an adverse effect on the market
price of, and the efficiency of the trading market for, our common stock. Also,
if in the future we were to determine that we need to seek additional equity
capital, it could have an adverse effect on our ability to raise capital in the
public equity markets.
In addition, if we fail to maintain Nasdaq listing for our securities, and
no other exclusion from the definition of a "penny stock" under the Exchange Act
is available, then any broker engaging in a transaction in our securities would
be required to provide any customer with a risk disclosure document, disclosure
of market quotations, if any, disclosure of the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market values of our securities held in the customer's
account. The bid and offer quotation and compensation information must be
provided prior to effecting the transaction and must be contained on the
customer's confirmation. If brokers become subject to the "penny stock" rules
when engaging in transactions in our securities, they would become less willing
to engage in transactions, thereby making it more difficult for our stockholders
to dispose of their shares.
WE ARE SUBJECT TO SIGNIFICANT INFLUENCE BY SOME STOCKHOLDERS THAT MAY HAVE
THE EFFECT OF DELAYING OR PREVENTING A CHANGE IN CONTROL.
As of November 20, 2002, our directors, executive officers and principal
stockholders and their affiliates (specifically, Leon S. Gross (10.6%), IES
Electronics Industries Ltd. (9.4%), Austin W. Marxe and David M. Greenhouse
(9.0%), Yehuda Harats (6.3%) and Robert S. Ehrlich (4.5%)) collectively
beneficially owned approximately 39.8% of the outstanding shares of our common
stock, including options and warrants exercisable within 60 days of November 20,
2002 (information with respect to the stockholdings of Messrs. Marxe and
Greenhouse is based on a Schedule 13G filed with the Securities and Exchange
Commission on February 11, 2002, and information with respect to the
stockholdings of IES Electronics Industries Ltd. is based on a Schedule 13D
filed with the Securities and Exchange Commission on August 12, 2002, as amended
on October 28, 2002). As a result, these stockholders are able to exercise
significant influence over matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying, preventing or
discouraging a change in control of Electric Fuel.
Pursuant to a voting rights agreement dated September 30, 1996, as amended,
between Leon S. Gross, Robert S. Ehrlich, Yehuda Harats and us, Lawrence M.
Miller, Mr. Gross's advisor, is entitled to be nominated to serve on our board
of directors so long as Mr. Gross, his heirs or assigns retain beneficial
ownership of at least 1,375,000 shares of common stock. In addition, under the
voting rights agreement, Mr. Gross and Messrs. Ehrlich and Harats agreed to vote
and take all necessary action so that Messrs. Ehrlich, Harats and Miller shall
13
serve as members of the board of directors until the earlier of December 28,
2004 or our fifth annual meeting of stockholders after December 28, 1999. Mr.
Harats resigned as a director in late 2002; however, we believe that Mr. Harats
must continue to comply with the terms of this agreement.
A SUBSTANTIAL NUMBER OF OUR SHARES ARE AVAILABLE FOR SALE IN THE PUBLIC
MARKET AND SALES OF THOSE SHARES COULD ADVERSELY AFFECT OUR STOCK PRICE.
Sales of a substantial number of shares of common stock into the public
market, or the perception that those sales could occur, could adversely affect
our stock price or could impair our ability to obtain capital through an
offering of equity securities. As of December 31, 2002, we had 34,749,835 shares
of common stock issued and outstanding. Of these shares, 27,223,357, including
the share being registered for resale under this prospectus, will after the date
of this prospectus be freely transferable without restriction under the
Securities Act of 1933 and 7,526,478 may be sold subject to the volume
restrictions, manner-of-sale provisions and other conditions of Rule 144 under
the Securities Act of 1933.
In connection with a stock purchase agreement dated September 30, 1996
between Leon S. Gross and us, we also entered into a registration rights
agreement with Mr. Gross dated September 30, 1996, setting forth registration
rights with respect to the shares of common stock issued to Mr. Gross in
connection with the offering. These rights include the right to make two demands
for the registration of the shares of our common stock owned by Mr. Gross. In
addition, Mr. Gross was granted unlimited rights to "piggyback" on registration
statements that we file for the sale of our common stock. Mr. Gross presently
owns 3,662,870 shares, of which 1,538,462 have never been registered.
