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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="right" style="font-size: 10pt">Registration No. 333-<U>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;</U>



<P align="center" style="font-size: 10pt">As filed with the Securities and Exchange Commission<BR>
on November&nbsp;18, 2004



<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="50%">


<P align="center" style="font-size: 14pt">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION

<DIV align="center" style="font-size: 12pt">Washington, D.C. 20549
</DIV>

<DIV align="center" style="font-size: 12pt"><B><HR align="center" size="1" noshade width="25%"></B>
</DIV>

<P align="center" style="font-size: 18pt">FORM S-8

<DIV align="center" style="font-size: 10pt">REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</DIV>



<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="50%">


<P align="center" style="font-size: 16pt"><B>ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.</B>

<DIV align="center" style="font-size: 10pt"><I>(Exact name of issuer as specified in its charter)</I></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B><BR>
<I>(State or other jurisdiction of
incorporation or organization)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>71-0675758</B><BR>
<I>(I.R.S. Employer Identification No.)</I></TD>
</TR>
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</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
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<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
</TR>
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<TR valign="bottom">
    <TD align="center" valign="top"><B>914 N Jefferson Street<BR>
Springdale, Arkansas</B><BR>
<I>(Address of principal executive offices)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>72764</B><BR>
<I>(Zip Code)</I></TD>
</TR>

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</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.:<BR>
AMENDED AND RESTATED STOCK OPTION PLAN<BR>
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN<BR>
CHAIRMAN STOCK OPTION PLAN<BR>
AND 1997 SECURITIES PLAN<BR>
<I>(Full title of the plans)</I>



<P align="center" style="font-size: 10pt">Joe G. Brooks, Chairman<BR>
Advanced Environmental Recycling Technologies, Inc.<BR>
914 N Jefferson Street<BR>
Springdale, Arkansas 72764<BR>
<I>(Name and address of agent for service)</I>



<P align="center" style="font-size: 10pt">(479)&nbsp;756-7400<BR>
<I>(Telephone number, including area code, of agent for service)</I>



<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="50%">



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt">CALCULATION OF REGISTRATION FEE


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="85%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Proposed</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Proposed maximum</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Title of Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount to be</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>maximum offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>aggregate offering</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>to be Registered</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>registered (1)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>price per share</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>price</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>registration fee</B><HR size="1" noshade></TD>
</TR>

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<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Class&nbsp;A
common stock $0.01
par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">4,634,130 shares (2)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1.04</TD>
    <TD nowrap>&nbsp;&nbsp;(3)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,819,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">610.63</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Class&nbsp;A
common stock $0.01
par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">&nbsp;&nbsp;&nbsp;&nbsp;13,537 shares (4)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1.37</TD>
    <TD nowrap>&nbsp;&nbsp;(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">18,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2.35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Class&nbsp;A
common stock $0.01
par value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">&nbsp;&nbsp;&nbsp;335,000 shares (6)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">1.37</TD>
    <TD nowrap>&nbsp;&nbsp;(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">458,950</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">58.15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>

<TD colspan="3" align="center">4,982,667
shares&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,296,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">671.13</TD>
    <TD>&nbsp;</TD>
</TR>

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</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pursuant to Rule&nbsp;416 under the Securities Act, there are also registered
hereby such indeterminate number of securities as may become issuable by
reason of the anti-dilution provisions of the plans referred to herein.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Issuable upon exercise of outstanding options under the Amended and
Restated Stock Option Plan (which covers 481,000 shares of Class&nbsp;A common
stock in the aggregate), the Non-Employee Director Stock Option Plan
(which covers 215,000 shares of Class&nbsp;A common stock in the aggregate),
the Chairman Stock Option Plan (which covers 500,000 shares of Class&nbsp;A
common stock in the aggregate) and the 1997 Securities Plan (which covers
3,438,130 shares of Class&nbsp;A common stock in the aggregate).</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Weighted average exercise price of options outstanding under the Amended
and Restated Stock Option Plan, the Non-Employee Director Stock Option
Plan, the Chairman Stock Option Plan and the 1997 Securities Plan.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Issuable upon exercise of options and other incentive stock grants of the
Class&nbsp;A common stock available for grant under the 1997 Securities Plan.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(h) under the Securities Act. Calculated on the basis
of the average of the highest and lowest sale prices of the Class&nbsp;A common
stock on November&nbsp;11, 2004, as reported by NASDAQ.</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Shares previously issued upon exercise of options granted pursuant to the
1997 Securities Plan.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P align="center" style="font-size: 10pt">EXPLANATORY NOTE



