Registration No. 333-
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GALES INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 20-4458244
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1479 North Clinton Avenue
Bay Shore, NY 11706
(Address of Principal Executive Offices)
2005 Stock Incentive Plan of Gales Industries Incorporated
(Full title of the plan)
Michael A. Gales, Executive Chairman
Gales Industries Incorporated
1479 North Clinton Avenue
Bay Shore, NY 11706
(631) 968-5000
(Name, address and telephone number of agent for service)
Copies of communications to:
Vincent J. McGill, Esq.
Eaton & Van Winkle LLP
3 Park Avenue, New York, New York 10016
(212) 779-9910
CALCULATION OF REGISTRATION FEE
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Title of securities Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
to be registered registered (1) price per share offering price) registration fee
-----------------------------------------------------------------------------------------------------------------------------------
Common Shares 10,000,000 $ 0.24 $2,400,000 $256.80
-----------------------------------------------------------------------------------------------------------------------------------
(1) In accordance with Rule 416(c) under the Securities Act of 1933, as amended,
this Registration Statement shall also cover any additional shares of the
Registrant's Common Stock which become issuable under the plan by reason of a
stock dividend, stock split, recapitalization or other similar transaction.
================================================================================
1
PROSPECTUS
GALES INDUSTRIES INCORPORATED
2005 STOCK INCENTIVE PLAN
------------------------------------------
An investment in our common shares involves a high degree of risk and only
people who can afford the loss of their entire investment should consider
investing. See "Risk Factors" beginning on page 1.
------------------------------
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.
You should rely only on the information contained in this prospectus or
that to which we have referred you. We have not authorized anyone to provide you
with information that is different. This prospectus does not constitute an offer
to sell, or the solicitation of an offer to buy, any of the securities offered
hereby to any person in any jurisdiction in which such offer or solicitation
would be unlawful. Our business may change after the date of this prospectus.
Delivery of this document and any sale of securities made hereunder does not
mean otherwise.
------------------------------
The date of this prospectus is January 17, 2006
2
TABLE OF CONTENTS
Page
----
Prospectus Summary.......................................................... 1
Risk Factors................................................................ 1
Notice Regarding Forward-looking Information................................ 5
Use of Proceeds............................................................. 6
Determination of Offering Price............................................. 6
Selling Security Holders.................................................... 6
Plan of Distribution........................................................ 11
Description of Securities to be Registered.................................. 13
Interests of Experts and Counsel .......................................... 13
Where You Can Find More Information......................................... 13
Incorporation of Company Documents by Reference............................. 14
Signatures.................................................................. 17
i
PROSPECTUS SUMMARY
THE GALES INDUSTRIES INCORPORATED 2005 STOCK INCENTIVE PLAN
This Prospectus relates to
(i) our 2005 Stock Incentive Plan (the "Plan"), which allows for
the issuance of up to 10,000,000 shares of Gales Industries
Incorporated (the "Registrant") Common Stock, either as stock
grants or options, to employees, officers, directors, advisors
and consultants of the Registrant; and
(ii) the resale and/or reoffer by selling shareholders identified
herein, to whom options to purchase 5,945,000 shares of our
Common Stock were granted prior to the date hereof.
The Board, or if so appointed, the committee administering the Plan
(in either case, the "Administrator") will have sole authority and discretion to
grant options under the Plan. We may grant options which become immediately
exercisable in the event of a change in control of the Registrant and in the
event of certain mergers and reorganizations of the Registrant.
RISK FACTORS
The purchase of our Common Stock involves a high degree of risk.
Before you invest you should carefully consider the risks and uncertainties
described below and other information and our consolidated financial statements
and related notes included elsewhere in this prospectus. If any of the events
described below actually occurs, our operating results would be dramatically
adversely affected, which in turn could cause the price of our Common Stock to
decline, perhaps significantly. Further, we may not be able to continue our
operations. This means you could lose all or a part of your investment.
The inability to successfully manage the growth of our business may have a
material adverse effect on our business, results or operations and financial
condition.
We expect to experience growth in the number of employees and the
scope of our operations as a result of internal growth and acquisitions. Such
activities could result in increased responsibilities for management.
Our future success will be highly dependent upon our ability to
manage successfully the expansion of operations. Our ability to manage and
support our growth effectively will be substantially dependent on our ability to
implement adequate improvements to financial, inventory, management controls,
reporting, union relationships, order entry systems and other procedures, and
hire sufficient numbers of financial, accounting, administrative, and management
personnel. There can be no assurance that we will be able to identify, attract
and retain experienced personnel.
Our future success depends on our ability to address potential
market opportunities and to manage expenses to match our ability to finance
operations. The need to control our expenses will place a significant strain on
our management and operational resources. If we are unable to control our
expenses effectively, our business, results of operations and financial
condition may be adversely affected.
The unsuccessful integration of a business or business segment we acquire
could have a material adverse effect on our results.