In addition, pursuant to the terms of their employment agreements with us,
both Yehuda Harats and Robert S. Ehrlich have a right to demand registration of
their shares. Mr. Harats owned 1,461,372 shares as of November 20, 2002, of
which 435,404 shares have never been registered, and Mr. Ehrlich presently owns
688,166 shares, of which 453,933 shares have never been registered.
EXERCISE OF OUR WARRANTS AND OPTIONS COULD ADVERSELY AFFECT OUR STOCK PRICE
AND WILL BE DILUTIVE.
As of December 31, 2002, there were outstanding warrants to purchase a
total of 4,421,138 shares of our common stock at a weighted average exercise
price of $3.26 per share, and options to purchase a total of 5,396,611 shares of
our common stock at a weighted average exercise price of $2.36 per share, of
which 4,748,938 were vested and exercisable within 60 days of the date of this
prospectus, at a weighted average exercise price of $2.37 per share. Holders of
our options and warrants will probably exercise them only at a time when the
price of our common stock is higher than the exercise price of the options or
warrants. Accordingly, we may be required to issue shares of our common stock at
a price substantially lower than the market price of our stock. This could
adversely affect our stock price. In addition, if and when these shares are
issued, the percentage of our common stock that existing stockholders own will
be diluted.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS AND DELAWARE LAW CONTAIN
PROVISIONS THAT COULD DISCOURAGE A TAKEOVER.
Provisions of our amended and restated certificate of incorporation may
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of us. These
provisions could limit the price that certain investors might be willing to pay
in the future for shares of our common stock. These provisions:
- divide our board of directors into three classes serving staggered
three-year terms;
- only permit removal of directors by stockholders "for cause," and require
the affirmative vote of at least 85% of the outstanding common stock to
so remove; and
- allow us to issue preferred stock without any vote or further action by
the stockholders.
14
The classification system of electing directors and the removal provision
may tend to discourage a third-party from making a tender offer or otherwise
attempting to obtain control of us and may maintain the incumbency of our board
of directors, as the classification of the board of directors increases the
difficulty of replacing a majority of the directors. These provisions may have
the effect of deferring hostile takeovers, delaying changes in our control or
management, or may make it more difficult for stockholders to take certain
corporate actions. The amendment of any of these provisions would require
approval by holders of at least 85% of the outstanding common stock.
ISRAEL-RELATED RISKS
A SIGNIFICANT PORTION OF OUR OPERATIONS TAKES PLACE IN ISRAEL.
The offices and facilities of two of our principal subsidiaries, EFL and
MDT, are located in Israel (in Beit Shemesh and Lod, respectively, both of which
are within Israel's pre-1967 borders). We conduct research and development
activities through EFL, and most of our senior management is located at EFL's
facilities. Although we expect that most of our sales will be made to customers
outside Israel, we are nonetheless directly affected by economic, political and
military conditions in that country. Accordingly, any major hostilities
involving Israel or the interruption or curtailment of trade between Israel and
its present trading partners could have a material adverse effect on our
operations. Since the establishment of the State of Israel in 1948, a number of
armed conflicts have taken place between Israel and its Arab neighbors and a
state of hostility, varying in degree and intensity, has led to security and
economic problems for Israel.
Historically, Arab states have boycotted any direct trade with Israel and
to varying degrees have imposed a secondary boycott on any company carrying on
trade with or doing business in Israel. Although in October 1994, the states
comprising the Gulf Cooperation Council (Saudi Arabia, the United Arab Emirates,
Kuwait, Dubai, Bahrain and Oman) announced that they would no longer adhere to
the secondary boycott against Israel, and Israel has entered into certain
agreements with Egypt, Jordan, the Palestine Liberation Organization and the
Palestinian Authority, Israel has not entered into any peace arrangement with
Syria or Lebanon. Moreover, since September 2000, there has been a significant
deterioration in Israel's relationship with the Palestinian Authority, and a
significant increase in terror and violence. Efforts to resolve the problem have
failed to result in an agreeable solution. Continued hostilities between the
Palestinian community and Israel and any failure to settle the conflict may have
a material adverse effect on our business and us. Moreover, the current
political and security situation in the region has already had an adverse effect
on the economy of Israel, which in turn may have an adverse effect on us.
Many of our employees are currently obligated to perform annual reserve
duty in the Israel Defense Forces and are subject to being called for active
military duty at any time. No assessment can be made of the full impact of such
requirements on us in the future, particularly if emergency circumstances occur,
and no prediction can be made as to the effect on us of any expansion of these
obligations. However, further deterioration of hostilities with the Palestinian
community into a full-scale conflict might require more widespread military
reserve service by some of our employees, which could have a material adverse
effect on our business.
