e424b3
Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-164084
PROSPECTUS
9,024,960 SHARES
ENOVA SYSTEMS, INC.
COMMON STOCK
This prospectus covers the sale or other disposition of up to 9,024,960 shares of our issued and
outstanding common stock by the selling stockholders identified in this prospectus, or their
transferees. The selling stockholders may, from time to time, sell, transfer, or otherwise dispose
of any or all of their shares of common stock or interests in shares of common stock on any stock
exchange, market or trading facility on which the shares are traded or in private transactions.
These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at
prices related to the prevailing market price, at varying prices determined at the time of sale, or
at negotiated prices.
We are not offering any shares of our common stock for sale under this prospectus, and we will not
receive any of the proceeds from the sale or other disposition of the shares of our common stock
covered hereby.
Our common stock is quoted on the NYSE Amex under the
symbol ENA. On January 12, 2010, the last
reported sales price of our common stock, as reported on the NYSE
Amex, was $1.92 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE THE SECTION ENTITLED RISK FACTORS BEGINNING ON
PAGE 4 OF THIS PROSPECTUS. YOU ALSO SHOULD CONSIDER THE RISK FACTORS DESCRIBED IN THE DOCUMENTS
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this prospectus is January 12, 2010
TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we filed with the Securities
and Exchange Commission (the SEC) using a shelf registration or continuous offering process.
You should read this prospectus and the information and documents incorporated by reference
carefully. Such documents contain important information you should consider when making your
investment decision. See Where You Can Find More Information and Incorporation of Certain
Documents by Reference in this prospectus.
You should rely only on the information provided in this prospectus or documents incorporated by
reference into this prospectus. We have not, and the selling stockholders have not, authorized
anyone to provide you with different information. This prospectus covers offers and sales of our
common stock only in jurisdictions in which such offers and sales are permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of our common stock. You should not assume that
the information contained in this prospectus is accurate as of any date other than the date on the
front cover of this prospectus, or that the information contained in any document incorporated by
reference is accurate as of any date other than the date of the document incorporated by reference,
regardless of the time of delivery of this prospectus or any sale of a security.
In this prospectus, we refer to Enova Systems, Inc. as we, us, our, the Company or
Enova. Reference to selling stockholders refers to those stockholders listed herein under
Selling Stockholders, and their transferees.
- 1 -
PROSPECTUS SUMMARY
The following is only a summary and therefore does not contain all of the information you should
consider before investing in our securities. We urge you to read this entire prospectus, including
the matters discussed under Risk Factors in this prospectus and the more detailed consolidated
financial statements, notes to the consolidated financial statements and other information
incorporated by reference from our other filings with the SEC.
Our Company
Enova Systems is an emerging alternative energy industry company. We believe we are a leader in the
development and production of proprietary, commercial digital power management systems for
transportation vehicles and stationary power generation systems. Power management systems control
and monitor electric power in an automotive or commercial application such as an automobile or a
stand-alone power generator. Drive systems are comprised of an electric motor, an electronics
control unit and a gear unit which power an electric vehicle. Hybrid systems, which are similar to
pure electric drive systems, contain an internal combustion engine in addition to the electric
motor, eliminating external recharging of the battery system. Stationary power systems utilize
similar components to those which are in a mobile drive system in addition to other elements.
A fundamental element of our strategy is to develop and produce advanced proprietary software,
firmware and hardware for applications in these alternative power markets. Our focus is digital
power conversion, power management, and system integration, focusing chiefly on vehicle power
generation.
Specifically, we develop, design and produce drive systems and related components for electric,
hybrid-electric and fuel cell vehicles. We also develop, design and produce power management and
power conversion components for stationary distributed power generation systems. Additionally, we
perform research and development to augment and support others and our own related product
development efforts.
Our product development strategy is to design and introduce to market successively advanced
products, each based on our core technical competencies. In each of our product/market segments, we
provide products and services to leverage our core competencies in digital power management, power
conversion and system integration. We believe that the underlying technical requirements shared
among the market segments will allow us to more quickly transition from one emerging market to the
next, with the goal of capturing early market share.
