AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 23, 2005
REGISTRATION NO. 333-_________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PACIFIC ETHANOL, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 41-2170618
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3300 UNIVERSITY DRIVE, SUITE 201, CORAL SPRINGS, FLORIDA 33065
(Address of Principal Executive Offices) (Zip Code)
CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION
AND CONSULTING AGREEMENTS
(Full title of the plan)
BARRY SIEGEL
PACIFIC ETHANOL, INC.
3300 UNIVERSITY DRIVE, SUITE 201,
CORAL SPRINGS, FLORIDA 33065
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(Name and address of agent for service)
(954) 752-6161
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(Telephone number, including area code, of agent for service)
COPY TO:
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Lawrence Muenz, Esq.
Meritz & Muenz LLP
2021 O Street, N.W.
Washington, D.C. 20036
(202) 787-1964
CALCULATION OF REGISTRATION FEE
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PROPOSED
MAXIMUM OFFERING PROPOSED AMOUNT OF
AMOUNT TO BE PRICE PER SHARE MAXIMUM AGGREGATE REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED (1) OFFERING PRICE (1) FEE
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Common Stock, $.001 par value 600,000 shares $9.00 $5,400,000 $635.58
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(1) Calculated pursuant to Rules 457(c) and 457(h) on the basis of the
average of the high and low prices per share as reported for such
securities on the Nasdaq SmallCap Market on March 21, 2005.
EXPLANATORY NOTE
This registration statement covers (i) 400,000 shares of common stock,
$.001 par value per share, of Pacific Ethanol, Inc., that were issued under a
Confidentiality, Non-Competition, Non-Solicitation and Consulting Agreement
dated as of March 23, 2005, between Pacific Ethanol, Inc. and Barry Siegel, and
(ii) 200,000 shares of common stock, $.001 par value per share, of Pacific
Ethanol, Inc. that were issued under a Confidentiality, Non-Competition and
Non-Solicitation and Consulting Agreement dated as of March 23, 2005, between
Pacific Ethanol, Inc. and Philip Kart.
This registration statement contains two parts. Part I contains a
reoffer prospectus prepared in accordance with Part I of Form S-3 in accordance
with Instruction C of the General Instructions to Form S-8. Subject to the
volume limitations of Rule 144(e) of the Securities Act of 1933, the reoffer
prospectus may be used for reoffers or resales on a continuous or delayed basis
in the future of the 600,000 shares of common stock issued under the
above-described Agreements. Part II contains information required in this
registration statement under Part II of Form S-8.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I, Items 1
and 2 of Form S-8, will be sent or given to Mr. Barry Siegel and Mr. Philip Kart
in accordance with Form S-8 and Rule 428(b)(1) of the Securities Act. We will
furnish without charge to any person to whom information is required to be
delivered, upon written or oral request, a copy of each document incorporated by
reference in Item 3 of Part II of this Registration Statement, which documents
are incorporated by reference in the Section 10(a) prospectus, and any other
documents required to be delivered to them under Rule 428(b) of the Securities
Act. Requests should be directed to Pacific Ethanol, Inc., 3300 University
Drive, Suite 201, Coral Springs, Florida 33065, Attention: Secretary. Pacific
Ethanol's telephone number is (954) 752-6161. The reoffer prospectus follows
this paragraph.
PROSPECTUS
PACIFIC ETHANOL, INC.
600,000 Shares of Common Stock
The shares of Pacific Ethanol, Inc. common stock being offered under
this prospectus are being offered by Barry Siegel and Philip Kart for their own
accounts. Our common stock trades on the Nasdaq SmallCap Market under the symbol
"ACTY." On March 21, 2005, the high and low sale prices for a share of our
common stock were $9.50 and $8.50, respectively.
The mailing address and the telephone number of our principal executive
offices are 3300 University Drive, Suite 201, Coral Springs, Florida 33065 (954)
752-6161.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is March 23, 2005
TABLE OF CONTENTS
PAGE
SUMMARY................................................................. 1
RISK FACTORS............................................................ 5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS....................... 17
USE OF PROCEEDS......................................................... 17
SELLING SECURITY HOLDERS................................................ 17
PLAN OF DISTRIBUTION.................................................... 18
INDEMNIFICATION OF DIRECTORS AND OFFICERS............................... 20
EXPERTS................................................................. 20
LEGAL MATTERS........................................................... 20
TRANSFER AGENT AND REGISTRAR............................................ 20
WHERE YOU CAN FIND MORE INFORMATION..................................... 20
INCORPORATION OF DOCUMENTS BY REFERENCE................................. 21
ii
SUMMARY
This registration statement covers (i) 400,000 shares of common stock,
$.001 par value per share, of Pacific Ethanol, Inc. that were issued under a
Confidentiality, Non-Competition, Non-Solicitation and Consulting Agreement
dated as of March 23, 2005, between Pacific Ethanol, Inc. and Barry Siegel, and
(ii) 200,000 shares of common stock, $.001 par value per share, of Pacific
Ethanol, Inc. that were issued under a Confidentiality, Non-Competition and
Non-Solicitation and Consulting Agreement dated as of March 23, 2005, between
Pacific Ethanol, Inc. and Philip Kart.
The aggregate of 600,000 shares of common stock, $.001 par value per
share, issued to Messrs. Siegel and Kart have been issued in anticipation of,
and immediately prior to, the consummation of a certain share exchange
transaction pursuant to a certain Share Exchange Agreement dated as of May 14,
2004 and Amendments No. 1 through 5 thereto by and among Accessity Corp., a New
York Corporation and our predecessor (the "Accessity/PEI"), Pacific Ethanol
Inc., a California corporation ("PEI"), Kinergy Marketing, LLC, an Oregon
limited liability company ("Kinergy"), ReEnergy, LLC, a California limited
liability company ("ReEnergy"), each of the shareholders and holders of options
or warrants to acquire shares of common stock of PEI, and each of the limited
liability company members of each of ReEnergy and Kinergy. The transactions
contemplated under the Share Exchange Agreement are described below.
PROPOSED SHARE EXCHANGE TRANSACTION
PEI has entered into a Share Exchange Agreement dated as of May 14,
2004, as amended on July 30, 2004, October 1, 2004, January 7, 2005, February
16, 2005 and March 3, 2005 (collectively, the "Share Exchange Agreement"), with
Accessity/PEI, Kinergy and ReEnergy.
The Share Exchange Agreement provides that PEI, Kinergy and ReEnergy
will be acquired by Accessity/PEI pursuant to a share exchange transaction in
which the shareholders of PEI and the limited liability company members of
Kinergy and ReEnergy will exchange their ownership interests in such companies
for restricted shares of common stock of Accessity/PEI and holders of options
and warrants to acquire restricted shares of common stock of PEI will exchange
their options and warrants for warrants to acquire shares of common stock of
Accessity/PEI. This transaction is referred to as the "Share Exchange" and PEI,
Kinergy and ReEnergy are sometimes referred to as the "Acquired Companies." If
the Share Exchange is completed, each of PEI, Kinergy and ReEnergy will become a
wholly-owned subsidiary of Accessity/PEI. The shares of Accessity/PEI common
stock to be issued to the shareholders of PEI and limited liability company
members of Kinergy and ReEnergy are expected to represent approximately 90% of
the outstanding common stock of Accessity/PEI on a fully-diluted basis after the
consummation of the Share Exchange.
In the Share Exchange, PEI shareholders will have the right to receive
one share of Accessity/PEI common stock for each share of PEI common stock they
own, the sole limited liability company member of Kinergy will have the right to
receive 38,750 shares of Accessity/PEI common stock for each one percent (1%) of
outstanding limited liability company interest he owns, and the limited
liability company members of ReEnergy will have the right to receive 1,250
shares of Accessity/PEI common stock for each one percent (1%) of outstanding
limited liability company interest they own. In addition, the holders of options
and warrants to acquire shares of PEI common stock will receive warrants to
acquire an aggregate of 379,587 shares of Accessity/PEI common stock at exercise
prices ranging from $.0001 per share to $5.00 per share. Additionally, the
holders of PEI's convertible debt will receive the ability to convert such debt
into no more than 730,000 shares of Accessity/PEI common stock.
1
None of the shares of Accessity/PEI common stock issued to PEI
shareholders, Kinergy members or ReEnergy members in the Share Exchange will be
registered under the Securities Act.