ANY FAILURE TO OBTAIN THE TAX BENEFITS FROM THE STATE OF ISRAEL THAT WE
EXPECT TO RECEIVE COULD NEGATIVELY IMPACT OUR PLANS AND PROSPECTS.
We benefit from various Israeli government programs, grants and tax
benefits, particularly as a result of the "approved enterprise" status of a
substantial portion of our existing facilities and the receipt of grants from
the Office of the Chief Scientist of the Israeli Ministry of Industry and Trade.
To be eligible for some of these programs, grants and tax benefits, we must
continue to meet certain conditions, including producing in Israel and making
specified investments in fixed assets. If we fail to meet such conditions in the
future, we could be required to refund grants already received, adjusted for
inflation and interest. From time to time, the government of Israel has
discussed reducing or eliminating the benefits available under approved
enterprise programs. We cannot assure you that these programs and tax benefits
will be continued in the future at their current levels or at all. The
Government of Israel has announced that programs receiving approved enterprise
status in 1996 and thereafter will be entitled to a lower level of government
grants than was previously available. The termination or reduction of certain
programs and tax benefits (particularly benefits available to us as a result of
the approved enterprise status of a substantial portion of our existing
15
facilities and approved programs and as a recipient of grants from the office of
the Chief Scientist) could have a material adverse effect on our business,
results of operations and financial condition. In addition, EFL has granted a
floating lien (that is, a lien that applies not only to assets owned at the time
but also to after-acquired assets) over all of EFL's assets as a security to the
State of Israel to secure its obligations under the approved enterprise
programs.
OUR GRANTS FROM THE ISRAELI GOVERNMENT IMPOSE CERTAIN RESTRICTIONS ON US.
Since 1992, our Israeli subsidiary, EFL, has received funding from the
Office of the Chief Scientist of the Israel Ministry of Industry and Trade
relating to the development of our zinc-air battery products, such as our
electric vehicle and our batteries and chargers for consumer products. Between
1998 and 2000, we have also received funds from the Israeli-U.S. Bi-National
Industrial Research and Development (BIRD) Foundation. Through 2002, we have
received an aggregate of $9.9 million from grants from the Chief Scientist and
$772,000 from grants from BIRD, and we may receive future grants, the amounts of
which would be determined at the time of application. The funding from the Chief
Scientist prohibits the transfer or license of know-how and the manufacture of
resulting products outside of Israel without the permission of the Chief
Scientist. Although we believe that the Chief Scientist does not unreasonably
withhold this permission if the request is based upon commercially justified
circumstances and any royalty obligations to the Chief Scientist are
sufficiently assured, the matter is solely within the discretion of the Chief
Scientist, and we cannot be sure that such consent, if requested, would be
granted upon terms satisfactory to us or granted at all. Without such consent,
we would be unable to manufacture any products developed by this research
outside of Israel, even if it would be less expensive for us to do so.
Additionally, current regulations require that, in the case of the approved
transfer of manufacturing rights out of Israel, the maximum amount to be repaid
through royalty payments would be increased to between 120% and 300% of the
amount granted, depending on the extent of the manufacturing to be conducted
outside of Israel, and that an increased royalty rate of up to 5% would be
applied. These restrictions could adversely affect our potential revenues and
net income from the sale of such products.
EXCHANGE RATE FLUCTUATIONS BETWEEN THE U.S. DOLLAR AND THE ISRAELI NIS MAY
NEGATIVELY AFFECT OUR EARNINGS.
Although a substantial majority of our revenues and a substantial
portion of our expenses are denominated in U.S. dollars, a significant portion
of our costs, including personnel and facilities-related expenses, is incurred
in New Israeli Shekels (NIS). Inflation in Israel will have the effect of
increasing the dollar cost of our operations in Israel, unless it is offset on a
timely basis by a devaluation of the NIS relative to the dollar.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
When used in this prospectus, the words "expects," "anticipates,"
"estimates" and similar expressions identify forward-looking statements. These
statements are "forward-looking" statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act. These statements, which
include statements under the caption "Risk Factors" and elsewhere in this
prospectus, refer to the stage of development of our products, the uncertainty
of the market for disposable cell phone batteries, significant future capital
requirements and our plans to implement our growth strategy, continue our
research and development, expand our manufacturing capacity, develop strategic
relationships for marketing and other purposes and carefully manage our growth.