Our primary market focus centers on both series and parallel hybrid medium and heavy-duty drive
systems for multiple vehicle and marine applications. A series hybrid system is one where only the
electric motor connects to the drive shaft; a parallel hybrid system is one where both the internal
combustion engine and the electric motor are connected to the drive shaft. We believe series-hybrid
and parallel hybrid medium and heavy-duty drive system sales offer us the greatest return on
investment in both the short and long term. We believe the medium and heavy-duty hybrid markets
best chances of significant growth lie in identifying and pooling the largest possible numbers of
early adopters in high-volume applications. By aligning ourselves with key customers in our target
markets, we believe that alliances will result in the latest technology being implemented and
customer requirements being met, with an optimized level of additional time or expense. As we
penetrate more market areas, we are continually refining and optimizing both our market strategy
and our product line to maintain our leading edge in power management and conversion systems for
mobile applications.
Our company, previously known as U.S. Electricar, Inc., a California corporation, was incorporated
on July 30, 1976. Our address is 1560 West 190th Street, Torrance, California 90501 and
our telephone number is 310-527-2800. Our website address is www.enovasystems.com.
Information on our website is not incorporated by reference into this prospectus and does not
constitute part of this prospectus.
- 2 -
Recent Financing
On October 29, 2009, Enova entered into a Purchase Agreement to sell 9,024,960 shares of common
stock to institutional investors at a price of $1.00 per share. In connection with the Purchase
Agreement, Enova agreed to enter into a Registration Rights Agreement with the investors.
On October 29, 2009, Enova also entered into a Placing Agreement with Investec Bank (UK) Limited
acting as Enovas agent to sell 1,323,200 shares of common stock at a fixed price of 62.5 Pence, or
approximately the equivalent of $1.00 per share based on the exchange rate as of that date. The
1,323,200 shares covered by the Placing Agreement are not subject to the Registration Rights
Agreement.
Each of the October 29, 2009 offerings covered by the Purchase Agreement and Placing Agreement were
subject to standard closing conditions and also subject to shareholder approval of the issuance of
the shares in accordance with NYSE Amex Rule Section 713. At a meeting held on December 8, 2009,
Enova shareholders voted to approve the issuance of the shares.
On December 15, 2009, Enova closed the sale of the 9,024,960 shares of common stock under the
Purchase Agreement, resulting in gross proceeds of $9,024,960, and the sale of the 1,323,200 shares
of common stock under the Placing Agreement resulting in gross proceeds of 827,000 pounds sterling
(approximately $1,323,200 based upon the exchange rate on December 15, 2009). Enova intends to use
the proceeds for working capital and general corporate purposes, including funding of its strategic
operating plan and the completion of key product development initiatives.
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The Offering |
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Common stock covered hereby:
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9,024,960 shares |
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Common stock outstanding:
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31,363,120 shares (1) |
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NYSE Amex symbol:
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ENA |
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Alternative Investment Market (London Stock Exchange) symbols:
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ENV and ENVS |
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Use of Proceeds:
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We will not receive any of the proceeds
from the sale or other disposition of
the shares covered by this prospectus. |
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Risk Factors:
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See Risk Factors
beginning on page 4
and other information included in this
prospectus for a discussion of factors
you should consider before investing
in shares of our common stock. |
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(1) |
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The number of shares shown to be outstanding is based on the number of shares of our common
stock outstanding as of December 28, 2009, and does not include shares issuable upon
conversion of outstanding preferred stock or reserved for issuance upon the exercise of
options granted or available under our equity compensation plan. |
- 3 -
RISK FACTORS
An investment in our common stock involves a high degree of risk. Before investing in our common
stock, you should consider carefully the specific risks detailed in this Risk Factors section and
any applicable prospectus supplement, together with all of the other information contained in this
prospectus and any prospectus supplement. If any of these risks occur, our business, results of
operations and financial condition could be harmed, the price of our common stock could decline,
and you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESS
Our history of operating losses and our expectation of continuing losses may hurt our ability to
reach profitability or continue operations.
We have experienced significant operating losses since our inception. Our net loss was $12,894,000
for the fiscal year ended December 31, 2008 and $4,974,000 for the nine months ended September 30,
2009. Our accumulated deficit was $129,663,000 as of December 31, 2008, and $134,637,000 as of
September 30, 2009. It is likely that we will continue to incur substantial net operating losses
and an accumulated deficit for the foreseeable future, which may adversely affect our ability to
continue operations. To achieve profitable operations, we must successfully develop, and market our
products. We may not be able to generate sufficient product revenue to become profitable. Even if
we do achieve profitability, we may not be able to sustain or increase our profitability on a
quarterly or yearly basis.