In connection with the Share Exchange, the Board of Directors of
Accessity/PEI has approved the following:
o the transfer of DriverShield CRM Corp. ("DriverShield"), a
wholly-owned subsidiary of Accessity/PEI, to Barry Siegel, the
current Chairman of the Board, President and Chief Executive
Officer of Accessity/PEI, the issuance of up to 400,000 shares
of Accessity/PEI common stock to Barry Siegel and 200,000
shares of Accessity/PEI common stock to Philip Kart,
Accessity/PEI's current Chief Financial Officer and the
execution of a consulting and noncompetition agreement between
Accessity/PEI and each of Barry Siegel and Philip Kart
(collectively, the "Subsidiary Transfer"), in full
consideration for the agreement of each of Messrs. Siegel and
Kart to relinquish cash payments that otherwise would be due
to each of them under their respective employment agreements
with Accessity/PEI as a result of the consummation of the
Share Exchange;
o the sale of Sentaur Corp. ("Sentaur"), a wholly-owned
subsidiary of Accessity/PEI, to Barry Siegel for the sum of
$5,000 (the "Subsidiary Sale");
o the 2004 Stock Option Plan of Accessity/PEI; and
o the reincorporation of the Accessity Corp. in the State of
Delaware under the name "Pacific Ethanol, Inc." to occur
immediately prior to the consummation of the Share Exchange
(the "Delaware Reincorporation").
The Delaware Reincorporation has been effected through a merger of
Accessity Corp. with and into a wholly-owned Delaware subsidiary of Accessity
Corp. named Pacific Ethanol, Inc., which was formed for the purpose of effecting
the reincorporation (the "Delaware Reincorporation Subsidiary"). In connection
with the Delaware Reincorporation Accessity/PEI has succeeded to the rights,
properties and assets and assumed the liabilities of Accessity Corp., and its
financial statements will be substantially identical to Accessity Corp., the
only difference being those appropriate to reflect Accessity/PEI's new corporate
identity, the Share Exchange and the Subsidiary Transfer. This new company
(i.e., the Delaware Reincorporation Subsidiary named Pacific Ethanol, Inc.),
which combines the operations of the Acquired Companies, is referred to as the
"Combined Company."
Shareholder approval by the Accesity Corp. shareholders of the Share
Exchange and the matters described in this Summary was obtained on February 28,
2005.
PEI
PEI was formed under the laws of the State of California in January
2003. PEI has purchased a 137-acre parcel of real property in Madera County,
California on which it intends to construct an ethanol production facility and a
grain receiving, processing and storage facility anticipated to produce up to 35
million gallons of denatured ethanol and 290,000 tons of distillers grain
annually. The site already has 50,000 tons of grain storage, a fully automated
processing mill, and two existing rail loops that will allow PEI to cost
effectively receive corn from any region of the country for making ethanol.
Pacific AG Products, LLC ("PAP"), a subsidiary of PEI, holds the remaining 10%
limited liability company interests, intends to manage corn purchasing for the
ethanol plant and to market distillers grain, the main co-product of ethanol
manufacturing.
2
PEI plans to do the following:
o construct an ethanol plant in Madera County, California for
the production of up to 35 million gallons of ethanol per year
(and, if possible, construct an additional ethanol production
facility on real property located in Visalia, California with
respect to which it has an option to purchase);
o upon completion of construction of its ethanol production
facility, market and sell ethanol using the marketing services
of Kinergy Marketing, LLC primarily in the Central Valley
region of California to major and independent oil customers
who control the majority of all gasoline sales in California;
o through PAP, market and sell wet distillers grain ("DWG") to
dairy farmers in California;
o to the extent possible, sell carbon dioxide, another
co-product of ethanol manufacturing, to dry ice companies in
California; and
o as funds become available, make strategic acquisitions in the
ethanol refining and marketing industry.
The demand for ethanol in 2003 reached approximately 750 million
gallons statewide in California and PEI believes that the demand for ethanol
will continue to grow. PEI believes it will have a competitive advantage in the
Central Valley of California market because competing Midwest-sourced ethanol
must be "double-handled" to reach Central Valley distribution racks. In
addition, the San Joaquin Valley (located in the southern half of the Central
Valley) has over 1.3 million head of dairy cattle in an area less than 30,000
square miles, which should provide an excellent market for DWG, an important
protein source for dairy cows.
ACCESSITY/PEI
Accessity/PEI is a provider of medical billing recovery services
through its wholly-owned subsidiary, Sentaur, and, until January 2003, also was
a provider of management and processing services for new automobile claims and
repairs through its wholly-owned subsidiary, DriverShield. Effective January 2,
2003, Accessity/PEI transferred to ClaimsNet, Inc. all responsibility for such
management and processing services pursuant to a Strategic Partnership Agreement
by and among Accessity/PEI, DriverShield and ClaimsNet, Inc. Although
Accessity/PEI continues to provide medical billing recovery services through
Sentaur, if the Share Exchange is consummated, Accessity/PEI will transfer
DriverShield to Barry Siegel and sell Sentaur to Barry Siegel. As a result,
Accessity/PEI will no longer engage in either business but will thereafter
conduct the businesses of PEI, Kinergy and ReEnergy.
Accessity Corp., the predecessor entity to Accessity/PEI, was
incorporated in New York on June 28, 1985 under the name Priority Group, Inc.
and was originally engaged in the automotive fleet management business and
administration of automobile repairs for businesses, insurance companies and
members of affinity groups. Accessity/PEI files annual, quarterly and special
reports, proxy statements (including the Proxy Statement) and other information
with the SEC. Investors may inspect and copy such material at the public
reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Investors may also obtain copies of such material from
the SEC at prescribed rates by writing to the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington. D.C. 20549. Please call the SEC at
1-800-SEC-0330 for more information on the public reference rooms. Investors can
also find Accessity/PEI's SEC filings at the SEC's website at
HTTP://WWW.SEC.GOV, currently under the name of Accessity Corp.
3
KINERGY
Kinergy is in the business of marketing ethanol throughout the western
United States and providing related transportation, storage and delivery
services through third party service providers. Kinergy sells ethanol into
California, Arizona and Oregon and has extensive customer relationships
throughout the western United States. Kinergy generated approximately $35
million in revenues during the year ended December 31, 2003 and is expected to
generate approximately $80 million during 2004. Kinergy believes that by
combining its operations with the proposed operations of PEI, and the proposed
operations of ReEnergy, the Combined Company can become a leader in the
production and sale of ethanol in the State of California and other Western
states.
Kinergy was organized in Oregon in September 2000. Neil Koehler, the
Chief Executive Officer of PEI, is the sole manager and sole limited liability
company member of Kinergy.
REENERGY
ReEnergy intends to develop a large-scale ethanol plant in California.
To date, ReEnergy has had no significant operations, other than entering into an
Option Agreement dated as of July 30, 2003 with Kent Kaulfuss, a limited
liability company member of ReEnergy, and his wife with respect to the
acquisition of approximately 89.3 acres of real property located in Visalia,
California, with respect to which real property ReEnergy has granted to PEI an
option to purchase upon ReEnergy's purchase of same from Kent Kaulfuss and his
wife.
ReEnergy believes that by combining its operations with the proposed
operations of PEI, and the operations of Kinergy, the Combined Company can
become a leader in the production and sale of ethanol in the State of California
and other Western states.
ReEnergy was organized in California in March 2001.
STRATEGY OF THE COMBINED COMPANY
The primary goal of the Combined Company is to create a vertically
integrated marketing, distribution and production alternative fuels business
focused in the ethanol market, employing existing traditional production
techniques and concurrently exploring advanced processing methods, including
hydrogen fuel cells. The Combined Company will include the ethanol marketing and
distribution business of Kinergy that generated revenues of approximately $80
million during 2004.
PEI is currently in discussions with senior and mezzanine lenders to
obtain aggregate debt financing of approximately $48 million. PEI believes that
if it is successful in obtaining such debt financing on terms acceptable to PEI,
and closing the Share Exchange, the Combined Company will have sufficient
capital to construct an ethanol refinery at PEI's Madera County site.
4
RISK FACTORS
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE KNOWN
AND UNKNOWN RISKS AND UNCERTAINTIES. THE ACTUAL RESULTS OF THE COMBINED COMPANY
MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS. YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW AND
ELSEWHERE IN THIS PROSPECTUS IN MAKING AN INVESTMENT DECISION.
RISKS RELATING TO THE SHARE EXCHANGE
MANAGEMENT OF THE COMBINED COMPANY MAY NOT BE SUCCESSFUL IN INTEGRATING THE
BUSINESSES OF PEI, KINERGY AND REENERGY, WHICH COULD HARM THE BUSINESS OF THE
COMBINED COMPANY.
Upon consummation of the Share Exchange, the current businesses of
Accessity/PEI will no longer be conducted by Accessity/PEI. Rather, only the
businesses conducted by PEI, Kinergy and ReEnergy will be conducted by the
Combined Company after consummation of the Share Exchange. Integrating the
respective businesses of PEI, Kinergy and ReEnergy will be complex,
time-consuming and expensive, and management of the Acquired Companies may not
successfully integrate the respective businesses of the Acquired Companies under
Accessity, which would harm the operations of the Combined Company.