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Registrant has prepared this Registration Statement in accordance with
the requirements of Form S-8 under the Securities Act of 1933, as amended (the
&#147;Securities Act&#148;), to register (i)&nbsp;4,634,130 shares of Class&nbsp;A common stock
that are issuable upon the exercise of options previously granted under the
Registrant&#146;s Amended and Restated Stock Option Plan, the Non-Employee Director
Stock Option Plan, the Chairman Stock Option Plan and the 1997 Securities Plan,
and (ii)&nbsp;13,537 shares of Class&nbsp;A common stock issuable upon the exercise of
stock options or other forms of derivatives or other incentive stock grants
related to the shares, which may be granted by the Registrant after the date
hereof under the 1997 Securities Plan.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Registration Statement also includes a prospectus (the &#147;Reoffer
Prospectus&#148;) prepared in accordance with General Instruction C of Form S-8 and
in accordance with the requirements of Part&nbsp;I of Form S-3. This Reoffer
Prospectus may be used for reofferings or resales on a continuous or delayed
basis in the future of an aggregate of 335,000 shares of Class&nbsp;A common stock
that have been previously issued by the Registrant upon exercise of options
granted under the 1997 Securities Plan.


<P align="center" style="font-size: 10pt">Part I



<P align="center" style="font-size: 10pt">INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS



<P align="left" style="font-size: 10pt">Item&nbsp;1. Plan Information.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The document(s) containing the information specified in Part&nbsp;I of Form S-8
will be sent or given to participants in the Amended and Restated Stock Option
Plan, the Non-Employee Director Stock Option Plan, the Chairman Stock Option
Plan and the 1997 Securities Plan as specified by Rule&nbsp;428(b)(1) under the
Securities Act. Such documents are not being filed with the Securities and
Exchange Commission, but constitute along with the documents incorporated by
reference into this Registration Statement, a prospectus that meets the
requirements of Section 10(a) of the Securities Act.


<P align="left" style="font-size: 10pt">Note: The Reoffer Prospectus referred to in the Explanatory Note follows this page.



<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>Reoffer Prospectus</B>

<P align="center" style="font-size: 10pt"><B>Advanced Environmental Recycling Technologies, Inc.</B>

<P align="center" style="font-size: 10pt"><B>Securities to be offered:</B>

<P align="center" style="font-size: 10pt"><B>Up To 335,000 Shares Of Class&nbsp;A Common Stock</B>

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus covers the resale by the selling stockholders identified
on pages 8 and 9 of some or all of the shares of our Class&nbsp;A common stock they
own pursuant to the exercise of options granted under our 1997
Securities Plan. The shares may be sold from time to time by the selling stockholders
through public or private transactions, at prevailing market prices or at
privately negotiated prices. We will not receive any of the proceeds from the
sale of the shares by the selling stockholders.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will pay all costs and expenses incurred by our company in connection
with the registration of the shares under the Securities Act of 1933. The
selling stockholders will pay the costs associated with any sale of shares,
including any discounts, commissions and applicable transfer taxes.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Class&nbsp;A common stock is traded on the Nasdaq SmallCap Market under the
symbol &#147;<B>AERTA</B>&#148;. On November&nbsp;11, 2004, the last reported sale price of our
Class&nbsp;A common stock was $1.36 per share, as reported by the Nasdaq SmallCap
Market System.

<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive offices
are located at 914 N Jefferson Street,
Springdale, Arkansas 72764, and our telephone number is (479)&nbsp;756-7400.