The forward-looking statements also include our expectations concerning factors
affecting the markets for our products.
These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from the results that we
anticipate. These risks and uncertainties include, but are not limited to, those
risks discussed in this prospectus and in the documents incorporated by
reference in this prospectus.
All such forward-looking statements are current only as of the date on
which such statements were made. We assume no obligation to update these
forward-looking statements or to update the reasons actual results could differ
materially from the results anticipated in the forward-looking statements.
You should rely only on the information in this prospectus and the
additional information described under the heading "Where You Can Find
Additional Information." We have not authorized any other person to provide you
16
with different information. If anyone provides you with different or
inconsistent information, you should not rely upon it. You should assume that
the information in this prospectus was accurate on the date of the front cover
of this prospectus only. Our business, financial condition, results of
operations and prospects may have changed since that date.
USE OF PROCEEDS
All net proceeds from the sale of the shares of common stock offered
hereunder by the selling stockholders will go to the stockholder who offers and
sells them. We will not receive any of the proceeds from the offering by the
selling stockholders.
SELLING STOCKHOLDERS
The selling stockholders listed below acquired their shares of common stock
from us in connection with the acquisition of IES, in the case of IES
Technologies Inc., or from IES Technologies, Inc. in a private purchase from IES
Technologies Inc., in the case of all other selling stockholders. The shares of
common stock issued to IES Technologies Inc. were issued in reliance upon the
exemption from registration provided by Section 4(2) of the Securities Act as
transactions by an issuer not involving a public offering. See "Summary - Recent
Developments." The shares of common stock held by the other selling stockholders
were transferred to them in reliance upon an exemption from registration
provided by Regulation D promulgated under the Securities Act.
Registration of the selling stockholders' shares does not necessarily mean
that the selling stockholders will sell all or any of their shares.
The selling stockholders may donate or transfer as gifts some or all of
their shares, or may transfer their shares for no value to other beneficial
owners. The selling stockholders will include these donees or transferees as
selling stockholders in a prospectus supplement if the donees or transferees
wish to use this prospectus to re-offer the shares.
The shares listed below represent all of the shares that the selling
stockholders currently beneficially own, the number of shares each of them may
offer, and the percentage of our outstanding common stock owned by the selling
stockholders.
SHARES BENEFICIALLY SHARES BENEFICIALLY PERCENT OF
OWNED PRIOR TO SHARES BEING OWNED AFTER CLASS OWNED
NAME OF SELLING STOCKHOLDER OFFERING(1) OFFERED OFFERING(2) AFTER OFFERING
------------------------------- ------------------ ---------------- ------------------- ----------------
IES Technologies Inc. 1,625,000 1,625,000 0 0%
ZLP Master Technology Fund, Ltd. 500,000 500,000 0 0%
Smithfield Fiduciary LLC 425,000 425,000 0 0%
Vertical Ventures Investments, LLC 587,500 587,500 0 0%
Vertical Ventures, LLC 112,500 112,500 0 0%
_________________
(1) Assumes that the selling stockholders acquire no additional shares of
common stock before completion of this offering.
(2) Assumes that all of the shares held by the selling stockholders and offered
under this prospectus are sold.
PLAN OF DISTRIBUTION
We are registering the shares of our common stock on behalf of the selling
stockholders. "Selling stockholders," as used in this prospectus, includes
donees and pledgees selling shares received from a named selling stockholder
after the date of this prospectus. We have agreed, among other things, to bear
all expenses, other than underwriting discounts and selling commissions, in
connection with the registration and sale of the shares of our common stock
covered by this prospectus. In addition, we have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act. We will not receive any of the proceeds
17
from the offering of the shares of our common stock by the selling stockholders.
The selling stockholders may offer their shares of Electric Fuel common stock
from time to time in one or more of the following transactions:
- on any national securities exchange or quotation service on which the
shares of common stock may be listed or quoted at the time of sale,
- in the over-the-counter market,
- in transactions otherwise than on a national securities exchange or
quotation service or in the over-the-counter market; or
- through the writing of options.
In connection with sales of shares of common stock, any selling stockholder may:
- enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of common stock in the course of
hedging the positions they assume;
- sell short and deliver shares of common stock to close out the short
positions; or
- loan or pledge shares of common to broker-dealers that in turn may
sell the shares.