Before the Share Exchange, each of PEI, Kinergy and ReEnergy operated
independently, each with its own business, culture, clients, employees and
systems. After the Share Exchange, PEI, Kinergy and ReEnergy must operate as a
combined organization under the Combined Company, utilizing common information
and communication systems, operating procedures, financial controls and human
resource practices, including benefit, training and professional development
programs. There may be substantial difficulties, costs and delays involved in
integrating PEI, Kinergy and ReEnergy. These include:
o diversion of management resources from the business of the
Combined Company;
o potential incompatibility of business cultures;
o perceived adverse change in client service standards, business
focus, billing practices, or service offerings available to
clients;
o perceived uncertainty in career opportunities, benefits and
the long-term value of stock options available to employees;
o costs and delays in implementing common systems and
procedures; and
o potential inefficiencies in delivering services to the clients
of the Combined Company.
Any one or all of these factors may cause increased operating costs,
lower than anticipated financial performance or the loss of customers and
employees. Many of these factors are outside the control of any of the Acquired
Companies or Accessity.
THE CHANGE IN BUSINESS OF ACCESSITY/PEI MAY RESULT IN A LOWER STOCK PRICE OF THE
COMBINED COMPANY.
5
Many shareholders of Accessity/PEI have invested in Accessity/PEI based
on the businesses conducted by Accessity/PEI. Following the Share Exchange, the
current businesses of Accessity/PEI will no longer be conducted by the Combined
Company and only the businesses conducted by PEI, Kinergy and ReEnergy will be
conducted by the Combined Company. Investors may be apprehensive in regard to
the conduct of the businesses of PEI, Kinergy and ReEnergy under the Combined
Company and the prospects of success for the Combined Company, which may cause
investors to sell their shares of Accessity/PEI common stock. If Accessity/PEI
shareholders sell their shares of Accessity/PEI common stock, the stock price of
Accessity/PEI common stock may fall significantly.
THE EXERCISE OF REGISTRATION RIGHTS BY FORMER PEI SHAREHOLDERS AND WARRANT
HOLDERS MAY RESULT IN A LOWER STOCK PRICE OF THE COMBINED COMPANY.
Holders of at least 8,252,200 shares of common stock of the Combined
Company and holders of warrants to purchase approximately 2,800,000 shares of
common stock, who were holders of shares of common stock and warrants to
purchase common stock, respectively, of PEI prior to the consummation of the
Share Exchange, will have certain rights to require the Combined Company to
register the shares of common stock of the Combined Company held by them for
resale pursuant to a registration statement filed under the Securities Act
Exchange of 1933 (the "Securities Act"), with the SEC. If and when a
registration statement covering these shares of common stock is declared
effective, holders of these shares may freely sell such shares of common stock
of the Combined Company. This may cause the stock price of the Combined Company
to fall significantly.
THE RIGHTS OF PEI SHAREHOLDERS AND KINERGY AND REENERGY MEMBERS WILL CHANGE
AFTER THE SHARE EXCHANGE.
Following the Share Exchange, PEI shareholders and the Kinergy and
ReEnergy limited liability company members will become shareholders of the
Combined Company. There are important differences between the rights of
shareholders of the Combined Company and the rights of shareholders in PEI and
important differences between the rights of shareholders of the Combined Company
and the rights of the Kinergy and ReEnergy limited liability company members.
NO ASSURANCE CAN BE GIVEN THAT AN ACTIVE MARKET FOR SHARES OF COMMON STOCK OF
THE COMBINED COMPANY WILL DEVELOP OR, IF IT DOES DEVELOP, WILL BE MAINTAINED IN
THE FUTURE. IF AN ACTIVE MARKET DOES NOT DEVELOP, INVESTORS MAY NOT BE ABLE TO
READILY SELL THEIR SHARES OF ACCESSITY COMMON STOCK.
Since the commencement of trading of Accessity/PEI's common stock on
The Nasdaq SmallCap Market, there has been limited trading in shares of
Accessity/PEI common stock, at widely varying prices. No assurance can be given
that an active market for shares of common stock of the Combined Company will be
established or maintained in the future, whether as a result of the Share
Exchange or otherwise. If an active market is not established or maintained,
investors may not be able to readily sell their shares of common stock of the
Combined Company.
RISKS RELATING TO THE BUSINESS OF PEI
PEI HAS NO HISTORY OF OPERATIONS AND HAS BEEN UNPROFITABLE TO DATE, WHICH MAY
ADVERSELY IMPACT PEI'S BUSINESS AND ITS SHAREHOLDERS.
PEI has to date not conducted any significant business operations,
other than the acquisition of real property located in Madera County, California
on which it intends to construct an ethanol production facility and an option to
acquire additional real property located in Visalia, California on which it may
construct an additional ethanol production facility. In addition, although PEI
has commenced discussions with several potential acquisition targets, no
assurance can be given that PEI will be successful in making any acquisitions.
Accordingly, there is no prior operating history by which to evaluate the
likelihood of PEI's profitability or success and no assurances can be given that
6
PEI will ever complete construction of an ethanol production facility or acquire
an ethanol production or marketing company or, if PEI completes construction of
an ethanol production facility or acquires an ethanol production or marketing
company, that PEI will ever be profitable or successful. PAP, PEI's subsidiary,
generated approximately $1 million in revenues for the year ended December 31,
2003 from the sale of grain purchased with the facility and minor transloading
operations. PAP intends to manage corn procurement for the ethanol plant and
market DWG, the main co-product of ethanol manufacturing. However, there can be
no assurance that PAP will be able to expand its feed business or continue to
generate revenues at current levels or at all.
PEI's recurring losses from operations and accumulated deficit, among
other factors, raised doubt about PEI's ability to continue as a going concern
and led PEI's independent certified public accountants to include an explanatory
paragraph related to PEI's ability to continue as a going concern in their
report for the year ended December 31, 2003. Reports of independent auditors
questioning a company's ability to continue as a going concern generally are
viewed unfavorably by analysts and investors. This report may make it difficult
for the Combined Company to raise additional debt or equity financing to the
extent needed for its continued operations or for planned expansion,
particularly if the Combined Company is unable to attain and maintain profitable
operations in the future. Consequently, future losses may have a material
adverse effect on PEI's business, prospects, financial condition, results of
operations and cash flows.
ADDITIONAL DEBT FINANCING IS REQUIRED IN ORDER FOR PEI TO CONSTRUCT AN ETHANOL
PRODUCTION FACILITY. FAILURE TO OBTAIN THIS ADDITIONAL FINANCING WOULD ADVERSELY
AFFECT THE BUSINESS OF THE COMBINED COMPANY.
PEI will need to obtain additional debt financing in an aggregate
amount of up to $48 million from one or more sources in order to be able to
construct an ethanol production facility on the 137-acre parcel of real property
located in Madera County, California owned by PEI. PEI has been negotiating with
several sources of such additional financing, but to date PEI has not obtained
any commitment or entered into any agreement with respect to any debt financing.
Accordingly, there can be no assurance that PEI will be able to obtain any such
debt financing or, if it is able to obtain such financing, that such financing
will be obtained on terms that are reasonably satisfactory to PEI or in an
amount or amounts that will enable PEI to complete construction of the ethanol
production facility. Failure to obtain this additional financing at such times
and in such amounts as are necessary to enable PEI to timely complete
construction of the ethanol production facility would adversely affect the
operations and business of PEI and, therefore, would adversely affect the
consolidated results of operations of the Combined Company.
IF PEI IS UNABLE TO SUCCESSFULLY IDENTIFY OR MAKE STRATEGIC ACQUISITIONS OR
ALLIANCES, ITS LONG-TERM COMPETITIVE POSITIONING MAY SUFFER.
PEI's business strategy includes growth through acquisitions that it
believes will improve its competitive capabilities or provide additional market
penetration or business opportunities in areas that are consistent with its
overall business plan. Identifying and pursuing strategic acquisition and
integrating acquired businesses requires a significant amount of management time
and skill. Acquisitions may also require PEI to expend a substantial amount of
cash or other resources. If PEI is unable to make strategic acquisitions due to
its inability to identify appropriate targets, to raise the necessary funds, or
to manage the difficulties or costs involved in the acquisitions, its long-term
competitive positioning could suffer.
7
PEI'S LACK OF DIVERSIFICATION COULD ADVERSELY AFFECT ITS BUSINESS.
It is anticipated that PEI's business will be that of the production
and marketing of ethanol and its by-products, such as DWG and carbon dioxide.
PEI will not have any other lines of business or other sources of revenue.
Accordingly, if PEI is unable to complete construction of an ethanol production
facility or if PEI is unable to market ethanol and its by-products, PEI's
business would be adversely affected.
THE EXISTENCE OF GOVERNMENTAL REGULATIONS COULD ADVERSELY AFFECT PEI'S BUSINESS.