<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="10%">

<P align="left" style="font-size: 10pt"><B><I>The securities offered in this prospectus involve a high degree of risk. You
should purchase shares only if you can afford a complete loss. See &#147;Risk
Factors&#148; beginning on page 2.</I></B>

<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="10%">

<P align="left" style="font-size: 10pt"><B><I>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.</I></B>

<P align="center" style="font-size: 10pt"><HR align="center" size="1" noshade width="10%">

<P align="center" style="font-size: 10pt">The date of this prospectus
is November&nbsp;18, 2004

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="center" style="font-size: 10pt"><B>Table Of Contents</B>


<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="92%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#101">Our Business</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#102">Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#103">Special Note Regarding Forward-Looking Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#104">Use Of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#105">Selling Stockholders</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#106">Plan Of Distribution</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#107">Legal Matters</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#108">Experts</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px"><A href="#109">Where You Can Find More Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d20094exv4w4.htm">Amended and Restated 1997 Securities Plan</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d20094exv5.htm">Opinion/Consent of Akin Gump Strauss Hauer & Feld LLP</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="d20094exv23w2.htm">Consent of Tullius Taylor Sartain & Sartain LLP</A></FONT></TD></TR>
</TABLE>
</DIV>


<DIV align="left">
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</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="101"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Our Business</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We develop, manufacture and market composite building materials that are
used in place of traditional wood products for exterior applications in
building and remodeling homes and for certain other industrial or commercial
building purposes. Since inception in 1989, we have sold in excess of $235
million of products into the North American marketplace. Our products are made
from approximately equal amounts of waste wood fiber and reclaimed polyethylene
plastic, have been extensively tested, and are sold by leading national
companies such as the Weyerhaeuser Company (Weyerhaeuser), Lowe&#146;s Companies,
Inc. (Lowe&#146;s) and Therma-Tru Corporation. Our growing line of non-wood
alternative building materials include standard door components, windowsills,
brick mould, fascia board, and heavy industrial flooring sold under the trade
names LifeCycle&#174;, MoistureShield&#174;, MoistureShield&#174; CornerLoc&#153; and a variety of
composite decking products under the trade name Weyerhaeuser ChoiceDek&#174;. We
operate five manufacturing facilities. The composite building products are
manufactured in Junction, Texas and Springdale, Arkansas. There are two plastic
processing plants &#151; one in Lowell, Arkansas and one in
Alexandria, Louisiana &#151; and a painting, finishing and packaging plant in Tontitown, Arkansas.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should rely only on the information contained in this prospectus or
incorporated by reference into this prospectus. We have not authorized any
other person to provide you with different information. 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 Class&nbsp;A common stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, nor shall there be any sale of these shares by any person in
any jurisdiction in which it is unlawful for that person to make such an offer,
solicitation or sale.


<P align="center" style="font-size: 10pt">1
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="102"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Risk Factors</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This offering involves a high degree of risk. You should carefully
consider the risks described below and other information contained in this
prospectus before deciding to invest in shares of our Class&nbsp;A common stock.


<P align="left" style="font-size: 10pt"><B>We have a working capital deficit</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At September&nbsp;30, 2004, we had a working capital deficit of $1.1&nbsp;million
and at December&nbsp;31, 2003, we had a working capital deficit of $1.9&nbsp;million.
The working capital deficit is the result of previously incurred losses from operations
and our decision to finance capital projects with cash generated from
operations. Additionally, pursuant to our bond agreement, we are required to
maintain a debt service reserve fund in the amount of $2&nbsp;million, which is
classified as a non-current asset in our balance sheet.


<P align="left" style="font-size: 10pt"><B>Our limited manufacturing capabilities could restrain our business growth</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The long-term success of our operations will depend upon the manufacture
of our composite products on a substantially greater commercial scale than we
have engaged in to date or have the current production capacity to engage in.
Our primary customers and markets are large, and continued increased sales
growth will require significant capital expenditures. Although we believe
financing can be obtained to add production equipment and build additional
manufacturing facilities, there is no assurance that we will secure the
necessary financing or that the equipment and facilities will become
operational in a timely manner. We currently have one composite manufacturing
facility in Junction, Texas, and a second composite manufacturing facility in
Springdale, Arkansas, but plan to increase production capacity at both
facilities, and plan to build a third composite manufacturing facility adjacent
to our current facility in Springdale in 2005.