As part of our business strategy, we expect to acquire assets and
businesses relating to or complementary to our operations. These acquisitions
will involve risks commonly encountered in acquisitions. These risks include,
1
among other things, exposure to unknown liabilities of the acquired companies,
additional acquisition costs and unanticipated expenses. Our quarterly and
annual operating results will fluctuate due to the costs and expenses of
acquiring and integrating new businesses. We may also experience difficulties in
assimilating the operations and personnel of acquired businesses. Our ongoing
business may be disrupted and our management's time and attention diverted from
existing operations. Our acquisition strategy will likely require additional
debt or equity financing, resulting in additional leverage or dilution of
ownership. We cannot assure you that any future acquisition will be consummated,
or that if consummated, that we will be able to integrate such acquisition
successfully.
Any reduction in government spending on defense could materially adversely
impact our revenues, results of operations and financial condition.
There are risks associated with programs that are subject to
appropriation by Congress, which could be potential targets for reductions in
funding to pay for other programs. Future reductions in United States Government
spending on defense or future changes in the kind of defense products required
by United States Government agencies could limit demand for our products, which
would have a materially adverse effect on our operating results and financial
condition.
In addition, potential shifts in responsibilities and functions
within the defense and intelligence communities could result in a reduction of
orders for defense products by segments of the defense industry that have
historically been our major customers. As a result, demand for our products
could decline, resulting in a decrease in revenues and materially adversely
affecting our operating results and financial condition.
We depend on revenues from a few significant relationships and any loss,
cancellation, reduction, or interruption in these relationships could harm our
business.
We derive a material portion of our revenue from one or a limited
number of customers. We expect that in future periods we may enter into
contracts with customers which represent a significant concentration of our
revenues. If such contracts were terminated, our revenues and net income could
significantly decline. Our success will depend on our continued ability to
develop and manage relationships with significant customers. Any adverse change
in our relationship with our significant customers could have a material adverse
effect on our business. Although we are attempting to expand our customer base,
we expect that our customer concentration will not change significantly in the
near future. The markets in which we sell our products are dominated by a
relatively small number of customers who have contracts with United States
governmental agencies, thereby limiting the number of potential customers. We
cannot be sure that we will be able to retain our largest customers or that we
will be able to attract additional customers, or that our customers will
continue to buy our products in the same amounts as in prior years. The loss of
one or more of our largest customers, any reduction or interruption in sales to
these customers, our inability to successfully develop relationships with
additional customers or future price concessions that we may have to make, could
significantly harm our business.
Continued competition in our markets may lead to a reduction in our
revenues and market share.
The defense and aerospace component manufacturing market is highly
competitive and we expect that competition will continue to increase. Current
competitors have significantly greater technical, manufacturing, financial and
marketing resources than we do. We expect that more companies will enter the
defense and aerospace component manufacturing market. We may not be able to
compete successfully against either current or future competitors. Increased
competition could result in reduced revenue, lower margins or loss of market
share, any of which could significantly harm our business.
Our future revenues are inherently unpredictable; our operating results
are likely to fluctuate from period to period and if we fail to meet the
expectations of securities analysts or investors, our stock price could decline
significantly.
Our quarterly and annual operating results are likely to fluctuate
significantly in the future due to a variety of factors, some of which are
2
outside our control. Accordingly, we believe that period-to-period comparisons
of our results of operations are not meaningful and should not be relied upon as
indications of performance. Some of the factors that could cause quarterly or
annual operating results to fluctuate include conditions inherent in government
contracting and our business such as the timing of cost and expense recognition
for contracts, the United States Government contracting and budget cycles,
introduction of new government regulations and standards, contract closeouts,
variations in manufacturing efficiencies, our ability to obtain components and
subassemblies from contract manufacturers and suppliers, general economic
conditions and economic conditions specific to the defense market. Because we
base our operating expenses on anticipated revenue trends and a high percentage
of our expenses are fixed in the short term, any delay in generating or
recognizing forecasted revenues could significantly harm our business.
Fluctuations in quarterly results, competition or announcements of extraordinary
events such as acquisitions or litigation may cause earnings to fall below the
expectations of securities analysts and investors. In this event, the trading
price of our Common Stock could significantly decline. In addition, there can be
no assurance that an active trading market will be sustained for our Common
Stock. These fluctuations, as well as general economic and market conditions,
may adversely affect the future market price of our Common Stock, as well as our
overall operating results.
We may lose sales if our suppliers fail to meet our needs. Although
we procure most of our parts and components from multiple sources or believe
that these components are readily available from numerous sources, certain
components are available only from sole sources or from a limited number of
sources. While we believe that substitute components or assemblies could be
obtained, use of substitutes would require development of new suppliers or would
require us to re-engineer our products, or both, which could delay shipment of
our products and could have a materially adverse effect on our operating results
and financial condition.
Attracting and retaining key personnel is an essential element of our
future success.
Our future success depends to a significant extent upon the
continued service of our executive officers and other key management and
technical personnel and on our ability to continue to attract, retain and
motivate executive and other key employees, including those in managerial,
technical, marketing and information technology support positions. Attracting
and retaining skilled workers and qualified sales representatives is also
critical to us. Experienced management and technical, marketing and support
personnel in the defense and aerospace industries are in demand and competition
for their talents is intense. The loss of the services of one or more of our key
employees or our failure to attract, retain and motivate qualified personnel
could have a material adverse effect on our business, financial condition and
results of operations.
Terrorist acts and acts of war may seriously harm our business, results of
operations and financial condition.