PEI's business is subject to extensive regulation by federal, state and
local governmental agencies. PEI cannot predict in what manner or to what extent
such regulation will harm or help its business or the ethanol production and
marketing industry in general. For example, the State of California has
requested a waiver from the federal Environmental Protection Agency, or EPA, to
reduce the amount of ethanol required in gasoline, which would boost supplies of
ethanol in California and potentially lower demand for ethanol, which would
cause the price of ethanol to decline. In addition, officials in the State of
California, including officials from the California Air Resources Board, have
argued to the EPA that ethanol is a volatile fuel that evaporates easily and
contributes to smog by increasing ozone levels and adding particulate matter to
the air. If the EPA grants the requested waiver, refineries would no longer be
required to blend ethanol into gasoline, which would adversely affect PEI's
business. Previously, California refiners used MTBE, another oxygenate, which
was banned by former Governor Gray Davis for contaminating groundwater and was
completely phased out in January 2004. If the State of California were to ban
the use of ethanol as an oxygenate in gasoline, PEI's business would be
adversely affected.
The fuel ethanol business depends upon tax incentive policies and
environmental regulations that favor the use of ethanol in motor fuel blends in
the United States. Currently, a gasoline marketer that sells gasoline without
ethanol must pay a federal tax of $0.18 per gallon compared to $0.13 per gallon
for gasoline that is blended with 10% ethanol. Smaller credits are available for
gasoline blended with lesser percentages of ethanol. The repeal or substantial
modification of the federal excise tax, or FET, exemption for ethanol-blended
gasoline or, to a lesser extent, other federal or state policies and regulations
that encourage the use of ethanol could have a detrimental effect on the ethanol
industry and adversely affect PEI's business and results of operation. Changes
in gasoline specifications could increase PEI's costs of ethanol production and
would adversely affect PEI's business, financial condition and results of
operation.
PEI'S BUSINESS MAY BE ADVERSELY AFFECTED IF IT IS UNABLE TO COMPLY WITH
GOVERNMENTAL REGULATIONS.
The production and sale of ethanol is subject to regulation by agencies
of the federal government, including but not limited to the EPA, as well as
other agencies in each jurisdiction in which ethanol is produced, sold, stored,
or transported. PEI will be subject to extensive air, water and other
environmental regulation, and PEI will need to obtain a number of additional
environmental permits to construct and operate its ethanol production facility.
Ethanol production involves the emission of various airborne pollutants,
including particulates, carbon monoxide, oxides of nitrogen and volatile organic
compounds. As a result, PEI will need to obtain an air quality permit from the
California Air Quality Management District and/or the San Joaquin Valley Air
Pollution Control District. PEI may also be required to obtain various other
water-related permits, such as a storm-water discharge permit, a water
withdrawal permit, public water supply permit, and a water discharge permit. If
for any reason PEI is unable to obtain any of such permits, construction costs
for the ethanol production facility may increase or the facility may not be
constructed at all. It is also likely that operations at the facility will be
governed by the federal Occupational Safety and Health Administration, or OSHA.
Compliance with such regulations may be time-consuming and expensive and may
delay or even prevent sales in California or in other states. In addition, such
laws and regulations are subject to change, which changes can be made
retroactively. Failure to comply with federal or state regulations or the
applicable regulations of any foreign jurisdiction in which PEI produces, sells,
stores, transports or delivers ethanol could adversely affect PEI's business,
financial condition and operations.
8
PEI'S DEPENDENCE ON W. M. LYLES CO. MAY ADVERSELY AFFECT ITS BUSINESS.
PEI will be highly dependent upon W. M. Lyles Co. to design and build
the ethanol production facility. PEI has entered into a Standard Form of
Design-Build Agreement and General Conditions Between Owner and Design-Builder
with W. M. Lyles Co. (as amended, the "Construction Agreement"). The
Construction Agreement contains a number of provisions that are favorable to W.
M. Lyles Co. and unfavorable to PEI. The Construction Agreement also includes a
provision that requires PEI to pay a termination fee of $5 million to W. M.
Lyles Co. if PEI terminates the Construction Agreement, in addition to payment
of all costs of W. M. Lyles Co. for services rendered through the date of
termination. Consequently, if the Construction Agreement is terminated by PEI,
the requirement of PEI to pay such termination fee would adversely affect PEI's
business, financial condition and results of operations.
If W. M. Lyles Co. has entered into or enters into a construction
contract with one or more other parties, it may be under pressure to complete
another project or projects in order to avoid operation of a consequential
damage clause or liquidated damage clause in such contract and may prioritize
the completion of another project or projects ahead of PEI's facility. As a
result, PEI's ability to sell ethanol products would be delayed and would
adversely affect PEI's business, financial condition and results of operations.
CONSTRUCTION RISKS MAY ADVERSELY AFFECT PEI'S BUSINESS.
Though PEI believes that W. M. Lyles Co. has the expertise and track
record to construct and deliver the ethanol production facility in a fully
functional state, there is no assurance that delays in construction or defects
in materials and/or workmanship will not occur. Though PEI expects W. M. Lyles
Co. to correct all defects in material or workmanship, material defects in
material or workmanship may still occur. Such defects could cause PEI to delay
the commencement of operations of the facility, or, if such defects are
discovered after operations have commenced, to halt or discontinue operation of
the facility. In addition, construction projects often involve delays in
obtaining permits, or encounter construction delays due to weather conditions,
fire, provision of materials or labor or other events that delay the
construction schedule. PEI experienced a fire at the Madera County, California
site during the first quarter of 2004 that the expenditure of funds to repair
areas and equipment damaged by the fire. Accordingly, any such event may
adversely affect PEI's business, financial condition and results of operations.
Although PEI has selected the Madera County site for construction of
the ethanol production facility after inspection of the site, there can be no
assurance that PEI will not encounter hazardous conditions at the site.
Accordingly, PEI may encounter conditions at the site that may delay
construction of the facility. Upon encountering a hazardous condition at the
site, work may be suspended and PEI may be required to correct the condition
prior to continuing construction. The presence of a hazardous condition would
likely delay construction of the facility and may require significant
expenditure of resources to correct the condition. In addition, it is
anticipated that W. M. Lyles Co. would be entitled to an adjustment in price and
time of performance if it has been adversely affected by the hazardous
condition. If PEI encounters any hazardous conditions during construction, such
event may adversely affect PEI's business, financial condition and results of
operations.
9
AN INDUSTRY SHIFT AWAY FROM ETHANOL WOULD ADVERSELY AFFECT PEI'S BUSINESS.
PEI's revenue will be derived primarily from sales of ethanol.
Currently, the predominant oxygenate used to blend with gasoline is ethanol.
Ethanol competes with several other existing products and other alternative
products could also be developed for use as fuel additives. An industry shift
away from ethanol or the emergence of new competing products may reduce the
demand for ethanol products and adversely affect PEI's business.
IF PEI DOES NOT COMPETE EFFECTIVELY IN THE ETHANOL PRODUCTION INDUSTRY, ITS
BUSINESS WILL BE ADVERSELY AFFECTED.
The ethanol production industry is highly competitive. PEI faces
substantial competition from established companies, many of which are larger
companies, such as Archer Daniels Midland Corporation, or ADM, and Cargill, that
have greater financial, engineering and production resources than PEI and have
larger service organizations and long-standing customer relationships. PEI will
face competition for capital, labor, management, raw materials and other
resources from such companies and from the major oil companies, many of whom are
potential customers of PEI. PEI expects it may face additional competition from
new entrants into the ethanol production and sale industry and from existing and
new competitors utilizing new technologies and processes. PEI may not have
sufficient resources to continue to make investments in research and
development. Even if sufficient funds are available, PEI may not be able to make
the technological advances necessary to maintain competitive advantages. PEI's
competitors can be expected to continue to improve the technologies and
processes used in the manufacture of ethanol and to develop alternative fuels,
gasoline oxygenates and other products which will increase the competitive
price/performance characteristics of ethanol and which could even replace
ethanol as the preferred gasoline oxygenate. PEI anticipates that, as additional
ethanol plants are constructed and brought on line, the supply of ethanol will
increase. The absence of increased demand and other competitive pressures may
necessitate price reductions, which could adversely affect PEI's financial
condition and results of operations. Accordingly, there is no assurance that PEI
will be able to compete successfully or that such competition will not adversely
affect on PEI's business, financial condition and results of operations.
RAW MATERIALS AND SUPPLIES TO PRODUCE ETHANOL MAY BE UNAVAILABLE OR MAY INCREASE
IN PRICE WHICH, IN TURN, MAY ADVERSELY AFFECT PEI'S BUSINESS.
The production of ethanol requires a significant amount of raw
materials and supplies, primarily corn, natural gas, electricity and water. The
failure of PEI to be able to obtain sufficient quantities of such raw materials
or supplies when needed by PEI could adversely affect PEI's business and results
of operations. In particular, PEI's planned Madera County production facility
will require approximately 12.5 million bushels or more of corn each year and,
accordingly, PEI's financial condition and results of operation will be
significantly affected by the cost and supply of corn. Because corn is not in
large supply near PEI's facility in Madera County, a significant amount of corn
will need to be sourced from the Midwest. Although PEI intends to implement
various hedging and contracting techniques in order to reduce the risk of corn
price fluctuations, PEI may not be able to anticipate increases in the price of
corn. Generally, higher corn prices will produce lower profit margins (or even
losses). The price of corn has fluctuated significantly in the past and may
fluctuate significantly in the future. If PEI is not able to pass any such price
increases on to its customers, such price increases could adversely affect PEI's
business, financial condition and results of operation. In addition, droughts,
severe winter weather in the Midwest, and other problems can causes delays or
interruptions of various durations in the delivery of corn to California and
reduce corn supplies. Any such delays or interruptions or reductions in corn
supplied could adversely affect PEI's business and results of operations.