Because we depend upon sales to a limited number of customers, our revenues will be reduced if we
lose a major customer
Our revenue is dependent on significant orders from a limited number of customers. We typically
enter into supply agreements with major customers establishing product and price standards for
future periods. Subsequent events may change the needs of the customer, requiring us to make
corresponding adjustments. Our largest four customers accounted for 73% of our revenue for the
fiscal year ended December 31, 2008 and 97% of our total revenue for the nine months ended
September 30, 2009. We believe that revenues from major customers will continue to represent a
significant portion of our revenues. This customer concentration increases the risk of quarterly
fluctuations in our revenues and operating results. The loss or reduction of business from one or a
combination of our significant customers could adversely affect our revenues, financial condition
and results of operations. Moreover, our success will depend in part upon our ability to obtain
orders from new customers, as well as the financial condition and success of our customers and
general economic conditions.
We extend credit to our customers, which exposes us to credit risk
Most of our outstanding accounts receivable are from a limited number of large customers. The four
highest outstanding accounts receivable balances represented 86% of our net accounts receivable at
December 31, 2008 and 99% of our net accounts receivable at September 30, 2009. If we fail to
monitor and manage effectively the resulting credit risk and a material portion of our accounts
receivable is not paid in a timely manner or becomes uncollectible, our business would be
significantly harmed, and we could incur a significant loss associated with any outstanding
accounts receivable.
Our business is affected by current economic and financial market conditions in the markets we
serve
Current global economic and financial markets conditions, including severe disruptions in the
credit markets and the significant and potentially prolonged global economic recession, may
materially and adversely affect our results of operations and financial condition. We are
particularly impacted by the global automotive slowdown and the effects on OEM inventory levels,
production schedules, support for our products and decreased ability to accurately forecast future
product demand. We could also be impacted in our ability to timely collect receivables from our
customers and, conversely, reductions in the level and tightening of terms of trade credit
available to us.
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The nature of our industry is dependent on technological advancement and is highly competitive
The mobile and stationary power markets, including electric vehicle and hybrid electric vehicles,
continue to be subject to rapid technological change. Most of the major domestic and foreign
automobile manufacturers: (1) have already produced electric and hybrid vehicles, (2) have
developed improved electric storage, propulsion and control systems, and/or (3) are now entering or
have entered into production, while continuing to improve technology or incorporate newer
technology. Various companies are also developing improved electric storage, propulsion and control
systems. In addition, the stationary power market is still in its infancy. A number of established
energy companies are developing new technologies. Cost-effective methods to reduce price per
kilowatt have yet to be established and the stationary power market is not yet viable.
Our current products are designed for use with, and are dependent upon, existing technology. As
technologies change, and subject to our limited available resources, we plan to upgrade or adapt
our products in order to continue to provide products with the latest technology. We cannot assure
you, however, that we will be able to avoid technological obsolescence, that the market for our
products will not ultimately be dominated by technologies other than ours, or that we will be able
to adapt to changes in or create leading-edge technology. In addition, further proprietary
technological development by others could prohibit us from using our own technology.
Our industry is affected by political and legislative changes
In recent years there has been significant public pressure to enact legislation in the United
States and abroad to reduce or eliminate automobile pollution. Although states such as California
have enacted such legislation, we cannot assure you that there will not be further legislation
enacted changing current requirements or that current legislation or state mandates will not be
repealed or amended, or that a different form of zero emission or low emission vehicle will not be
invented, developed and produced, and achieve greater market acceptance than electric or hybrid
electric vehicles. Extensions, modifications or reductions of current federal and state
legislation, mandates and potential tax incentives could also adversely affect our business
prospects if implemented.
We are subject to increasing emission regulations in a changing legislative climate
Because vehicles powered by internal combustion engines cause pollution, there has been significant
public pressure in Europe and Asia, and enacted or pending legislation in the United States at the
federal level and in certain states, to promote or mandate the use of vehicles with no tailpipe
emissions (zero emission vehicles) or reduced tailpipe emissions (low emission vehicles).
Legislation requiring or promoting zero or low emission vehicles is necessary to create a
significant market for electric vehicles. The California Air Resources Board is continuing to
modify its regulations regarding its mandatory limits for zero emission and low emission vehicles.
Furthermore, several car manufacturers have challenged these mandates in court and have obtained
injunctions to delay these mandates.
We may be unable to effectively compete with other companies who have significantly greater
resources than we have
Although we were originally founded in 1976, our business just completed a migration into a
production stage, and our proposed operations are subject to all of the risks inherent in
production stage, including the likelihood of continued operating losses. Many of our competitors,
in the automotive, electronic and other industries, are larger, more established companies that
have substantially greater financial, personnel, and other resources than we do. These companies
may be actively engaged in the research and development of power management and conversion systems.