The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices, or at fixed prices.
The selling stockholders may use underwriters, broker-dealers or agents to
sell their shares. If this happens, underwriters, broker-dealers or agents will
either receive discounts or commissions from the selling stockholders, or they
will receive commissions from purchasers of shares for whom they acted as
agents.
The selling stockholders also may resell all or a portion of their shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
rather than by means of this prospectus, provided they meet the criteria and
conform to the requirements of that Rule.
If necessary to comply with the securities laws of any state, the shares
will be sold only through brokers or dealers. In addition, in some states, the
shares may not be sold unless they have been registered or qualified for sale or
an exemption from registration or qualification is available and is complied
with.
Any broker-dealers who participate in a sale of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commissions
received by them, and proceeds of any sales by broker-dealers as principals, may
be deemed to be underwriting discounts and commissions under the Securities Act.
If a selling stockholder is deemed to be acting as an underwriter, it may be
subject to statutory liabilities of the Securities Act.
In addition, the selling stockholders and any other person participating in
the sale or distribution of the shares offered under this prospectus will be
subject to the Securities Exchange Act of 1934 and its rules and regulations,
including, without limitation, Regulation M. These provisions may limit the
timing of purchases and sales of any of the shares. In addition, any person
engaged in a distribution of the shares may not simultaneously engage in
market-making activities during the period beginning when he or she becomes a
distribution participant and ending upon his or her completion of participation
in a distribution. All of these factors may affect the marketability of the
shares and the ability of any person or entity to engage in market-making
activities.
Our common stock is currently listed on the Nasdaq system under the symbol
"EFCX." We do not currently intend to list the shares of our common stock on any
other securities exchange.
18
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 100,000,000 shares of common stock
par value $.01 per share, and 1,000,000 shares of preferred stock, par value
$.01 per share. As of December 31, 2002, 34,749,835 shares of common stock were
issued and outstanding, 555,333 shares of common stock were held as treasury
shares, and no shares of preferred stock were issued and outstanding.
The additional shares of our authorized stock available for issuance might
be issued at times and under circumstances so as to have a dilutive effect on
earnings per share and on the equity ownership of the holders of our common
stock. The ability of our board of directors to issue additional shares of stock
could enhance the board's ability to negotiate on behalf of the stockholders in
a takeover situation but could also be used by the board to make a
change-in-control more difficult, thereby denying stockholders the potential to
sell their shares at a premium and entrenching current management. The following
description is a summary of the material provisions of our capital stock. You
should refer to our amended and restated certificate of incorporation, as
amended, and bylaws for additional information.
COMMON STOCK
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Except as required
under Delaware law or the rules of the Nasdaq National Market, the rights of
stockholders may not be modified otherwise than by a vote of a majority or more
of the shares outstanding. Subject to preferences that may be applicable to any
outstanding shares of preferred stock, the holders of common stock are entitled
to receive ratably any dividends as may be declared by the board of directors
out of funds legally available for the payment of dividends. In the event of our
liquidation, dissolution or winding up, the holders of common stock are entitled
to share ratably in all assets, subject to prior distribution rights of the
preferred stock, if any, then outstanding. Holders of common stock have no
preemptive rights or rights to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are fully paid and
non-assessable.
PREFERRED STOCK
Our board of directors has the authority, within the limitations and
restrictions stated in our amended and restated certificate of incorporation and
without shareholder approval, to provide by resolution for the issuance of
shares of preferred stock, and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preference and the number of shares
constituting any series of the designation of such series. The issuance of
preferred stock could have the effect of decreasing the market price of the
common stock, impeding or delaying a possible takeover and adversely affecting
the voting and other rights of the holders of our common stock. At present, we
have no plans to issue preferred stock.
STOCK OPTIONS
As of December 31, 2002:
- options to purchase a total of 5,396,611 shares of common stock at a
weighted average exercise price of $2.36 per share were outstanding,
4,748,938 of which were vested and exercisable within 60 days of the
date of this prospectus, at a weighted average exercise price of $2.37
per share; and
- up to 8,668,989 additional shares of common stock may be issued under
our various stock option plans.
19
WARRANTS
As of December 31, 2002, there were outstanding warrants to purchase a
total of 4,421,138 shares of common stock at a weighted average exercise price
of $3.26 per share.