10
In an attempt to minimize the effects of the volatility of corn costs
on operating profits, PEI will likely take hedging positions in corn futures
markets. Hedging means protecting the price at which PEI buys corn and the price
at which PEI will sell its products in the future. It is a way to attempt to
reduce the risk caused by price fluctuation. The effectiveness of such hedging
activities is dependent upon, among other things, the cost of corn and PEI's
ability to sell sufficient amounts of ethanol and DWG. Although PEI will attempt
to link hedging activities to sales plans and pricing activities, such hedging
activities can themselves result in costs because price movements in corn
contracts are highly volatile and are influenced by many factors that are beyond
PEI's control. PEI's purchasing and hedging activities may or may not lower its
price of corn, and in a period of declining corn prices, these purchase and
hedging strategies may result in PEI paying a higher price for corn than its
competitors pay. Accordingly, PEI may incur significant costs from its
purchasing and hedging strategies, which could adversely affect PEI's business,
financial condition and results of operation. In addition, there can be no
assurance that PEI will be able to enter into definitive agreements with any
corn producers to provide corn to PEI's ethanol production facility or that the
terms of such agreements will be acceptable to PEI.
In addition to corn, the ethanol production facility will require a
significant and uninterrupted supply of water, electricity and natural gas to
operate. Although PEI intends to enter into agreements with local gas,
electricity and water utilities to provide required amounts of energy and water,
there can be no assurance that those utilities will be able to reliably supply
the water, electricity and gas that the facility will need or will supply such
resources on terms that are acceptable to PEI. In addition, if there is an
interruption in the supply of energy or water for any reason, PEI may be
required to halt ethanol production. If production is halted for an extended
period of time, it may adversely affect PEI's business, financial condition and
results of operation. As with corn prices, the price of natural gas and
electricity has fluctuated significantly in the past and may fluctuate
significantly in the future. If PEI is not able to pass any such price increases
on to its customers, such price increases could also adversely affect PEI's
business, financial condition and results of operations.
BECAUSE THE MARKET PRICE OF ETHANOL IS VOLATILE AND SUBJECT TO SIGNIFICANT
FLUCTUATION, PEI'S RESULTS OF OPERATIONS MAY FLUCTUATE SIGNIFICANTLY.
The market price of ethanol is dependent on the price of gasoline,
which is in turn dependent on the price of petroleum. Petroleum prices are
highly volatile and difficult to forecast due to daily changes on the
geo-political front and in the world economy. The distribution of petroleum
throughout the world is affected by incidents in unstable political
environments, such as Iraq, Iran, Kuwait, Saudi Arabia and other countries.
Because of the industrialized world's critical dependence upon oil from such
areas, any disruption or other reduction in supply can cause the price of oil
(and gasoline) to fluctuate significantly. PEI cannot predict the price of oil
or gasoline from time to time and may establish unprofitable prices for the sale
of its ethanol due to significant fluctuations in market price. Such failure to
price its ethanol consistently in a manner that is profitable to PEI could
adversely affect PEI's business, financial conditions and results of operations.
PEI believes that ethanol production is expanding rapidly at this time.
There are a number of new plants under construction and planned for
construction, both inside and outside California. PEI expects existing ethanol
plants to expand by increasing production. However, no assurance can be provided
that there will be any material or significant increases in the demand for
ethanol. Increased production of ethanol may lead to lower prices. The increased
production of ethanol could have other adverse effects as well. For example, the
increased production could lead to increased supplies of co-products from the
production of ethanol, such as DWG. Those increased supplies could lead to lower
prices for those co-products. Also, the increased production of ethanol could
result in increased demand for corn. This could result in higher prices for corn
and corn production, creating lower profits. There can be no assurance as to the
price of ethanol or DWG in the future. Any material adverse change affecting the
price of ethanol and/or DWG may adversely affect PEI's business, financial
condition and results of operations.
11
In addition to those factors described above, many other factors may
influence PEI's results of operations in any particular quarter. These include:
o volume and timing of the receipt of orders for ethanol from
major customers;
o competitive pricing pressures;
o ability to produce ethanol on a cost-effective and timely
basis;
o inability to obtain construction, capital equipment and/or
working capital financing;
o the introduction and announcement of new products and
processes by PEI's competitors; and
o changing conditions in the ethanol and fuel markets.
Furthermore, PEI believes that economic conditions in the United States
could have a negative impact on PEI's results of operations. Accordingly, PEI's
results of operations could be subject to significant quarterly variation.
BECAUSE PEI EXPECTS THAT SALES OF ETHANOL WILL BE MADE TO A LIMITED NUMBER OF
PURCHASERS, PEI WILL BE SUBJECTED TO SIGNIFICANT PAYMENT RISKS.
Upon completion of construction of its ethanol production facility, PEI
intends to market and sell ethanol using the marketing services of Kinergy
primarily in the Central Valley region of California to major and independent
oil customers who control the majority of all gasoline sales in California. With
such a limited number of large purchasers, the risk that a large customer could
fail to make payments for ethanol purchases when due, or at all, is significant.
Although PEI intends to establish payment terms of less than net ten days with
its customers, the failure of any large customer to make any payment for
purchases when due, or at all, would adversely affect PEI's business, financial
condition and results of operations.
THE FAILURE TO RETAIN OR ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT PEI.
The future success of PEI is dependent, in part, on its ability to
retain certain key personnel. PEI is presently, and is likely for some time to
continue to be, dependent upon its founding members. PEI currently has few
employees, and PEI's founders and initial directors will therefore be
instrumental to PEI's success. It is possible that one or more of PEI's founding
members and/or initial directors may later become unable to serve, and PEI may
be unable to recruit and retain suitable replacements. PEI currently does not
maintain key employee life insurance for any of its founding members and/or
initial directors. Accordingly, PEI's dependence on its founding members and
initial directors may adversely affect PEI's business, results of operations,
and financial condition. PEI also needs to attract additional skilled technical,
clerical, sales and managerial personnel in all areas of its business to
continue to grow. The competition for such individuals in the growing ethanol
production and marketing industry is intense. There can be no assurance that PEI
will be able to retain its existing personnel or attract additional qualified
employees in the future.
12
In particular, PEI is dependent upon its relationship with Neil
Koehler, its Chief Executive Officer. Mr. Koehler has considerable experience in
the construction, start-up and operation of an ethanol production facility. Any
loss of PEI's relationship with Mr. Koehler, particularly during the
construction and start-up period for the ethanol production facility, may
adversely affect PEI's business, results of operations, and financial condition.
PEI'S EXPANSION PLANS MAY ADVERSELY AFFECT ITS FUTURE PROFITABILITY.
PEI intends to expand its ethanol production facilities to include
operations on an 89.3-acre parcel of real property in Visalia, California for
which PEI has an option to purchase, and to also expand its sales and marketing
efforts. Such expansion will necessitate increased expenditures by PEI, which
will be funded through additional capital raises. Such funding or expansion may
not occur. If such funding and expansion do occur, they may not result in
increased revenues or profitability.
FAILURE BY PEI TO MANAGE ITS GROWTH EFFECTIVELY COULD ADVERSELY AFFECT ITS
BUSINESS.
Any expansion plans that PEI may choose to implement may place a
significant strain on its personnel and management resources and financial and
management control systems. Personnel, management resources and PEI's management
and financial control systems may not be adequate to address future expansion of
PEI's business and operations. Failure by PEI to maintain adequate personnel and
management resources or to upgrade its operating, management and financial
control systems, or any difficulties encountered during such upgrades, could
adversely affect PEI's business. The success of PEI's expansion plans will
depend in part on its ability to expand its personnel and management resources
and to improve its management and financial control systems. PEI may not be
successful in any of these regards.
RISKS RELATING TO THE BUSINESS OF KINERGY
KINERGY'S EXPANSION PLANS MAY ADVERSELY AFFECT ITS FUTURE PROFITABILITY.
Kinergy intends to expand the ethanol marketing services it offers and
to expand its operations and sales and marketing efforts, particularly after
construction of the ethanol production facility by PEI has been completed and
Kinergy begins to provide marketing services for the ethanol production by the
facility. Such expansion will necessitate increased expenditures by Kinergy,
which is anticipated to be funded out of cash flow from operations and/or from
advances obtained under the $2 million business line of credit that Kinergy has
established with Comerica Bank. Expansion may not occur. If expansion does
occur, expansion may not result in increased revenues or profitability. If cash
flow from operations and/or borrowing under Kinergy's business line of credit is
insufficient to cover the increased costs resulting from expansion, Kinergy may
sustain losses, which would adversely affect Kinergy's business, financial
condition and results of operations.