Because of their greater resources, some of our competitors may be able to adapt more quickly to
new or emerging technologies and changes in customer requirements, or to devote greater resources
to the promotion and sales of their products than we can. We believe that developing and
maintaining a competitive advantage will require continued investment in product development,
manufacturing capability and sales and marketing. We cannot assure you however that we will have
sufficient resources to make the necessary investments to do so. In addition, current and potential
competitors may establish collaborative relationships among themselves or with third parties,
including third parties with whom we have relationships. Accordingly, new competitors or alliances
may emerge and rapidly acquire significant market share.
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We may be exposed to product liability or tort claims if our products fail, which could adversely
impact our results of operations
A malfunction or the inadequate design of our products could result in product liability or other
tort claims. Accidents involving our products could lead to personal injury or physical damage. Any
liability for damages resulting from malfunctions could be substantial and could materially
adversely affect our business and results of operations. In addition, a well-publicized actual or
perceived problem could adversely affect the markets perception of our products. This could result
in a decline in demand for our products, which would materially adversely affect our financial
condition and results of operations.
We are highly dependent on a few key personnel and will need to retain and attract such personnel
in a labor competitive market
Our success is largely dependent on the performance of our key management and technical personnel,
the loss of one or more of whom could adversely affect our business. Additionally, in order to
successfully implement our anticipated growth, we will be dependent on our ability to hire
additional qualified personnel. There can be no assurance that we will be able to retain or hire
other necessary personnel. We do not maintain key man life insurance on any of our key personnel.
We believe that our future success will depend in part upon our continued ability to attract,
retain, and motivate additional highly skilled personnel in an increasingly competitive market.
There are minimal barriers to entry in our market
We presently license or own only certain proprietary technology, and therefore have created little
or no barrier to entry for competitors other than the time and significant expense required to
assemble and develop similar production and design capabilities. Our competitors may enter into
exclusive arrangements with our current or potential suppliers, thereby giving them a competitive
edge which we may not be able to overcome, and which may exclude us from similar relationships.
RISKS RELATED TO OWNING OUR STOCK
The holders of our preferred stock have certain rights and privileges that are senior to our common
stock, and we may issue additional shares of preferred stock without stockholder approval that
could have a material adverse effect on the market value of the common stock
Our Board of Directors has the authority to issue a total of up to 35,000,000 shares of preferred
stock and the rights, preferences, privileges, and restrictions, including voting rights, of the
preferred stock, are senior to the rights of the common shareholders. The rights of our common
shareholders are subject to, and may be adversely affected by, the rights of the holders of the
preferred stock that have been issued, or might be issued in the future. Preferred stock also
could have the effect of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of Enova. This could delay, defer, or prevent a change in control.
Furthermore, holders of preferred stock may have other rights, including economic rights, senior to
the Common Stock. As a result, their existence and issuance could have a material adverse effect
on the market value of the Common Stock. We have in the past issued and may from time to time in
the future issue, preferred stock for financing or other purposes with rights, preferences, or
privileges senior to the Common Stock. At December 28, 2009 we had two series of preferred stock
outstanding, Series A convertible preferred stock (Series A) and Series B convertible preferred
stock (Series B).
The provisions of our Series B prohibit the payment of dividends on the Series A or the Common
Stock unless the dividends on those Series B Stock are first paid. Series B shareholders are
entitled to receive non-cumulative cash dividends at the rate of seven percent of $2.00 per share
per annum, whenever funds are legally available and when and if declared by the Board of Directors.
Subject to the dividend rights of Series B, Series A holders are entitled to receive
non-cumulative cash dividends in preference to any dividend on the Common Stock at the rate of six
percent of $0.60 per share per annum, whenever funds are legally available and when and if declared
by the Board of Directors. After payment in full during any fiscal year of all preferred stock
preferential dividends in the amounts set out above, each holder of Common Stock is entitled to
receive non-cumulative cash dividends, whenever funds are legally available and if and when
declared by the Board of Directors, in an amount equal to the per share amount paid to the Series A
on an as converted basis. After the holders of record of the Common Stock, Series A and Series
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B have been paid their preferential dividends in full, then the holders of record of Series A,
Series B and Common Stock are entitled to share ratably in any additional dividends during such
fiscal year on an as converted basis.