United States and global responses to the Middle East conflict,
terrorism, perceived nuclear, biological and chemical threats and other global
crises increase uncertainties with respect to U.S. and other business and
financial markets. Several factors associated, directly or indirectly, with the
Middle East conflict, terrorism, perceived nuclear, biological and chemical
threats, and other global crises and responses thereto, may adversely affect the
Registrant.
While some of our products may experience greater demand as a result
of increased U.S. Government defense spending, various responses could realign
U.S. Government programs and affect the composition, funding or timing of our
government programs and those of our customers. U.S. Government spending could
shift to defense programs in which we and our customers do not participate. As a
result of the September 11th terrorist attacks and given the current Middle East
and global situation, U.S. defense spending is generally expected to increase
over the next several years. Increased defense spending does not necessarily
correlate to increased business, because not all the programs in which we
participate or have current capabilities may be earmarked for increased funding.
Terrorist acts of war (wherever located around the world) may cause
damage or disruption to us, our employees, facilities, partners, suppliers,
distributors and resellers, and customers, which could significantly impact our
revenues, expenses and financial condition. The terrorist attacks that took
place in the United States on September 11, 2001 were unprecedented events that
have created many economic and political uncertainties. The potential for future
terrorist attacks, the national and international responses to terrorist
3
attacks, and other acts of war or hostility have created many economic and
political uncertainties, which could adversely affect our business and results
of operations in ways that cannot presently be predicted. In addition, as a
company with headquarters and significant operations located in the United
States, we may be impacted by actions against the United States.
Our indebtedness may affect operations.
We are significantly leveraged and our indebtedness is substantial
in relation to our shareholders' equity. Our ability to make principal and
interest payments will depend on future performance, which is subject to many
factors, some of which are outside our control. In addition, our indebtedness to
PNC Bank (our "Bank Debt") is secured by substantially all of our assets. In the
case of a continuing default under the Bank Debt, the lender will have the right
to foreclose on our assets, which would have a material adverse effect on the
Registrant. Payment of principal and interest on the Bank Debt may limit our
ability to pay cash dividends to shareholders and the documents governing the
Bank Debt will prohibit the payment of cash dividends. Our leverage may also
adversely affect our ability to finance future operations and capital needs, may
limit our ability to pursue other business opportunities and may make our
results of operations more susceptible to adverse economic conditions.
We may issue shares of our capital stock or debt securities to complete an
acquisition, which would reduce the equity interest of our stockholders.
We will, in all likelihood, issue additional shares of our Common
Stock or preferred stock, or a combination of common and preferred stock, to
complete an acquisition. The issuance of additional shares of our Common Stock
or any number of shares of our preferred stock may significantly reduce the
equity interest of our current stockholders, may subordinate the rights of
holders of our Common Stock if preferred stock is issued with rights senior to
the Common Stock and may adversely affect prevailing market prices for our
Common Stock.
Similarly, if we issue debt securities, it could result in default
and foreclosure on our assets if our operating revenues after an acquisition
were insufficient to pay our debt obligations. Even if our revenues are
sufficient to satisfy our debt obligations, if the debt security contains
covenants that require the maintenance of certain financial ratios or reserves
and any such covenant is breached, such breach could result in a foreclosure
action.
Issuance of securities under the Plan being reported by this
prospectus will also result in dilution to our shareholders.
Because of our limited resources and the significant competition for
acquisitions, we may not be able to consummate an acquisition with growth
potential, if at all.
We expect to encounter intense competition from other entities
having a business objective similar to ours, including venture capital funds,
leveraged buyout funds and operating businesses competing for acquisitions. Many
of these entities are well established and have extensive experience in
identifying and effecting business combinations directly or through affiliates.
Many of these competitors possess greater technical, human and other resources
than we do and our financial resources will be relatively limited when
contrasted with those of many of these competitors. While we believe that there
are numerous potential target businesses that we could acquire, our ability to
compete in acquiring certain target businesses will be limited by our available
financial resources. This inherent competitive limitation gives others an
advantage in pursuing the acquisition of certain target businesses.
We may be unable to obtain additional financing, if required, to complete
an acquisition or to fund the operations and growth of any business acquired,
which could compel us to abandon a particular prospective acquisition.
4
If we require additional financing to complete an acquisition, we
cannot assure you that such financing would be available on acceptable terms, if
at all. To the extent that additional financing proves to be unavailable when
needed to consummate a particular acquisition, we would be compelled to
restructure the transaction or abandon that particular acquisition. In addition,
if we consummate an acquisition, we may require additional financing to fund the
operations or growth of the business acquired. The failure to secure additional
financing could have a material adverse effect on the continued development or
growth of our business.
There is only a limited public market for our securities.
The trading market for our Common Stock is limited and conducted on
the OTC Bulletin Board. Our Common Stock is very thinly traded. There can be no
assurance that we will ever achieve a listing of our securities on NASDAQ or a
stock exchange or that a more active trading market will ever develop, or, if
developed, that it will be sustained.
Potential Adverse Effect on Market Price of Securities from Future Sales
of Common Stock.