<P align="center" style="font-size: 10pt">2
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<P align="left" style="font-size: 10pt"><B>Declines in construction activity may adversely affect our business</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our engineered composites have been marketed primarily to companies that
manufacture products for use by the construction industry in new home
construction and home improvement work. The construction industry is subject
to significant fluctuations in activity and to periodic downturns caused by
general economic conditions. Increases in long-term interest rates can have a
negative effect by slowing housing starts due to increased financing costs.
Reductions in construction activity could have an adverse effect on the demand
for our composites in the door and window market. However, we believe our
decking lines, which are primarily targeted to the independent
contractor-oriented lumber dealers and the remodeling market, are not as
susceptible to downturns in construction activity.


<P align="left" style="font-size: 10pt"><B>The loss of one or more of our key customers could cause a substantial
reduction in our revenues</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We could be materially adversely affected if we were to lose one or more
of our large existing customers. We have limited our marketing to major
industrial companies with large market shares nationwide in the building
material, door, and window construction industries. Our principal marketing
and distribution channel for our decking material is Weyerhaeuser, which
accounted for 81% of our sales in both 2003 and 2002. Since inception, a few
large door and window construction companies have historically purchased
substantially our entire MoistureShield&#174; product line. Most of our key door
and window customers are not contractually obligated to purchase additional
products.


<P align="left" style="font-size: 10pt"><B>Fire disruptions may adversely affect our business</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our raw materials and manufacturing processes involve a greater than
average risk of fire loss or disruption. We experienced a series of fires in
1996, which severely disrupted our manufacturing operations, although these
were determined to be instances of arson. The pattern of fires caused our fire
insurance to be cancelled, but we were subsequently able to renew it. There
was an accidental fire at our Junction, Texas facility in March&nbsp;2003, which
caused substantial damage and temporarily shut down plant operations. Although
we have increased security and increased fire protection equipment at our
facilities, another major fire could occur and materially adversely affect our
operations.


<P align="left" style="font-size: 10pt"><B>We could face future litigation</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We were sued in May&nbsp;2000, in a federal action in the Western District of
Texas, for breach of contract seeking royalties allegedly owed but unpaid from
a 1987 settlement of prior litigation against a predecessor entity and two of
our founders in the United States District Court for the Western District. The
plaintiffs were seeking approximately $1.2&nbsp;million in past royalties, plus
attorneys&#146; fees, any applicable pre-judgment and post-judgment interest, and a
declaration that we pay an ongoing royalty in the amount of $10 per ton on
future sales from our Junction, Texas facility on production utilizing cedar
fiber and recycled plastic. In 2001, the plaintiffs amended the complaint to
include two of our founders as co-defendants. At trial, the plaintiffs obtained
a judgment for past royalties in the amount of approximately $821,000, plus
prejudgment and post-judgment interest and attorneys&#146; fees. We settled the
lawsuit in December&nbsp;2002 for $1,100,000. The court, in May&nbsp;2002, declined to
enter a declaratory judgment requested by the plaintiff requiring us to pay a
royalty on a monthly basis in the future on our products, but the release
executed in connection with the December&nbsp;2002 settlement does not release any
potential claims for royalties after January&nbsp;1, 2002.


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<P align="left" style="font-size: 10pt"><B>Covenants in our bond agreements could restrict our ability to borrow, which
could impair the improvement and expansion of our operations</B>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain covenants in our bond agreements restrict the types and amounts of
additional indebtedness that we may incur, including a requirement that, with
certain exceptions, we may only incur additional indebtedness to the extent it
would satisfy a debt incurrence coverage ratio of 250% of income
before interest, taxes, depreciation and amortization to debt
service. Those restrictions could inhibit our ability to improve our current
operations and expand our operations. Additionally, our ability to secure
adequate working capital to support our day-to-day operations as we grow could
be limited by the covenants in our bond agreements.