Upon a liquidation or dissolution, the holders of the Series B Preferred Stock will be entitled to
receive, in preference to any distribution to the holders of Series A and Common Stock,
distributions of (i) $2.00 per share, (ii) an amount equal to a dividend of 7% on $2.00,
compounded annually, for each year (or fraction thereof) which has transpired between March 15,
2006 and the date of such liquidation, less the amount of any dividends actually paid and (iii) all
declared but unpaid dividends. Upon a liquidation or dissolution, Series A holders will be
entitled to receive, subject to the liquidation preference of the Series B holders, and in
preference to the holders of Common Stock, an amount equal to $0.60 per share, plus declared and
unpaid dividends. Thereafter, the holders of Common Stock shall be entitled to receive proceeds up
to a total amount per share equal to the liquidation preference of the Series A on an as converted
basis.
Each share of Series B is convertible at any time at the option of the holder into 0.0444 shares of
Common Stock. Subject to certain limitations, the conversion price per share shall be adjusted in
the event of certain subsequent stock dividends, splits, reclassifications, dilutive issuances,
rights offerings, and reclassifications. Each share of Series B is also automatically converted
immediately prior to either: (i) consummation of an underwritten public offering of Common Stock by
Enova at a price per share of $27.00 and resulting in net cash proceeds to Enova in excess of
$10,000,000 in cash or marketable securities; or (ii) a merger or consolidation with or into
another corporation or a sale of the Common Stock or a sale of all or substantially all of Enovas
properties and assets in which the aggregate gross cash proceeds received by the shareholders is at
least $10,000,000 in cash or marketable securities.
Each share of Series A is convertible at any time, at the option of the holder, into 0.0222 shares
of Common Stock, the conversion price per share shall be adjusted in the event of certain
subsequent stock dividends, splits, reclassifications, dilutive issuances, rights offerings, and
reclassifications. Each share of Series A is also automatically converted immediately prior to
either (i) consummation of an underwritten public offering of Common Stock by Enova under the
Securities Act; (ii) the registration of the underlying Common Stock or the holders Series A stock
under the Securities Act; or (iii) a merger or consolidation of Enova with or into another
corporation or a sale of more than 50 percent of the outstanding voting securities of the Company
or a sale of all or substantially all of Enovas properties and assets.
The Series B and Series A holders have the right to vote on all matters submitted or required to be
submitted to a vote of the shareholders and have that number of votes equal to the number of Common
Stock shares issuable upon conversion of the Series B and Series A stock, respectively, at the
record date for the determination of shareholders entitled to vote on such matters.
Our stock price has been volatile, and your investment in our common stock could suffer a decline
in value
There has been significant volatility in the market price and trading volume of equity securities,
which is unrelated to the financial performance of the companies issuing the securities. These
broad market fluctuations may negatively affect the market price of our common stock. You may not
be able to resell your shares at or above the price you pay for those shares due to fluctuations in
the market price of our common stock caused by changes in our operating performance or prospects
and other factors.
Some specific factors that may have a significant effect on our common stock market price include:
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actual or anticipated fluctuations in our operating results or future prospects; |
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our announcements or our competitors announcements of new products; |
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the publics reaction to our press releases, our other public announcements and our
filings with the SEC; |
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strategic actions by us or our competitors, such as acquisitions or restructurings; |
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new laws or regulations or new interpretations of existing laws or regulations
applicable to our business;
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changes in accounting standards, policies, guidance, interpretations or principles; |
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changes in our growth rates or our competitors growth rates; |
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developments regarding our patents or proprietary rights or those of our competitors; |
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our inability to raise additional capital as needed; |
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concern as to the performance of our products; |
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changes in financial markets or general economic conditions; |
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sales of common stock by us or members of our management team; and |
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changes in stock market analyst recommendations or earnings estimates regarding our
common stock, other comparable companies or our industry generally. |
Future sales of our common stock could adversely affect its price and our future capital-raising
activities could involve the issuance of equity securities, which would dilute your investment and
could result in a decline in the trading price of our common stock.
We may sell securities in the public or private equity markets if and when conditions are
favorable, even if we do not have an immediate need for additional capital at that time. Sales of
substantial amounts of common stock, or the perception that such sales could occur, could adversely
affect the prevailing market price of our common stock and our ability to raise capital. We may
issue additional common stock in future financing transactions or as incentive compensation for our
executive management and other key personnel, consultants and advisors. Issuing any equity
securities would be dilutive to the equity interests represented by our then-outstanding shares of
common stock. The market price for our common stock could decrease as the market takes into
account the dilutive effect of any of these issuances. Furthermore, we may enter into financing
transactions at prices that represent a substantial discount to the market price of our common
stock. A negative reaction by investors and securities analysts to any discounted sale of our
equity securities could result in a decline in the trading price of our common stock.