CERTAIN CHARTER PROVISIONS
Provisions of our amended and restated certificate of incorporation may
have the effect of making it more difficult for a third party to acquire, or of
discouraging a third party from attempting to acquire, control of us. These
provisions could limit the price that certain investors might be willing to pay
in the future for shares of our common stock. These provisions:
- divide our board of directors into three classes serving staggered
three-year terms;
- only permit removal of directors by stockholders "for cause," and
require the affirmative vote of at least 85% of the outstanding common
stock to so remove; and
- allow us to issue preferred stock without any vote or further action
by the stockholders.
The classification system of electing directors and the removal provision
may tend to discourage a third-party from making a tender offer or otherwise
attempting to obtain control of us and may maintain the incumbency of our board
of directors, as the classification of the board of directors increases the
difficulty of replacing a majority of the directors. These provisions may have
the effect of deferring hostile takeovers, delaying changes in our control or
management, or may make it more difficult for stockholders to take certain
corporate actions. The amendment of any of these provisions would require
approval by holders of at least 85% of the outstanding common stock.
LEGAL MATTERS
Lowenstein Sandler PC, Roseland, New Jersey will pass upon the validity of
the shares of common stock offered by this prospectus for us.
EXPERTS
Our consolidated financial statements for the fiscal years ended December
31, 2001 and 2000, which have been incorporated by reference in this prospectus,
have been audited by independent accountants Kost Forer & Gabbay (a member firm
of Ernst & Young Global). Such financial statements have been so included in
reliance on the report of such independent accountants given on the authority of
such firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can read and copy
any materials we file with the Securities and Exchange Commission at its Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
regional offices located at Seven World Trade Center, New York, New York 10048
and at 500 West Madison Street, Chicago, Illinois 60661. You can obtain
information about the operations of the Securities and Exchange Commission
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission also maintains a Website
that contains information we file electronically with the Securities and
Exchange Commission, which you can access over the Internet at
http://www.sec.gov.
This prospectus is part of a Form S-3 registration statement that we have
filed with the Securities and Exchange Commission relating to the shares of our
common stock being offered hereby. This prospectus does not contain all of the
information in the Registration Statement and its exhibits. The Registration
Statement, its exhibits and the documents incorporated by reference in this
prospectus and their exhibits, all contain information that is material to the
20
offering of the common stock. Whenever a reference is made in this prospectus to
any of our contracts or other documents, the reference may not be complete. You
should refer to the exhibits that are a part of the Registration Statement in
order to review a copy of the contract or documents. The registration statement
and the exhibits are available at the Securities and Exchange Commission's
Public Reference Room or through its Website.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information we incorporate by reference is an important part of this prospectus,
and later information that we file with the Securities and Exchange Commission
will automatically update and supersede some of this information. The documents
we incorporate by reference are:
- the description of our common stock contained in our registration
statement on Form 8-A, Commission File No. 0-23336, as filed with the
Securities and Exchange Commission on February 2, 1994;
- our Annual Report on Form 10-K for the year ended December 31, 2001;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2002;
- our proxy statement filed with the Securities and Exchange Commission
on a Schedule 14A on May 6, 2002;
- our Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2002, as amended;
- our Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 12, 2002;
- our Current Report on Form 8-K/A filed with the Securities and
Exchange Commission on October 11, 2002;
- our Current Report on Form 8-K filed with the Securities and Exchange
Commission on October 22, 2002; and
- our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 2002.
All reports and other documents that we file with the Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus but before the termination of the offering of the common stock
hereunder will also be considered to be incorporated by reference into this
prospectus from the date of the filing of these reports and documents, and will
supersede the information herein. We undertake to provide without charge to each
person who receives a copy of this prospectus, upon written or oral request, a
copy of all of the preceding documents that are incorporated by reference (other
than exhibits, unless the exhibits are specifically incorporated by reference
into these documents). You may request a copy of these materials, at no cost, by
telephoning us at the following address:
ELECTRIC FUEL CORPORATION
632 Broadway
New York, New York 10012
Attention: Chief Executive Officer
(646) 654-2107
You should rely only on the information in this prospectus and the
additional information described under the heading "Where You Can Find More
Information." We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
21
information, you should not rely upon it. Neither we nor the selling
stockholders are making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
in this prospectus was accurate on the date of the front cover of this
prospectus only. Our business, financial condition, results of operations and
prospects may have changed since that date.