Future sales of Common Stock pursuant to a registration statement or
Rule 144 under the Securities Act, or the perception that such sales could
occur, could have an adverse effect on the market price of the Common Stock. We
have filed a Registration Statement on form SB-2 covering the resale by selling
security holders of more than 60,000,000 shares of Common Stock, which became
effective as of August 4, 2006. Relative to the number of shares of our
freely-trading Common Stock outstanding, which we estimate to be approximately
2.52 million shares, the number of shares which will be sold into the
marketplace pursuant to such Registration Statement will be enormous. We believe
that such sales will severely depress the market price of our Common Stock
NOTICE REGARDING FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated in it by reference contain
forward-looking statements within the meaning of section 27A of the Securities
Act, as amended referred to herein as the Securities Act, and Section 21E of the
Securities Exchange Act of 1933, as amended; referred to herein as the Exchange
Act and involve known and unknown risks and uncertainties. Examples of
forward-looking statements include: projections of capital expenditures,
competitive pressures, revenues, growth prospects, product development,
financial resources and other financial matters. You can identify these and
other forward-looking statements by the use of words such as "may", "will",
"should", "plans", "anticipates", "believes", "estimates", "predicts",
"intends", "potential" or the negative of such terms, or other comparable
terminology.
Our ability to predict the results of our operations or the effects of
various events on our operating results is inherently uncertain. Therefore, we
caution you to consider carefully the matters described under the caption "Risk
Factors" and certain other matters discussed in this prospectus, the documents
incorporated by reference in this prospectus, and other publicly available
sources. Such factors and many other factors beyond the control of our
management could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by the forward-looking statements.
We undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any additional disclosures we make in our
Reports on Form 10-KSB and 10-QSB and our company reports on Form 8-K to the
SEC. Also note that we provide a cautionary discussion of risks and
uncertainties under the caption "Risk Factors" in this prospectus. These are
factors that we think could cause our actual results to differ materially from
expected results. Other factors besides those listed here could also adversely
affect us.
We include this notice for the express purpose of permitting us to obtain
the protections of the safe harbor provided by the Private Securities Litigation
Reform Act of 1995 with respect to all such forward-looking statements.
5
USE OF PROCEEDS
The options to purchase shares of common stock discussed in this
prospectus may be exercised by the selling shareholders and subsequent
participants in the Plan, and all proceeds from such exercise will be applied to
working capital of the Registrant. All proceeds from the sales of shares
received pursuant to the Plan or upon exercise of options granted under the Plan
will be retained by the selling shareholders. We will not receive any proceeds
from the sale or distribution of the common stock by the selling shareholders or
other plan participants.
DETERMINATION OF OFFERING PRICE
The exercise or purchase price, if any, for an award shall be as follows:
(i) In the case of an Incentive Stock Option: (A) granted to an employee
who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company or any parent or subsidiary,
the per share exercise price shall be not be less than one hundred
ten percent (110%) of the fair market value per share on the date of
grant; or (B) granted to any employee other than an employee
described in the preceding clause, the per sale exercise price shall
be not less than one hundred percent (100%) of the fair market value
per share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per share exercise
price shall be not less than one hundred percent (100%) of the fair
market value per share on the date of grant unless otherwise
determined by the Administrator;
(iii) In the case of other Awards, such price as is determined by the
Administrator, and
(iv) Notwithstanding the foregoing, in the case of an Award issued
pursuant to a settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in
connection with the Company or a related entity acquiring another
entity, an interest in another entity or an additional interest in a
related entity whether by merger, stock purchase, asset purchase or
other form of transaction, the exercise or purchase price for the
award shall be determined in accordance with the principles of
Section 424(a) of the Code.
SELLING SECURITY HOLDERS
The common shares being offered for resale or reoffer hereby represent
stock issuable under the stock options previously awarded by us to the selling
shareholders. The following table sets forth the names of those selling
shareholders, and the number of shares of common stock known by us to be
beneficially owned by each of the selling shareholders as of January 16, 2007,
and the number of shares of common stock being registered for sale. The term
"selling shareholder" or "selling shareholders" includes the shareholders listed
below and their transferees, assignees, pledgees, donees or other successors. We
are unable to determine the exact number of shares that will actually be sold
because the selling shareholders may sell all or some of the shares and because
we are not aware of any agreements, arrangements or understandings with respect
to the sale of any of the shares. The following table assumes that the selling
shareholders will sell all of the shares being offered for their account by this
prospectus. The shares offered by this prospectus may be offered from time to
time by the selling shareholders. The selling shareholders are not making any
representation that any shares covered by this prospectus will or will not be
offered for sale. The selling shareholders reserve the right to accept or
reject, in whole or in part, any proposed sale of shares. The selling
shareholders also may offer and sell less than the number of shares indicated.