Sales of shares issued in recent placements may cause the market price of our shares to decline.
On December 15, 2009, we issued 10,348,160 shares of common stock to institutional investors in and
outside the United States. We have agreed to register with the SEC up to 9,024,960 of those shares
for resale as described in this prospectus. The shares issued on December 15, 2009 represent
approximately 1/3rd of our issued and outstanding shares of common stock. Upon the effectiveness
of the registration statement of which this prospectus is a part, they may be freely sold in the
open market. The sale of a significant amount of shares in the open market, or the perception that
these sales may occur, could cause the trading price of our common stock to decline or become
highly volatile.
We may have to pay liquidated damages to our investors, which will increase our negative cash
flows.
In connection with the December 15, 2009 issuance of shares described above, we entered into a
Registration Rights Agreement. Under the terms of the Registration Rights Agreement, if a
registration statement relating to the shares covered by this prospectus is not declared effective
by the SEC within the time periods specified in the Registration Rights Agreement or, after having
been declared effective, is not available (with certain limited exceptions), then we are required
to pay the investors, as liquidated damages, 1.5% of the amount invested for each 30-day period (or
pro rata portion thereof) during which such failure continues until the shares are sold or can be
sold without restriction under Rule 144. As of the date of this prospectus, no liquidated damages
have accrued. There can be no assurance that the registration statement of which this prospectus
is a part will be declared or will remain effective by the SEC for the time periods necessary to
avoid payment of liquidated damages.
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We do not expect to pay cash dividends on our common stock for the foreseeable future.
We have never paid cash dividends on our common stock and do not anticipate that any cash dividends
will be paid on the common stock for the foreseeable future. The payment of any cash dividend by
us will be at the discretion of our board of directors and will depend on, among other things, our
earnings, capital, regulatory requirements and financial condition. Furthermore, the terms of our
Series B and Series A preferred Stock limit our ability to pay cash dividends on our Common Stock.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Information in and incorporated by reference into this prospectus contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the safe
harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange
Act), and Section 27A of the Securities Act. These forward-looking statements often can be, but
are not always, identified by the use of words such as assume, expect, intend, plan,
project, believe, estimate, predict, anticipate, may, might, should, could,
goal, potential and similar expressions. Such forward-looking statements, including, without
limitation, those relating to the future business prospects, revenues and income of Enova, wherever
they occur, are necessarily estimates reflecting the best judgment of our senior management on the
date on which they were made, or if no date is stated, as of the date of this prospectus.
Forward-looking statements are subject to risks, uncertainties and assumptions, including those
described in the section entitled Risk Factors and elsewhere in the documents incorporated by
reference into this prospectus, including our Annual Report on Form 10-K for the fiscal year ended
December 31, 2008 and our subsequent SEC filings.
Because actual results or outcomes could differ materially from those expressed in any
forward-looking statements made by us or on our behalf, you should not place undue reliance on any
such forward-looking statements. New factors emerge from time to time, and it is not possible for
us to predict which factors will arise. In addition, we cannot assess the impact of each factor on
our business or the extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or any other reason. All subsequent forward-looking
statements attributable to us or any person acting on our behalf are expressly qualified in their
entirety by the cautionary statements contained or referred to herein. In light of these risks,
uncertainties and assumptions, the forward-looking events discussed in this prospectus may not
occur.
USE OF PROCEEDS
We will not receive any of the proceeds from any such sale or other disposition of the common stock
covered by this prospectus.
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SELLING STOCKHOLDERS
We have prepared this prospectus to allow the selling stockholders or their donees, pledgees,
transferees or other successors in interest to sell or otherwise dispose of, from time to time, up
to 9,024,960 shares of our common stock which they acquired pursuant to the Purchase Agreement
dated October 29, 2009. The table below presents information regarding the selling stockholders and
the shares of our common stock that they may sell or otherwise dispose of from time to time under
this prospectus. Percentages of beneficial ownership are based upon 31,363,120 shares of common
stock issued and outstanding as of December 28, 2009. Beneficial ownership is determined under
Section 13(d) of the Exchange Act and generally includes voting or investment power with respect to
securities and including any securities that grant the selling stockholder the right to acquire
common stock within 60 days of December 28, 2009. We do not know when or in what amounts the
selling stockholders may sell or otherwise dispose of the shares covered hereby. The selling
stockholders might not sell any or all of the shares covered by this prospectus or may sell or
dispose of some or all of the shares other than pursuant to this prospectus. Because the selling
stockholders may not sell or otherwise dispose of some or all of the shares covered by this
prospectus and because there are currently no agreements, arrangements or understandings with
respect to the sale or other disposition of any of the shares, we cannot estimate the number of the
shares that will be held by the selling stockholders after completion of the offering. However,
for purposes of this table, we have assumed that all of the shares covered by this prospectus will
be sold by the selling stockholders.