FAILURE BY KINERGY TO MANAGE ITS GROWTH EFFECTIVELY COULD ADVERSELY AFFECT ITS
BUSINESS.
Although part of Kinergy's expansion plans is to grow through
appropriate acquisitions of technologies and/or industry service providers as
and if acquisitions become feasible, there can be no assurance that Kinergy will
ever become positioned to undertake any acquisitions. Kinergy's current
expansion plans may place a significant strain on its personnel and management
resources and financial and management control systems. Personnel, management
resources and Kinergy's management and financial control systems may not be
adequate to address future expansion of Kinergy's business and operations.
Failure by Kinergy to maintain adequate personnel and management resources or to
upgrade its operating, management and financial control systems, or any
difficulties encountered during such upgrades, could adversely affect Kinergy's
business. The success of Kinergy's expansion plans will depend in part on its
ability to expand its personnel and management resources and to improve its
management and financial control systems. Kinergy may not be successful in any
of these regards.
13
KINERGY'S DEPENDENCE ON LIMITED SOURCES OF SUPPLY MAY ADVERSELY AFFECT ITS
BUSINESS AND OPERATIONS.
Ethanol products are available only from limited sources. Although
Kinergy generally buys ethanol under short-term (6-month) purchase orders and
contracts and does not have long-term agreements with its suppliers, Kinergy
relies on only approximately up to nine suppliers to satisfy its ethanol
requirements. Four of these suppliers accounted for over 90% of Kinergy's
purchases of ethanol during the fiscal year ended December 31, 2003. Although
alternate suppliers are believed to be available for ethanol, the process of
qualifying replacement ethanol suppliers, replacing orders and receiving ethanol
supplies from a new vendor could take six months or more. If the supply of
ethanol products were interrupted for any reason, Kinergy may not be able to
establish alternative sources of supply of ethanol products without substantial
disruption to Kinergy's business, financial condition and operations. In
addition, any significant increase in ethanol prices or a decrease in ethanol
availability could have a material adverse effect on Kinergy's business,
financial condition and results of operations.
BECAUSE KINERGY EXPECTS THAT SALES OF ETHANOL WILL CONTINUE TO BE TO A LIMITED
NUMBER OF PURCHASERS, KINERGY WILL BE SUBJECTED TO SIGNIFICANT PAYMENT RISKS.
Kinergy markets and sells ethanol primarily in the Central Valley
region of California to large oil customers who control the majority of all
gasoline sales in California. During the fiscal year ended December 31, 2003,
Kinergy purchased and resold an aggregate of approximately 26 million gallons of
fuel grade ethanol to approximately 20 customers. Sales to five of Kinergy's
customers accounted for 67% and 59% of revenue for the year ended December 31,
2003 and for the nine months ended September 30, 2004, respectively. With such a
limited number of large purchasers, the risk that a large customer could cease
purchasing ethanol from Kinergy or fail to make payments for ethanol purchases
when due, or at all, is significant. Although Kinergy has established payment
terms of less than net ten days with its customers, the failure of any large
customer to continue to purchase ethanol from Kinergy or to make any payment for
purchases when due, or at all, would adversely affect Kinergy's business,
financial condition and results of operations.
KINERGY MAY NOT BE SUCCESSFUL IF ADDITIONAL FUNDING IS UNAVAILABLE.
If Kinergy's capital requirements or revenue vary materially from
current plans or if unforeseen circumstances occur, Kinergy may require
additional financing. Additional financing may not be available on a timely
basis, in sufficient amounts or on terms acceptable to Kinergy and/or Combined
Company. Any debt financing or other financing of securities senior to common
stock will likely include financial and other covenants that will restrict
Kinergy's and the Combined Company's flexibility.
KINERGY'S BUSINESS MAY BE ADVERSELY AFFECTED IF IT IS UNABLE TO COMPLY WITH
GOVERNMENTAL REGULATIONS.
The production and marketing of ethanol is subject to regulation by
agencies of the federal government, as well as other agencies in the State of
California and in each other jurisdiction in which ethanol products are sold or
used. Compliance with such regulations may be time-consuming and expensive and
may delay or even prevent sales in California or in particular jurisdictions.
Failure to comply with federal or state regulations or the applicable
regulations of any foreign jurisdiction in which Kinergy's products are sold or
used could adversely affect Kinergy's business. See "Risks Relating to the
Business of PEI--Governmental regulation could adversely affect PEI's business"
and "--PEI's business may be adversely affected if it is unable to comply with
governmental regulations."
14
THE FUTURE PERFORMANCE OF KINERGY DEPENDS IN PART ON FUTURE GROWTH IN THE
ETHANOL FUEL MARKETS.
The failure of the ethanol fuel markets to grow as anticipated would
harm Kinergy's business, financial condition and results of operation. Kinergy's
sales of ethanol may also be adversely affected by the overall health of the
United States economy. A downturn or slowdown in economic conditions in the
United States could result in customers failing to place orders for ethanol,
which would adversely affect Kinergy's business.
AN INDUSTRY SHIFT AWAY FROM ETHANOL WOULD HARM KINERGY'S BUSINESS.
Kinergy's revenue is and will continue to be derived primarily from
sales of ethanol. Currently, the predominant oxygenate used to blend with
gasoline is ethanol. Ethanol competes with several other existing products and
other alternative products could also be developed for use as fuel additives. In
addition, some studies, including a study conducted at the University of
California, Berkeley in 2003, suggest that producing ethanol from corn requires
burning as much as twice the amount of gasoline already used in cars, thereby
harming the environment more than pure gasoline. Although Kinergy intends to
become involved with renewable fuels as a broader industry, including possibly
biodiesel and other fuel blends with renewable components and related
technologies, such as ethanol reformers for fuel cells, Kinergy will be
completely focused on the marketing of ethanol for the foreseeable future and
there can be no assurance that Kinergy will be able to expand into such areas.
Accordingly, an industry shift away from ethanol or the emergence of new
competing products may reduce the demand for ethanol products and adversely
affect Kinergy's business.
KINERGY MAY NOT BE SUCCESSFUL IF IT IS UNABLE TO COMPETE EFFECTIVELY.
The ethanol marketing industry is highly competitive. Kinergy expects
new competitors to enter into its markets. Some or all of Kinergy's current and
future competitors have or may have significantly greater financial, technical,
manufacturing and marketing resources than Kinergy. Kinergy's ability to compete
in the market depends on a number of factors. These factors include:
o price;
o product distribution abilities; and
o general economic conditions.
Kinergy competes in the ethanol re-marketing industry mainly on the
basis of price and delivery performance. Kinergy believes that price competition
will increase in the future. A key marketing strategy of Kinergy is to provide
ethanol products at a competitive price. However, Kinergy may not continue to
perform at levels expected by customers or be priced competitively.
THE FAILURE TO RETAIN OR ATTRACT KEY PERSONNEL COULD ADVERSELY AFFECT KINERGY.
The future success of Kinergy is dependent, in part, on its ability to
retain certain key personnel. Kinergy is presently, and is likely for some to
continue to be, dependent upon its founding member. Kinergy currently has no
employees, and Kinergy's founder will therefore be instrumental to Kinergy's
success. It is possible that Kinergy's founding member may later become unable
to serve, and Kinergy may be unable to recruit and retain suitable replacements.
15
Accordingly, Kinergy's dependence on its founding member may adversely affect
Kinergy's business, results of operations, and financial condition. Kinergy also
needs to attract additional skilled technical, clerical and managerial personnel
in all areas of its business to continue to grow. The competition for such
individuals in the growing ethanol production and marketing industry is intense.
There can be no assurance that Kinergy will be able to retain its existing
personnel or attract additional qualified personnel in the future. Kinergy has
not entered into long-term contracts with any of its employees and does not
maintain key employee life insurance.
In particular, Kinergy is dependent upon its relationship with Neil
Koehler, its sole manager and sole limited liability company member. Mr. Koehler
has considerable experience in the construction, start-up and operation of an
ethanol production facility and in the ethanol marketing business. Any loss of
Kinergy's relationship with Mr. Koehler may adversely affect Kinergy's business,
results of operations, and financial condition.
FLUCTUATIONS IN QUARTERLY PERFORMANCE COULD ADVERSELY AFFECT KINERGY'S BUSINESS.
Kinergy's operating results have fluctuated significantly in the past,
and Kinergy expects its operating results to fluctuate significantly from
quarter to quarter in the future depending on a number of factors. These factors
include:
o volume and timing of the receipt of orders for ethanol from
major customers;
o competitive pricing pressures;
o Kinergy's ability to sell and deliver ethanol on a
cost-effective and timely basis;
o the introduction and announcement of new products and
processes by Kinergy's competitors; and
o changing conditions in the ethanol and fuel markets.