6
Shares Common stock beneficially owned after
beneficially Number of offering for resale
owned prior to Shares being
offering for offered for Number of Percentage of
resale resale shares outstanding shares
Name of Selling Security Holder
Michael Gales (1) 4,576,219 500,000 4,076,219 7.1%
Louis Giusto (2) 3,884,538 480,000 3,404,538 5.9%
Peter Rettaliata (3) 1,250,000 300,000 950,000 1.3%
Dario Peragallo (4) 1,250,000 300,000 950,000 1.3%
Rsyzar Wawro * 5,000 0 *
Mauricio Diaz * 5,000 0 *
Joaquin Melendez * 5,000 0 *
Claudia Perez * 5,000 0 *
Keith Hispanski * 5,000 0 *
James Reinfurt * 5,000 0 *
Tomas Portillo * 5,000 0 *
Victor Franco * 5,000 0 *
Thomas Roderka * 5,000 0 *
Joyce Rein * 5,000 0 *
Deverle Lawther * 5,000 0 *
Stephen Sariego * 5,000 0 *
Amparo Andrade * 5,000 0 *
Zbignie Maliszewski * 5,000 0 *
William Reyes * 5,000 0 *
Oscar Debiassi * 5,000 0 *
Carlos Monterroso * 5,000 0 *
Ulysses Salva * 5,000 0 *
George Johnson * 5,000 0 *
Jorge Ramos * 5,000 0 *
Juan Rodriguez * 5,000 0 *
Isidro Patino * 5,000 0 *
Sy Bigas * 5,000 0 *
Jose Fortunato * 5,000 0 *
Selvins Flores * 5,000 0 *
John Rojas * 5,000 0 *
David Bermudez * 5,000 0 *
Jorge Chaves * 5,000 0 *
Jose De Jesus * 5,000 0 *
Antonio Cuadrado * 5,000 0 *
7
Hector Diaz * 5.000 0 *
Marlon Flores * 5,000 0 *
Thomas Walker * 5,000 0 *
Luis Gonzalez * 5,000 0 *
Luis Giraldo * 5,000 0 *
Oscar Madrigal * 5,000 0 *
Felipe Muriel * 5,000 0 *
Stavomir Dabrowski * 5,000 0 *
joseMejias * 5,000 0 *
Adrian Aguero * 5,000 0 *
Gustavo Orosco * 5,000 0 *
Daniel Pampalone * 5,000 0 *
Cecilio Valentin * 5,000 0 *
Vincenzo Tedone * 5,000 0 *
Thomas Dutcher * 5,000 0 *
Gustavo Gonzalez * 5,000 0 *
Jorge Gennari * 5,000 0 *
Frank Murphy * 5,000 0 *
Victor Rivera * 5,000 0 *
Carlos Franchino * 5,000 0 *
Nolvia Rivera * 5,000 0 *
Noel Perla * 5,000 0 *
Changeon Lee * 5,000 0 *
Dean Mortera * 5,000 0 *
John Rettaliata * 5,000 0 *
Luciano Debiassi * 5,000 0 *
Gaston Debiassi * 5,000 0 *
Oscar Debiassi, Jr. * 5,000 0 *
Marcos Freyre * 5,000 0 *
Gerard Dietz * 5,000 0 *
Eduardo Gorosito * 5,000 0 *
Robert Nagy * 5,000 0 *
DeJesus Gonzalez * 5,000 0 *
Stanley Houlik * 5,000 0 *
John Dill * 5,000 0 *
Jorge Ortiz * 5,000 0 *
Hermes Oliveros * 5,000 0 *
Vincent Bivona * 5,000 0 *
Diana Alvarez * 5,000 0 *
Martha Gonzalez * 5,000 0 *
Pablo Torres * 5,000 0 *
Marco Arroyave * 5,000 0 *
Jorge Londono * 5,000 0 *
Christopher Cirillo * 5,000 0 *
Elena Chacon * 5,000 0 *
Johan Perez * 5,000 0 *
Michelle Malliat * 5,000 0 *
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Maria Mesa * 5,000 0 *
Beatriz Fuentes * 5,000 0 *
David Bowker * 5,000 0 *
Gordon Kuloy * 5,000 0 *
Domingo Zaba * 5,000 0 *
Luis Peragallo, Jr. * 5,000 0 *
Don Wolf * 5,000 0 *
Darius Mejer * 5,000 0 *
Michael Stebel * 5,000 0 *
Michael Biancospino * 5,000 0 *
Alberto Rey * 5,000 0 *
Robert Gelhaus * 5,000 0 *
Felipe Acevedo * 5,000 0 *
Julio Flores * 5,000 0 *
Agustin Cabrera * 5,000 0 *
Ricardo Perez * 5,000 0 *
Francisco Calderon * 5,000 0 *
Alcides Hernandez * 5,000 0 *
Alejandro Cano * 5,000 0 *
Jorge Burgos * 5,000 0 *
Juan Carlos Martinez * 5,000 0 *
Jesus Ayala * 5,000 0 *
Hector Osorio * 5,000 0 *
Armando Rosero * 5,000 0 *
Armando Alvarez * 5,000 0 *
Jan Szyjko * 5,000 0 *
German Ortiz * 5,000 0 *
Jeff Claisse * 5,000 0 *
Seegobin Dookwah * 5,000 0 *
James Convey * 5,000 0 *
Luis Apolinar * 5,000 0 *
Luis Rodriguez * 5,000 0 *
Luis Hurtado * 5,000 0 *
Jennie Grey * 5,000 0 *
Kristie Marie Ciaccio * 5,000 0 *
Alejandro Granados-Gomez * 5,000 0 *
Christina Parada * 5,000 0 *
Lucille Cuomo * 5,000 0 *
Frank Sadkowski * 5,000 0 *
Barbara Connolly * 5,000 0 *
Erasto Rodriguez * 5,000 0 *
Jair Gallego * 5,000 0 *
Jose Pereyra * 5,000 0 *
Alfred Bistrais * 5,000 0 *
9
Kalman Blake * 5,000 0 *
Sigismund Kudrycki * 5,000 0 *
Policarpo Vergaray * 5,000 0 *
Isaac Algarin * 5,000 0 *
Angel Torres * 5,000 0 *
Alejandro Henriquez * 5,000 0 *
Cherisse Williams * 5,000 0 *
Jason Lang * 5,000 0 *
Louis Alifano * 30,000 0 *
Paula Castellano * 30,000 0 *
James Pfister * 30,000 0 *
Greg Warren * 30,000 0 *
Wilson Zuluaga * 30,000 0 *
Gary Settoducato * 30,000 0 *
George Kfoury * 30,000 0 *
Anthony Schiappa * 30,000 0 *
Michael Revak * 15,000 0 *
Frank Palmeri * 15,000 0 *
Marcos Castro * 15,000 0 *
Michael Lobasso * 15,000 0 *
Luis Mortera * 15,000 0 *
Ismael Lucana * 15,000 0 *
Jairo Gomez * 15,000 0 *
Richard Roderka * 15,000 0 *
Norman Felsen * 15,000 0 *
Anthony Landis * 15,000 0 *
Blanchard Linda * 15,000 0 *
Dorothy Ramos * 15,000 0 *
Efren Sandi * 15,000 0 *
Fernando Gomez * 15,000 0 *
* denotes less than 1%
(1) Beneficially owned shares consist of 4,076,219 shares of Common Stock and
vested options exercisable for 500,000 shares of Common Stock.
(2) Beneficially owned shares consist of 3,404,538 shares of Common Stock and
vested options exercisable for 480,000 shares of Common Stock.