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NUMBER OF SHARES |
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SHARES BENEFICIALLY OWNED |
NAME OF |
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BENEFICIALLY OWNED |
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NUMBER OF SHARES |
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AFTER OFFERING |
SELLING STOCKHOLDERS(1) |
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BEFORE OFFERING |
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COVERED HEREBY |
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NUMBER |
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PERCENTAGE |
Special Situations Fund III QP, L.P. (2) |
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3,403,445 |
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3,000,000 |
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403,445 |
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1.3 |
% |
Special Situations Cayman Fund, L.P. (2) |
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1,127,369 |
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1,000,000 |
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127,369 |
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* |
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Stitching Shell Pensioenfonds (3) |
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1,466,404 |
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464,960 |
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1,001,444 |
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3.2 |
% |
Shell Pensions Trust Limited as trustee of the Shell
Contributory Pension Fund (3) |
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2,294,816 |
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1,210,000 |
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1,084,816 |
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3.5 |
% |
Shell Trust (Bermuda) Limited as trustee of the Shell
Overseas Contributory Pension Fund (3) |
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2,293,740 |
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1,500,000 |
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793,740 |
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2.5 |
% |
SAM Sustainable Asset Management AG on behalf of the Julius
Bar Multipartner SAM Smart Energy Fund (4) |
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1,771,750 |
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1,500,000 |
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271,750 |
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* |
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Eruca Limited (5) |
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484,567 |
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250,000 |
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234,567 |
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* |
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Silicon Prairie Partners LP (6) |
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122,000 |
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100,000 |
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22,000 |
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* |
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* |
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Represents beneficial ownership of less than 1% |
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(1) |
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Unless otherwise noted, this table is based on information supplied to us by the selling
stockholders and certain records of the Company. |
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(2) |
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MGP Advisors Limited (MGP) is the general partner of the Special Situations Fund III, QP,
L.P. AWM Investment Company, Inc. (AWM) is the general partner of MGP and the general
partner of and investment adviser to the Special Situations Cayman Fund, L.P. Austin W. Marxe
and David M. Greenhouse are the principal owners of MGP and AWM. Through their control of MGP
and AWM, Messrs. Marxe and Greenhouse share voting and investment power over the portfolio
securities of each of the funds listed above. |
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(3) |
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Shell Asset Management Company B.V. holds voting and investment power of the shares listed
above. Per the table above, and as reported in its Amendment No. 3 to Schedule 13G filed
December 15, 2009, Shell Asset Management Company B.V. beneficially owns 6,054,960 shares of
our common stock. |
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(4) |
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SAM Sustainable Asset Management AG (SAM), as investment adviser of the Julius Bar Multipartner
SAM Smart Energy Fund (part of the Julius Barr Multipartner SICAV), holds investment power over the shares
listed above. The voting power of the shares listed above is held by
the Julius Barr Multipartner SICAV fund administrator, Swiss & Global Asset Management Ltd. Zurich, which has delegated such voting power
over the shares listed above to SAM, which in turn, has delegated such
voting power to Robeco Institutional Asset Management. |
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(5) |
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Tang Chon Luang, director of Eruca Limited, holds voting and investment power of the shares
listed above. |
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(6) |
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John Micek, a director of Enova, is Managing Director at Silicon Prairie Partners L.P.