<P align="left" style="font-size: 10pt"><B>If we are unable to comply with certain debt covenants, our financial position
and operations could be adversely affected</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The bond agreement contains financial covenants, which include a current
ratio of not less than 1.00 to 1.00 and a requirement that not more than 10% of
accounts payable be in excess of 75&nbsp;days past the invoice date. We were not in
compliance with these two covenants at December&nbsp;31, 2003. The accounts payable
covenant was waived, and the current ratio covenant was modified to include the
debt service reserve fund in current assets for purposes of the current ratio
calculation, resulting in our compliance with this covenant at December&nbsp;31,
2003. There is no assurance that we will be able to comply with these debt
covenants in the future, or that the bondholder will waive or modify the
covenants in the future. If we are unable to comply with the covenants or
obtain a waiver or modification of the covenants in the future, then the bond
debt in the amount of $14.4&nbsp;million could immediately become due and payable,
the bondholder could foreclose on the property used to secure the debt, and the
bondholder could claim our revenues pledged as part of the bond agreement.

<P align="left" style="font-size: 10pt"><B>Our common stock could be diluted or otherwise adversely affected by additional
issuances of preferred stock</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional issuances of preferred stock may provide for rights that
adversely affect the Class&nbsp;A common stock or may be convertible into shares of
Class&nbsp;A common stock on a basis which would cause dilution. We are authorized
to issue up to 5,000,000 shares of preferred stock, 2,900 shares of which have
been issued. Our board of directors is empowered to fix the terms of the
preferred stock without stockholder approval, which terms may adversely affect
the rights of holders of the Class&nbsp;A common stock.

<P align="left" style="font-size: 10pt"><B>We could be required to pay liquidated damages on preferred stock</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we default under certain obligations with respect to our outstanding
preferred stock, we may be required to pay liquidated damages to the holders of
the preferred stock. Our outstanding Series&nbsp;A, B and C convertible preferred
stock (total stated value of $2,760,000) has a 10% per annum accreting premium
for conversion, redemption and liquidation purposes. Although the preferred
stock is not mandatorily redeemable, we could be required to pay as liquidated
damages an amount equal to 10% of the stated value of the preferred stock if we
default under the provisions of the preferred stock agreements. The liquidated
damages amount is payable at our option in either cash or shares of Class&nbsp;A
common stock. The redemption price is generally equal to the greater of (a)
the aggregate market value of the Class&nbsp;A common stock into which


<P align="center" style="font-size: 10pt">4
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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">the preferred stock could be converted and (b)&nbsp;115% of the sum of (i)&nbsp;the
stated value, (ii)&nbsp;the 10% per annum premium, and (iii)&nbsp;any unpaid conversion
default payment. Payment of the liquidated damages amount in common stock
would result in substantial dilution to existing holders of common stock.


<P align="left" style="font-size: 10pt"><B>The floating conversion feature of our convertible preferred stock could cause
a drop in our stock price</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conversion of a material amount of our convertible preferred stock into
Class&nbsp;A common stock, which would increase the total number of Class&nbsp;A common
stock in the marketplace, could cause a drop in our stock price. Our
convertible preferred stock is convertible into common stock at the holder&#146;s
option at any time at a conversion price equal to the lower of a fixed $1.20
conversion price or the 10-trading day average closing bid price immediately
prior to the date of conversion. At November&nbsp;11, 2004, the applicable
conversion price was $1.20.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based on these conversion price formulae, whenever the prevailing market
price of the common stock is below $1.20, the convertible preferred stock will
be convertible into a proportionately greater number of shares of common stock.
The number of shares we could be required to issue in payment of the premium on
the preferred stock would also increase whenever the market price of the common
stock is below $1.20. In that event, the lower the price of our common stock
at the time of conversion, the more shares into which the convertible preferred
stock will be convertible. There is no minimum conversion price for the
preferred stock. These increases in the number of shares issuable upon
conversion of the convertible preferred stock and upon payment of the premium
on the preferred stock could result in a substantial dilution to other holders
of Class&nbsp;A common stock and could cause a decline in the market price of the
Class&nbsp;A common stock due to the added number of shares in the market. In
addition, substantial sales by the holders of the convertible preferred stock
could place further downward pressure on our stock price and permit holders of
our convertible preferred stock to convert additional shares at a lower price,
which would further add to the number of shares in the market and cause the
price to fall further. An additional reduction of the price of Class&nbsp;A common
stock shares may occur if shareholders or others begin to sell the Class&nbsp;A
common stock short to take advantage of the falling stock price caused by
preferred stock holders converting material amounts of their preferred stock.