(3) Beneficially owned shares for Mr. Rettatalia consist of 118,423 shares of
Common Stock, vested options exercisable into 300,000 shares of Common
Stock, and a convertible note in the principal amount of $332,631,
convertible into 831,577 shares of Common Stock, exclusive of the number
of shares receivable upon conversion of the interest accrued under such
note.
(4) Beneficially owned shares for Mr. Peragallo consist of 118,423 shares of
Common Stock, vested options exercisable into 300,000 shares of Common
Stock, and a convertible note in the principal amount of $332,631,
convertible into 831,577 shares of Common Stock, exclusive of the number
of shares receivable upon conversion of the interest accrued under such
note.
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PLAN OF DISTRIBUTION
The selling shareholders and any of their pledgees, assignees,
transferees, donees and successors-in-interest may, from time to time, sell any
or all of their shares on any stock exchange, market or trading facility on
which our common stock is traded or in private transactions. Each selling
shareholder will act independently in making decisions with respect to the
timing, manner and size of each sale of the shares covered in this prospectus.
The selling shareholders may use any one or more of the following methods when
selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers, which may include long sales and short
sales effected after the effective date of the registration statement;
- block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account pursuant to this prospectus;
- "at the market" to or through market makers or into an existing market
for the shares;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- in other ways not involving market makers or established trading
markets, including direct sales to purchasers, sales effected through
agents or other privately negotiated transactions;
- settlement of short sales;
- broker-dealers may agree with the selling shareholders to sell a
specified number of shares at a stipulated price per share;
- through transactions in options, swaps or other derivative securities
(whether exchange-listed or otherwise);
- a combination of any the foregoing methods of sale; or
- any other method permitted by applicable law.
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In the event that a sale is to be made pursuant to this registration
statement by a pledgee or other transferee, we will provide appropriate
information regarding such pledgee or transferee by a prospectus supplement or a
post-effective amendment, if necessary, naming such pledgee or transferee as a
selling shareholder.
Any sale or distribution of common stock by the selling shareholders must
be accompanied by, or follow the delivery of, this prospectus, unless the
selling shareholders elect to rely on Rule 144 or another exemption from the
registration requirements in connection with a particular transaction. The
selling shareholders may sell 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 shareholders may sell directly to broker-dealers
as principals, in routine transactions through broker-dealers that will be
compensated in the form of discounts, concessions, or commissions, or in block
transactions in which a broker-dealer may act as a principal or an agent. The
broker-dealers will either receive discounts or commissions from the selling
shareholders, or they will receive commissions from purchasers of shares. We
have not and do not intend to enter into any arrangement with any securities
dealer concerning such discounts, concessions or commissions for the
solicitation of offers to purchase the common stock or the sale of such stock.
Under certain circumstances any broker-dealers that participate in the
distribution may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933. Any commissions received by these broker-dealers and any
profits realized on the resale of shares by them may be considered underwriting
discounts and commissions under the Securities Act of 1933.
Under the rules and regulations of the Securities Exchange Act of 1934,
any person engaged in the distribution or the resale of shares may not
simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of such
distribution. The selling shareholders will also be subject to applicable
provisions of the Securities Exchange Act of 1934, and regulations under the
Securities Exchange Act of 1934, which may limit the timing of purchases and
sales of our shares of common stock by the selling shareholders.
The selling shareholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by the selling
shareholders. The shares offered hereby are being registered pursuant to
contractual obligations to which we are subject, and we have paid the expenses
of the preparation of this prospectus.