Through his control of Silicon Prairie Partners L.P., Mr. Micek holds voting and investment
power over the shares listed above. In addition, Mr. Micek beneficially owns 57,584 shares of
our common stock for his own account. |
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PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees, transferees or other
successors-in-interest selling shares of common stock or interests in shares of common stock
received after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise
dispose of any or all of their shares of common stock or interests in shares of common stock on any
stock exchange, market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market prices at the time
of sale, at prices related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling stockholders may use any one or more of the following methods when disposing of shares
or interests therein:
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ordinary brokerage transactions and transactions in which the broker-dealer solicits
purchasers; |
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block trades in which the broker-dealer will attempt to sell the shares as agent, but
may position and resell a portion of the block as principal to facilitate the transaction; |
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purchases by a broker-dealer as principal and resale by the broker-dealer for its
account; |
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an exchange distribution in accordance with the rules of the applicable exchange; |
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privately negotiated transactions; |
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short sales effected after the date the registration statement of which this Prospectus
is a part is declared effective by the SEC; |
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through the writing or settlement of options or other hedging transactions, whether
through an options exchange or otherwise; |
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broker-dealers may agree with the selling stockholders to sell a specified number of
such shares at a stipulated price per share; and |
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a combination of any such methods of sale. |
The selling stockholders may, from time to time, pledge or grant a security interest in some or all
of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock,
from time to time, under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list of selling
stockholders to include the pledgee, transferee or other successors in interest as selling
stockholders under this prospectus. The selling stockholders also may transfer the shares of
common stock in other circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of our common stock or interests therein, the selling stockholders may
enter into hedging transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the common stock in the course of hedging the positions they assume.
The selling stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).
- 11 -
The aggregate proceeds to the selling stockholders from the sale of the common stock offered by
them will be the purchase price of the common stock less discounts or commissions, if any. Each of
the selling stockholders reserves the right to accept and, together with their agents from time to
time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering.
The selling stockholders also may resell all or a portion of the shares in open market transactions
in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria
and conform to the requirements of that rule.
The selling stockholders and any underwriters, broker-dealers or agents that participate in the
sale of the common stock or interests therein may be underwriters within the meaning of Section
2(a)(11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any
resale of the shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are underwriters within the meaning of Section 2(a)(11) of the
Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
To the extent required, the shares of our common stock to be sold, the names of the selling
stockholders, the respective purchase prices and public offering prices, the names of any agents,
dealer or underwriter, any applicable commissions or discounts with respect to a particular offer
will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable, the common stock may be
sold in these jurisdictions only through registered or licensed brokers or dealers. In addition,
in some states the common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the
Exchange Act may apply to sales of shares in the market and to the activities of the selling
stockholders and their affiliates. In addition, to the extent applicable we will make copies of
this prospectus (as it may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including liabilities arising under
the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities, including liabilities
under the Securities Act and state securities laws, relating to the registration of the shares
offered by this prospectus.
We have agreed with the selling stockholders to keep the registration statement of which this
prospectus constitutes a part effective until the earlier of (1) such time as all of the shares
covered by this prospectus have been disposed of pursuant to and in accordance with the
registration statement or (2) the date on which the shares may be sold without restriction pursuant
to Rule 144 of the Securities Act.
EXPERTS
The consolidated financial statements of Enova Systems, Inc. as of December 31, 2008 and 2007 have
been incorporated by reference herein in reliance upon the report of PMB Helin Donovan, LLP,
independent registered public accounting firm, given upon the authority of that firm as experts in
accounting and auditing.
LEGAL MATTERS
The validity of our common stock offered hereby will be passed upon for us by Reed Smith LLP, San
Francisco, California.
- 12 -
WHERE YOU CAN FIND MORE INFORMATION
We electronically file annual, quarterly and special reports, proxy and information statements and
other information with the SEC. The public may read and copy any materials we file with the SEC at
the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the
SEC. The address of that site is http://www.sec.gov. Our website address is www.enovasystems.com.
Information contained in, or accessible through, our website is not a part of this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with them, which means that
we can disclose important information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any filings that we will make with the SEC (other than
current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed on such form
that are related to such items) under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the initial filing date of the registration statement of which this prospectus forms a part and
prior to the termination of this offering:
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Our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 filed with
the SEC on March 31, 2009 and amended on October 13, 2009; |
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Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009 filed with
the SEC on May 13, 2009 and amended on October 13, 2009; |
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Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009 filed with
the SEC on August 14, 2009 and amended on October 13, 2009; |
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Our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2009 filed
with the SEC on November 12, 2009; |
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Our Current Reports on Form 8-K filed with the SEC on February 23, 2009, April 13, 2009,
April 16, 2009, October 28, 2009, October 30, 2009, December 16, 2009, and December 24,
2009; and |
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The description of our common stock included in our registration statement on Form 8-A
filed with the SEC on August 28, 2006. |
We will provide without charge upon written or oral request, to each person, including any
beneficial owner, to whom a prospectus is delivered, a copy of any or all of the documents
incorporated by reference, including exhibits to these documents. You should direct any requests
for documents to:
Chief Financial Officer
Enova Systems, Inc..
1560 West 190th Street
Torrance, CA 90501
(310) 527-2800
- 13 -