Furthermore, Kinergy believes that the economic conditions in
California and other states, as well as the United States as a whole, could have
a negative impact on Kinergy's results of operations. Accordingly, Kinergy's
results of operations could be subject to significant quarterly variation due to
general economic conditions. Demand for ethanol products could also be adversely
affected by a slow down in overall demand for oxygenate and gasoline additive
products.
A portion of Kinergy's ethanol purchases and spending levels is made
based upon forecasted demand. Accordingly, any inaccuracy in forecasting
anticipated revenues and expenses could adversely affect Kinergy's business.
Furthermore, Kinergy recognizes revenues from ethanol sales at the time of
delivery. The failure to receive anticipated orders or to complete delivery in
any quarter could adversely affect Kinergy's results of operations for that
quarter. Quarterly results are not necessarily indicative of future performance
for any particular period, and Kinergy may not experience revenue growth or
profitability on a quarterly or annual basis.
RISKS RELATING TO THE BUSINESS OF REENERGY
ReEnergy intends to develop a large-scale ethanol plant in California. To date,
ReEnergy has had no significant operations, other than entering into an Option
Agreement dated as of July 30, 2003, with Kent Kaulfuss, a limited liability
company member of ReEnergy, and his wife, with respect to the acquisition of
approximately 89.3 acres of real property located in Visalia, California, with
respect to which real property ReEnergy has granted to PEI an option to purchase
upon ReEnergy's purchase from Kent Kaulfuss and his wife. Accordingly, the risks
relating to the business of ReEnergy are generally the same as or substantially
similar to the general risks relating to the business of PEI. See "Risk
Factors--Risks Relating to the Business of PEI."
16
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements, including among
others:
o our business development activities;
o our business strategies;
o anticipated trends in our financial condition and results of
operations; and
o our ability to distinguish ourselves from our current and
future competitors.
You can identify forward-looking statements generally by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"intends," "plans," "should," "could," "seeks," "pro forma," "anticipates,"
"estimates," "continues," or other variations thereof, including their use in
the negative, or by discussions of strategies, opportunities, plans or
intentions. You may find these forward-looking statements under the captions
"Risk Factors," as well as captions elsewhere in this document. A number of
factors could cause results to differ materially from those anticipated by
forward-looking statements, including those discussed under "Risk Factors."
Although we believe that the expectations reflected in these forward-looking
statements are reasonable, actual conditions in the automatic meter reading and
utility industries, and actual conditions and results in our business, could
differ materially from those expressed in these forward-looking statements. In
addition, none of the events anticipated in the forward-looking statements may
actually occur. Any of these different outcomes could cause the price of our
common stock to decline substantially. Except as required by law, we undertake
no duty to update any forward-looking statement after the date of this
prospectus, either to conform any statement to reflect actual results or to
reflect the occurrence of unanticipated events.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares of
common stock offered under this prospectus by the selling security holders.
Rather, the selling security holders will receive those proceeds directly.
SELLING SECURITY HOLDERS
The following table sets forth information as of March 23, 2005 with
respect to the beneficial ownership of our common stock both before and
immediately following the offering by the selling security holders. The
following calculations of the percent of outstanding shares are based on
2,939,414 shares of our common stock outstanding as of the date of the table.
Beneficial ownership includes shares issuable upon exercise of warrants and
options that are exercisable within sixty days of the date of the table.
Beneficial ownership and, accordingly, percent of class ownership, are
calculated according to Securities and Exchange Commission Rule 13d-3.
The shares of common stock being offered under this prospectus may be
offered for sale from time to time during the period the registration statement
of which this prospectus is a part remains effective, by or for the accounts of
the selling security holders. All of the shares being offered under this
prospectus were issued under the terms of Confidentiality, Non-Competition,
Non-Solicitation and Consulting Agreements dated as of March 23, 2005 by and
between us and the selling security holders.
17
We will not receive any of the proceeds from the sale of the shares of
common stock offered by the selling security holders.
MAXIMUM
SHARES BENEFICIALLY NUMBER SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING OF SHARES OWNED AFTER OFFERING
----------------------- BEING ---------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
------------------------------------- ------- -------- --------- ------ -------
Barry Siegel (1)
6881 NW 117th Avenue
Parkland, Florida 33076-3320 860,873 28.51% 400,000 460,873 15.26%
Philip Kart(2)
11260 Manderly Lane
Wellington, Florida 33467 265,000 8.82% 200,000 65,000 2.16%
------------------
* Less than 1.00% of our outstanding common stock.
(1) Includes 667 shares held by Mr. Siegel as custodian for two nephews and
13 shares held directly by Mr. Siegel's wife, Lisa Siegel. Both Mr. and
Mrs. Siegel disclaim beneficial ownership of shares held by the other.
Also includes options held by Mr. Siegel to purchase 80,000 shares of
common stock exercisable within 60 days of March 23, 2005.
(2) Includes options held by Mr. Kart to purchase 65,000 shares of common
stock exercisable within 60 days of March 23, 2005.
PLAN OF DISTRIBUTION
The selling security holders and any of their respective donees,
pledgees, assignees and other successors-in-interest may, from time to time,
sell any or all of their shares of our common stock being offered under this
prospectus on any stock exchange, market or trading facility on which the shares
are traded or in private transactions. These sales, which may include block
transactions, may be at fixed or negotiated prices. Each selling security holder
may use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o 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;
o purchases by a broker-dealer as principal and resales by the
broker-dealer for its own account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales, which are contracts for the sale of shares of
stock that the seller does not own, or certificates for which
are not within his control, so as to be available for delivery
at the time when, under applicable rules, delivery must be
made;
o transactions to cover short sales;
o broker-dealers may agree with the selling security holder to
sell a specified number of shares at a stipulated price per
share;
o a combination of any of these methods of sale; or
o any other method permitted by applicable law
18
The sale price to the public may be:
o the market price prevailing at the time of sale;
o a price related to the prevailing market price;
o at negotiated prices; or
o such other price as the selling security holder determines
from time to time.
The shares may also be sold under Rule 144 under the Securities Act of
1933, as amended, if available, rather than under this prospectus.
Each selling security holder shall have the sole and absolute
discretion not to accept any purchase offer or make any sale of shares if he
deems the purchase price to be unsatisfactory at any particular time.
Each selling security holder may also engage in short sales against the
box, which are sales where the seller owns enough shares to cover the borrowed
shares, if necessary, puts and calls and other transactions in securities of
Pacific Ethanol or derivatives of Pacific Ethanol securities and may sell or
deliver shares in connection with these trades. Each selling security holder may
pledge his shares to his brokers under the margin provisions of customer
agreements. If a selling security holder defaults on a margin loan, the broker
may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by a selling security holder may arrange for
other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holder (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. Neither selling security holder has indicated to us
that he expects these commissions and discounts to exceed what is customary in
the types of transactions involved.
A selling security holder and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with these sales. In that event, any
commissions received by these broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
A selling security holder, alternatively, may sell all or any part of
the shares offered in this prospectus through an underwriter. To our knowledge,
neither selling security holder has entered into any agreement with a
prospective underwriter, and there is no assurance as to whether any such
agreement will be entered into. If a selling security holder enters into such an
agreement or agreements, the relevant details will be set forth in a supplement
or revisions to this prospectus.
Each selling security holder and any other persons participating in the
sale or distribution of the shares offered under this prospectus will be subject
to applicable provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations under that act, including, without limitation,
Regulation M. These provisions may restrict certain activities of, and limit the
timing of purchases and sales of any of the shares by, a selling security holder
or any other such person. Furthermore, under Regulation M, persons engaged in a
distribution of securities are prohibited from simultaneously engaging in market
making and certain other activities with respect to such securities for a
specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.
We have agreed to pay all fees and expenses incident to the
registration of the shares.
19
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
permits a corporation to indemnify its directors and officers against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with a pending or completed action, suit or proceeding if the
officer or director acted in good faith and in a manner the officer or director
reasonably believed to be in the best interests of Accessity/PEI.
Our Certificate of Incorporation provides that, except in certain
specified instances, a director shall not be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director.
To the extent indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of Pacific Ethanol under the above provisions, or otherwise,
we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable.
EXPERTS
The consolidated financial statements of Pacific Ethanol, Inc.,
formerly known as Accessity Corp., for the fiscal years ended December 31, 2004
and 2003 incorporated by reference into this prospectus have been audited by
Nussbaum Yates & Wolpow, P.C., independent certified public accountants, to the
extent and for the periods set forth in that firm's report, are incorporated in
this prospectus in reliance upon the report given upon the authority of Nussbaum
Yates & Wolpow, P.C. as experts in
auditing and accounting.
LEGAL MATTERS
The validity of the shares of common stock offered under this
prospectus will be passed upon by Meritz & Muenz LLP, Washington, D.C.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is North American
Stock Transfer Co. Its telephone number is (516) 379-8501.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-8 under the Securities Act, and the rules and
regulations promulgated under the Securities Act, with respect to the common
stock offered under this prospectus. This prospectus, which constitutes a part
of the registration statement, does not contain all of the information contained
in the registration statement and the exhibits and schedules to the registration
statement. While material elements of the contracts and documents referenced in
this prospectus are contained in this prospectus, statements contained in this
prospectus as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance reference is made to the full
text of the contract or other document, which is filed as an exhibit to the
registration statement.