Because the selling shareholders received the common shares directly from
us, the common shares constitute "control" or "restricted" securities as defined
for purposes of General Instruction C to this Form S-8 Registration Statement
and promulgated by the SEC. As such, the common shares may be subject to resale
and reoffer limitations imposed by Rule 144(e) under the Securities Act,
including those applicable volume limitations on the amount of common shares
which can be resold or reoffered during any 90 day period by any selling
shareholder.
DESCRIPTION OF SECURITIES TO BE REGISTERED
10,000,000 shares of the common stock of the Registrant, each common share
being entitled to one vote on all matters submitted to a vote by shareholders,
including the election of directors. There are no cumulative voting rights in
the election of directors. All common shares are equal to each other with
respect to liquidation and dividend rights and are entitled to receive dividends
if and when our board declares them out of funds legally available for
distribution. Upon our liquidation, all assets available for distribution are
distributable among shareholders according to their respective holdings. There
are no preemptive rights to purchase any additional, unissued common shares.
EXPERTS AND COUNSEL
Eaton & Van Winkle LLP will provide the Registrant with a legal
opinion in connection with the securities being registered hereby. Eaton & Van
Winkle has served as counsel to the Registrant on various matters, for which it
has been paid legal fees. Stephen M. Nagler, a member of Eaton & Van Winkle LLP,
is a Director of the Registrant. Eaton & Van Winkle LLP owns 90,000 shares of
our Common Stock, and Mr. Nagler is the beneficial owner of 205,455 shares of
our Common Stock.
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Our consolidated financial statements for the year ended December 31, 2005
and December 31, 2004 have been incorporated by reference herein and in the
registration statement in reliance on the report of independent accountants
Goldstein Golub Kessler LLP, and Bildner and Giannasco LLP, respectively, also
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is a part of a registration statement on Form S-8, which
we filed with the Securities and Exchange Commission, or the SEC, under the
Securities Act of 1933, as amended (the "Securities Act"). As permitted by the
rules and regulations of the SEC, this prospectus does not contain all of the
information contained in the registration statement and the exhibits and
schedules thereto. As such we make reference in this prospectus to the
registration statement and to the exhibits and schedules thereto. For further
information about us and about our securities, you should consult the
registration statement and the exhibits thereto. You should be aware that
statements contained in this prospectus concerning the provisions of any
documents filed as an exhibit to the registration statement or otherwise filed
with the SEC are not necessarily complete, and in each instance reference is
made to the copy of such document so filed. Each such statement is qualified in
its entirety by such reference.
We file annual and special reports and other information with the SEC
(Commission File Number 0000918387) pursuant to Section 13(a) of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"). These filings contain
important information which does not appear in this prospectus. For further
information about us, you may read and copy these filings at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330, and may obtain copies of our filings from the public reference
room by calling (202) 942-8090. The SEC maintains a web site (www.sec.gov) that
contains the registration statements, reports, proxy and information statements
and other information regarding registrants that file electronically with the
SEC such as us.
We shall provide you without charge, upon your written or oral request, a
copy of any of the documents incorporated by reference in this prospectus, other
than exhibits to such documents which are not specifically incorporated by
reference into such documents. Please direct your written or telephone requests
to Michael A. Gales, at the address provided on the cover of this Prospectus, or
(631)328-7024. You may also obtain information about us by visiting our website
at www.airindmc.com. Information contained in our website is not part of this
prospectus.
PART II
INFORMATION REQUIRED IN
THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents we have filed or will file with the SEC. We are
incorporating by reference in this prospectus the documents listed below:
1. The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2005;
2. The Registrant's Quarterly Reports on Form 10-QSB for the quarters
ended March 31, 2006, June 30, 2006, and September 30, 2006;
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3. The reports filed pursuant to Section 8-K of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), since January 1, 2006;
and
4. 2005 Stock Incentive Plan of Gales Industries Incorporated,
incorporated by reference to Exhibit 10.14 of the Registrant's Form
8-K report, dated December 6, 2005.
All documents which we file with the SEC pursuant to Section 13(a), 13(c)
or 15(d) of the Exchange Act after the date of this prospectus and before the
expiration or termination of this prospectus shall be deemed to be incorporated
by reference in this prospectus and to be a part of it from the filing dates of
such documents. Certain statements in and portions of this prospectus update and
replace information in the above listed documents incorporated by reference.
Likewise, statements in or portions of a future document incorporated by
reference in this prospectus may update and replace statements in and portions
of this prospectus or the above listed documents
Item 4. Description of Securities.
Disclosed in Prospectus under identical heading - "Description of
Securities"
Item 5. Interests of Named Experts and Counsel
Disclosed in Prospectus under "Experts and Counsel"
Item 6. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation, (the "Certificate")
provides that the Registrant shall indemnify to the fullest extent authorized by
the Delaware General Corporation Law ("DGCL"), each person who is involved in
any litigation or other proceeding because such person is or was a director or
officer of the Registrant or is or was serving as an officer or director of
another entity at the request of the Registrant, against expenses (including
attorneys' fees), judgments, fines and amounts reasonably incurred in connection
therewith. The Certificate provides that the right to indemnification includes
the right to be paid expenses incurred in defending any proceeding in advance of
its final disposition; provided, however, that such advance payment will only be
made upon delivery to the Registrant of an undertaking, by the director or
officer, to repay all amounts so advanced if it is ultimately determined that
such director or officer is not entitled to indemnification.