<P align="left" style="font-size: 10pt"><B>Future sales of shares could be dilutive and impair our ability to raise
capital</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion of a significant number of our outstanding derivative
securities into Class&nbsp;A common stock could adversely affect the market price of
the stock. At November&nbsp;11, 2004, we had reserved approximately 23,339,300
shares of Class&nbsp;A common stock for issuance upon conversion of outstanding
preferred stock, Class&nbsp;B Common stock, and upon exercise of outstanding
warrants and options. Of those reserved shares, 18,705,170 are covered by
other registration statements and can be sold from time to time. This
prospectus covers the potential sale from time to time of up to 335,000 of such
reserved shares of Class&nbsp;A common stock.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The exercise or conversion of a material amount of such securities will
result in a dilution in interest for our other security holders. Such
convertible securities, whether converted into


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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">stock or not, could impair our ability to obtain additional capital because of
the potential for dilution. Also, the holders of such securities may be
expected to exercise their rights at a time when we would in all likelihood be
able to obtain needed capital through a new offering of our securities on terms
more favorable than those provided by the outstanding securities.



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<A name="103"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Special Note Regarding Forward-Looking Statements</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have made statements in this prospectus, including statements under
&#147;Our Business&#148; and &#147;Risk Factors,&#148; which constitute forward-looking statements
within the meaning of Section&nbsp;27A of the Securities Act of 1933 and Section&nbsp;21E
of the Securities Exchange Act of 1934. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions, including, among
other things:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to obtain additional debt and equity
financing to satisfy existing debt obligations, provide
working capital and support our growth strategy;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our expectations and estimates concerning future
financial performance, financing plans and the impact of
competition;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general economic and business conditions;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipated trends in our business;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>existing and future regulations affecting our business;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to improve operating efficiencies and increase sales; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other risk factors described in the section
entitled &#147;Risk Factors&#148; in this prospectus.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You can identify these forward-looking statements by forward-looking words
such as &#147;believe,&#148; &#147;may,&#148; &#147;could,&#148; &#147;will,&#148; &#147;estimate,&#148; &#147;continue,&#148;
&#147;anticipate,&#148; &#147;intend,&#148; &#147;seek,&#148; &#147;plan,&#148; &#147;expect,&#148; &#147;should,&#148; &#147;would&#148; and similar
expressions in this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus may not occur and actual results
could differ materially from those anticipated or implied in the
forward-looking statements.


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<DIV align="left">
<A name="104"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Use Of Proceeds</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not receive any of the proceeds from the sale of shares of Class&nbsp;A
common stock by the selling stockholders. Proceeds from the exercises of
options from time to time have been used for general corporate purposes,
primarily for working capital to sustain operations and for capital
expenditures to further develop our business.

<DIV align="left">
<A name="105"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Selling Stockholders</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus covers the resale of up to 335,000 shares of Class&nbsp;A
common stock previously issued
to employees or consultants upon the exercise of stock options granted to them
pursuant to our 1997 Securities Plan.


<P align="left" style="font-size: 10pt"><B>1997 Securities Plan</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Between
May&nbsp;30, 1997 and November&nbsp;11, 2004, 4,986,463 stock options were
issued under the 1997 Securities Plan that were not forfeited. Since the
original issuance of the options, 1,548,333 have been exercised and 3,438,130
remain exercisable at exercise prices ranging from $0.375 to $2.75. Each stock
option is exercisable for one share of Class&nbsp;A common stock. We may issue up
to an additional 13,537 shares pursuant to grants under the 1997 Securities
Plan after the date of this prospectus. The above numbers are subject to adjustment in accordance with the
anti-dilution provisions of the plan.