For further information with respect to us and the common stock offered
under this prospectus, reference is made to the registration statement and its
exhibits and schedules. The registration statement, including its exhibits and
schedules, may be inspected without charge at the Public Reference Room
maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W.,
20
Washington, D.C. 20549. Copies of such documents may be obtained from the
Securities and Exchange Commission upon the payment of the charges prescribed by
the Securities and Exchange Commission. The public may obtain information on the
operation of the Public Reference Room by calling the Securities and Exchange
Commission at 1-800-SEC-0330.
The Securities and Exchange Commission maintains an Internet web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Securities and Exchange
Commission. The Securities and Exchange Commission's web site address is
http://www.sec.gov. Our web site address is http://www.accessitycorp.com.
All trademarks or trade names referred to in this prospectus are the
property of their respective owners.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference information we file with it, which means we can disclose important
information to you by referring you to documents we have filed with the
Securities and Exchange Commission. The information incorporated by reference is
considered to be a part of this prospectus. We incorporate by reference the
documents listed below and all documents we subsequently file with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the offering
covered by this prospectus:
(a) Our annual report on Form 10-KSB for the fiscal year ended December
31, 2004 (File No. 000-21467), filed with the Securities and Exchange Commission
on March 17, 2005.
For purposes of this Registration Statement, any document or any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded to the extent
that a subsequently filed document or a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
herein by reference modifies or supersedes such document or such statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Notwithstanding the above, information that is "furnished to" the
Commission shall not be deemed "filed with" the Commission and shall not be
deemed incorporated by reference into this Registration Statement.
We will provide to each person, including any beneficial owner, to whom
a prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference in this prospectus but not delivered with this
prospectus. You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Pacific Ethanol, Inc.
3300 University Drive, Suite 201
Coral Springs, Florida 33065
(954) 752-6161
21
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents by Reference.
----------------------------------------
We incorporate the following documents by reference in this
registration statement:
(a) Our annual report on Form 10-KSB for the fiscal year ended December
31, 2004 (File No. 000-21467), filed with the Securities and Exchange Commission
on March 17, 2005.
All reports and other documents we subsequently filed after the date of
this registration statement under Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act, prior to the filing of a post-effective amendment that indicates
that all securities offered under this registration statement have been sold, or
which deregisters all securities then remaining unsold, shall be deemed
incorporated by reference into this registration statement and shall be a part
of this registration statement from the date of filing such documents.
For purposes of this registration statement, any document or any
statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded to the extent
that a subsequently filed document or a statement contained herein or in any
other subsequently filed document, which also is or is deemed to be incorporated
herein by reference modifies or supersedes such document or such statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this registration
statement.
Notwithstanding the above, information that is "furnished to" the
Commission shall not be deemed "filed with" the Commission and shall not be
deemed incorporated by reference into this Registration Statement.
ITEM 4. Description of Securities.
--------------------------
GENERAL
Our Certificate of Incorporation currently authorizes us to issue
100,000,000 shares of common stock, $.001 par value per share, and 10,000,000
shares of preferred stock, $.001 par value per share. We currently has 2,939,414
shares of common stock outstanding. All outstanding shares of common stock are
fully paid and nonassessable.
COMMON STOCK
The following summarizes the rights of holders of our common stock:
o each holder of common stock is entitled to one vote per share
on all matters to be voted upon by the stockholders;
o subject to preferences that may apply to shares of preferred
stock that may be outstanding, the holders of common stock are
entitled to receive such lawful dividends as may be declared
by our board of directors;
22
o upon liquidation, dissolution or winding up, the holders of
shares of common stock are entitled to receive a pro rata
portion of all of our assets remaining for distribution after
satisfaction of all liabilities and the payment of any
liquidation preference of any preferred stock that may be
outstanding;
o there are no redemption or sinking fund provisions applicable
to our common stock; and
o there are no preemptive or conversion rights applicable to our
common stock.
PREFERRED STOCK
Our board of directors is authorized to issue from time to time, in one
or more designated series, any or all of our authorized but unissued shares of
preferred stock with dividend, redemption, conversion, exchange, voting and
other provisions as may be provided in that particular series. The issuance need
not be approved by our common stockholders.
Issuance of a new series of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of entrenching our board of directors and making
it more difficult for a third-party to acquire, or discourage a third-party from
acquiring, a majority of our outstanding voting stock. We have no present plans
to issue any shares of or to designate any series of preferred stock.
ITEM 5. Interests of Named Experts and Counsel.
--------------------------------------
Not Applicable.
ITEM 6. Indemnification of Directors and Officers.
------------------------------------------
Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify its directors and officers against expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with a pending or completed action, suit or proceeding if the officer
or director acted in good faith and in a manner the officer or director
reasonably believed to be in the best interests of the corporation.
Our certificate of incorporation provides that, except in certain
specified instances, our directors shall not be personally liable to us or our
stockholders for monetary damages for breach of their fiduciary duty as
directors.
In addition, our certificate of incorporation and bylaws obligate us to
indemnify our directors and officers against expenses and other amounts
reasonably incurred in connection with any proceeding arising from the fact that
such person is or was an agent of ours. Our bylaws also authorize us to purchase
and maintain insurance on behalf of any of our directors or officers against any
liability asserted against that person in that capacity, whether or not we would
have the power to indemnify that person under the provisions of the Delaware
General Corporation Law.
To the extent indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of Pacific Ethanol under the above provisions, or otherwise,
we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable.
23
ITEM 7. Exemption from Registration Claimed.
------------------------------------
Exemption from the registration provisions of the Securities Act of
1933 for the issuance of the shares being offered pursuant to the reoffer
prospectus contained in this registration statement is claimed under Section
4(2) of the Securities Act of 1933, among others, on the basis that such
transaction did not involve any public offering and the purchaser was
sophisticated with access to the kind of information registration would provide.
ITEM 8. Exhibits.
--------
4.1 Confidentiality, Non-Competition, Non-Solicitation
and Confidentiality Agreement dated as of March 23,
2005 by and between Pacific Ethanol, Inc. and Barry
Siegel
4.2 Confidentiality, Non-Competition, Non-Solicitation
and Confidentiality Agreement dated as of March 23,
2005 by and between Pacific Ethanol, Inc. and Philip
Kart
5.1 Opinion of Meritz & Muenz LLP
23.1 Consent of Meritz & Muenz LLP (included in Exhibit
5.1)
23.2 Consent of Nussbaum Yates & Wolpow, P.C.
24.1 Power of Attorney (contained on the signature pages
to this Registration Statement)
ITEM 9. Undertakings.
-------------
We hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement (except that
paragraphs (i) and (ii) below shall not apply if the information required by
paragraphs (i) and (ii) below is contained in periodic reports filed by us with
the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in this Registration Statement):
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
24
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 Coral Springs, State of Florida, on March 23, 2005.
PACIFIC ETHANOL, INC.,
a Delaware corporation
By: /s/ BARRY SIEGEL
---------------------------------------------------
Barry Siegel, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Neil Koehler his attorney-in-fact and
agent, with the power of substitution and resubstitution, for him and in his
name, place or stead, in any and all capacities, to sign any amendment to this
Registration Statement on Form S-8, and to file such amendments, together with
exhibits and other documents in connection therewith, with the Securities and
Exchange Commission, granting to such attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully as he might or could do in
person, and ratifying and confirming all that the attorney-in-fact and agent, or
his substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
SIGNATURE TITLE DATE
/s/ BARRY SIEGEL Chairman of the Board, President and Chief March 23, 2005
----------------------------
Barry Siegel Executive Officer (Principal Executive
Officer)
/s/ PHILIP KART Senior Vice President, Secretary and Chief March 23, 2005
----------------------------
Philip Kart Financial Officer (Principal Financial
Officer)
/s/ KENNETH J. FRIEDMAN Director March 23, 2005
----------------------------
Kenneth J. Friedman
/s/ BRUCE S. UDELL March 23, 2005
----------------------------
Bruce S. Udell Director
25
EXHIBIT INDEX
4.1 Confidentiality, Non-Competition, Non-Solicitation and Confidentiality
Agreement dated as of March 23, 2005 by and between Pacific Ethanol,
Inc. and Barry Siegel
4.2 Confidentiality, Non-Competition, Non-Solicitation and Confidentiality
Agreement dated as of March 23, 2005 by and between Pacific Ethanol,
Inc. and Philip Kart
5.1 Opinion of Meritz & Muenz LLP
23.1 Consent of Meritz & Muenz LLP (included in Exhibit 5.1)
23.2 Consent of Nussbaum Yates & Wolpow, P.C.
24.1 Power of Attorney (contained on the signature pages to this
Registration Statement)
26