Section 145 of the DGCL permits a corporation to indemnify any
director or officer of the corporation against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding brought by reason of
the fact that such person is or was a director or officer of the corporation, if
such person acted in good faith and in a manner that he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal action or proceeding, if he or she had no
reason to believe his or her conduct was unlawful. In a derivative action,
(i.e., one brought by or on behalf of the corporation), indemnification may be
made only for expenses, actually and reasonably incurred by any director or
officer in connection with the defense or settlement of such an action or suit,
if such person acted in good faith and in a manner that he reasonably believed
to be in, or not opposed to, the best interests of the corporation, except that
no indemnification shall be made if such person shall have been adjudged to be
liable to the corporation, unless and only to the extent that the court in which
the action or suit was brought shall determine that the defendant is fairly and
reasonably entitled to indemnity for such expenses despite such adjudication of
liability.
Pursuant to Section 102(b)(7) of the DGCL, the Certificate
eliminates the liability of a director or the corporation or its shareholders
for monetary damages for such breach of fiduciary duty as a director, except for
liabilities arising (i) from any breach of the director's duty of loyalty to the
corporation or its shareholders, (ii) from acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the DGCL, or (iv) from any transaction from which the
director derived an improper personal benefit. The Registrant has obtained
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insurance policies insuring the directors and officers of the Registrant against
certain liabilities that they may incur in their capacity as directors and
officers.
Pursuant to the Agreement and Plan of Merger by and among the
Registrant and Gales Industries Incorporated, a wholly-owned subsidiary of the
Registrant ( the "Subsidiary"), dated as of January 13, 2006, the Registrant
agreed to fulfill and honor the obligations of Subsidiary which existed prior to
the merger to indemnify Subsidiary's present and former directors and officers.
The certificate of incorporation and by-laws of Subsidiary provide for the
indemnification and elimination of liability for monetary damages to the same
extent as set forth in Subsidiary's certificate of incorporation and by-laws and
such provision may not be amended, repealed or otherwise modified for a period
of six years after the merger in any manner that would adversely affect the
rights of the directors or officers of Subsidiary at the time of the completion
of the merger. The Registrant has agreed to guarantee the timely payment of all
funds owing by, and the timely performance of all obligations of Subsidiary
relating to these indemnification obligations.
Item 7. Exemption from Registration Claimed.
The issuance of the common shares to the selling shareholders was exempt
from the registration requirements of the Securities Act, under Section 4(2) of
such Securities Act.
Item 8. Exhibits.
The following exhibits are filed as part of or incorporated by reference
into this Registration Statement:
Exhibit Description
------- -----------
4.1 2005 Stock Incentive Plan of Gales Industries Incorporated,
incorporated by reference to Exhibit 10.14 of the Registrant's Form
8-K report, dated December 6, 2005.
5.1 Opinion of Eaton & Van Winkle LLP, counsel to the Registrant, as to
the validity of common shares being registered.
23.1 Consent of Independent Accountants Bildner & Giannasco LLP
23.2 Consent of Eaton & Van Winkle LLP (included in Exhibit 5.1)
23.3 Consent of Independent Accountants Goldstein Golub Kessler LLP
Item 9. 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. 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 (the "Securities Act"), each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed the initial bona fide
offering thereof.
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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 Sections 13(a) or 15(d)
of the Exchange Act that is incorporated by reference in this
registration statement shall be deemed to be a new registration
statement relating to the securities offered 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 foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1993, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on January 17,
2007.
GALES INDUSTRIES INCORPORATED
By: /s/ Michael Gales
----------------------------------
Name: Michael Gales
Title: Executive Chairman
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Capacities Date
/s/ Michael A. Gales Executive Chairman January 17, 2007
-------------------------
Michael A. Gales
/s/ Louis A. Giusto Vice Chairman, Chief Financial January 17, 2007
------------------------- Officer and Treasurer
Louis A. Giusto
/s/ Peter D. Rettaliata Director, President and Chief January 17, 2007
------------------------- Executive Officer
Peter D. Rettaliata
Director, Executive Vice January __, 2007
------------------------- President
Dario A. Peragallo
/s/ Seymour G. Siegel Director January 17, 2007
-------------------------
Seymour G. Siegel
/s/ Rounsevelle W. Schaum Director January 17, 2007
-------------------------
Rounsevelle W. Schaum
17
Director January __, 2007
-------------------------
Ira A. Hunt Jr.
/s/ Stephen M. Nagler Director, Secretary January 17, 2007
-------------------------
Stephen M. Nagler
Director January __, 2007
-------------------------
James A. Brown
THE PLAN
Pursuant to the requirements of the Securities Act of 1933, the trustee (or
other persons who administer the Plan) have duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
organized, in the City of Bay Shore, State of New York, on January 17, 2007.
2005 STOCK INCENTIVE PLAN OF GALES INDUSTRIES INCORPORATED
By: /s/ Michael A. Gales
----------------------------
Michael A. Gales
Executive Chairman
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