22
================================================================================
3,250 ,000 SHARES
COMMON STOCK
ELECTRIC FUEL (R)
----------
PROSPECTUS
----------
, 2003
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by Electric
Fuel in connection with the sale of common stock being registered. All amounts
are estimates except the SEC registration fee.
SEC Registration Fee . . . . . . . $ 385.71
Legal Fees and Expenses . . . . . 7,500.00
Accounting Fees and Expenses . . . 110,000.00
Printing and Engraving . . . . . 3,500.00
Miscellaneous . . . . . . . . . . 3,614.29
--------------
TOTAL: $ 125,000.00
==============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Electric Fuel Corporation is a Delaware corporation. Section 102(b)(7) of
the Delaware General Corporation Law (the "DGCL") enables a corporation in its
original certificate of incorporation or an amendment thereto to eliminate or
limit the personal liability of a director to the corporation or its
stockholders for monetary damages for violations of the director's fiduciary
duty, except (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit. The Company's Amended and Restated Certificate of Incorporation
("Certificate of Incorporation") and By-Laws contain provisions eliminating the
liability of directors to the extent permitted by the DGCL.
Section 145 of the DGCL provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. Section 145 further provides that a corporation similarly
may indemnify any such person serving in any such capacity who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure judgment in its
favor, against expenses actually and reasonably incurred in connection with the
defense or settlement of such action or suit if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Delaware
Court of Chancery or such other court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
Article 10 of the Company's Certificate of Incorporation provides that, to
the fullest extent permitted by the DGCL, the Company's directors shall not be
liable to the Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director.
II-1
Article 11 of the Company's Certificate of Incorporation provides that the
Company shall, to the maximum extent permitted under the DGCL, indemnify any
person who was or is made a party or is threatened to be made a party to any
threatened, pending or completed action, suit, proceeding or claim, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was or has agreed to be a director or officer of the Company
or while a director or officer is or was serving at the request of the Company
as a director, officer, partner, trustee, employee, or agent of any corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, against expenses (including attorney's fees),
judgments, fines, penalties and amounts paid in settlement incurred in
connection with the investigation, preparation to defend or defense of such
action, suit, proceeding or claim.
The Company also maintains directors' and officers' insurance.
For the undertaking with respect to indemnification, see Item 17 herein.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
(1)3.1 . . . . Registrant's Amended and Restated Certificate of Incorporation
(2)3.1.1 . . . Amendment to Registrant's Amended and Restated Certificate of Incorporation
(3)3.2 . . . . Amended and Restated By-Laws
(3)4.1 . . . . Specimen Certificates for shares of the Registrant's Common Stock, $.01 par value
+ 5.1 . . . . Legal Opinion of Lowenstein Sandler PC
++ 23.1 . . . Consent of Kost Forer & Gabbay
+ 23.2 . . . Consent of Lowenstein Sandler PC (contained in the opinion filed as Exhibit 5.1)
++24.1 . . . Power of Attorney (included as part of the signature page filed herewith)
_____________
+ Filed herewith
++ Previously filed
(1) Incorporated by reference to our Annual Report on Form 10-K for the year ended December 31, 1998
(2) Incorporated by reference to our Annual Report on Form 10-K for the year ended December 31, 2000
(3) Incorporated by reference to our Registration Statement on Form S-1 (Registration No. 33-73256), which became
effective on February 23, 1994
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933,
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement,
II-2
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions set forth in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer,
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on this
21st day of January, 2003.
---
ELECTRIC FUEL CORPORATION
By: /s/ Robert S. Ehrlich
-----------------------------------------
Name: Robert S. Ehrlich
Title: President, Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
registration statement or amendment has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Robert S. Ehrlich Chairman, President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer) January 21, 2003
Robert S. Ehrlich ---
/s/ Avihai Shen Vice President - Finance
------------------------ (Principal Financial and Accounting Officer) January 21, 2003
Avihai Shen ---
*
------------------------
Dr. Jay M. Eastman Director January 21, 2003
---
*
------------------------
Leon S. Gross Director January 21, 2003
---
*
------------------------
Lawrence M. Miller Director January 21, 2003
---
*
------------------------
Jack E. Rosenfeld Director January 21, 2003
---
/s/ Steven Esses
------------------------
Steven Esses Director and Executive Vice President January 21, 2003
---
By: /s/ Robert S. Ehrlich
-----------------------
Robert S. Ehrlich
Attorney-in-fact January 21, 2003
---
II-4