<P align="left" style="font-size: 10pt"><B>Selling Stockholders</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the names of the selling stockholders, the
number of shares of common stock owned beneficially by each of the selling
stockholders as of November&nbsp;11, 2004, and the number of shares which may be
offered for sale in connection with this prospectus. Information set forth
herein with respect to each selling stockholder&#146;s beneficial ownership of
common stock has been provided by such selling stockholder. Although the
selling stockholders may offer all, some or none of their Class&nbsp;A common stock,
the following table has been prepared on the assumption that all shares of
common stock covered by this prospectus will be sold. Unless otherwise
indicated, the persons and entities named in the table have sole voting and
sole investment power with respect to all shares beneficially owned, subject to
community property laws where applicable. This prospectus may be
amended or supplemented from time to time to amend or supplement the
information in the table set forth below.


<P align="center" style="font-size: 10pt">8
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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="70%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="43%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>&nbsp;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Name and Address of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned Prior</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% Beneficially Owned</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Selling</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Beneficially</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>to Completion</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>to be</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Following Completion</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Stockholder (1)(2)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Owned</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Offering</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Offered (3)</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>of Offering (4)</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">James Kelly Schmidt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Marcy Zahm</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,085</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Florentino Sanchez</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Steve Couey</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Jane Kiser</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">David Sparks</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Theresa Adams</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Jane Horton</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Monte Hale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Teodoro Hernandez</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Eric Barnes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Jan Wilkinson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">David Higgins</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #eeeeee">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Kirk Ruffridge</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Douglas Triplett</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Totals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>335,000</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="left" style="font-size: 10pt">* Beneficially owns less than 1%


<P align="left" style="font-size: 10pt">(1)&nbsp;Address: PO Box 1237, Springdale, AR 72765.

<P align="left" style="font-size: 10pt">(2)&nbsp;All selling
stockholders are current or former employees of the Company with the exception
of David Higgins and Douglas Triplett who were engineering consultants.

<P align="left" style="font-size: 10pt">(3)&nbsp;The number of shares to be offered represents shares received upon the
exercise of stock options.


<P align="left" style="font-size: 10pt">(4)&nbsp;Assumes the sale of all shares offered hereby.


<DIV align="left">
<A name="106"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Plan Of Distribution</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus covers the resale of shares of Class&nbsp;A common stock by the
selling stockholders and their pledgees, donees, assignees and other successors
in interest (all of whom may be &#147;selling stockholders&#148;). The selling
stockholders may sell their shares on the Nasdaq SmallCap Market, in the
over-the-counter market or through any other facility on which the shares are
traded, or in private transactions. These sales may be at market prices or at
negotiated prices. The selling stockholders may use the following methods when
selling shares:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ordinary brokerage transactions and transactions
in which the broker or dealer solicits purchasers;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>block trades in which the broker or dealer
attempts to sell the shares as agent, but may position and
resell a portion of the block as principal to facilitate the
transaction;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">9
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>purchases by a broker dealer as principal and
resale by the broker or dealer for its account in connection
with this prospectus;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>privately negotiated transactions;</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any combination of these methods of sale; or</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any other legal method.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders may also pledge their shares, enter into put or
call options or enter into other transactions with broker-dealers or others
which require delivery to those persons of shares covered by this prospectus.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brokers, dealers or other agents participating in the distribution of the
shares of Class&nbsp;A common stock may receive compensation in the form of
discounts or commissions from the selling stockholders, as well as the
purchaser if they act as agent for the purchaser. The discount or commission in
a particular transaction could be more than the customary amount. We know of no
existing arrangements between any selling stockholder and any underwriter,
broker, dealer or agent relating to the sale or distribution of the shares.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders and any brokers or dealers that participate in
the sale of the shares may be deemed to be underwriters within the meaning of
the Securities Act. Any discounts, commissions or other compensation received
by these persons and any profit on the resale of the shares by them as
principals might be deemed to be underwriters&#146; compensation. The selling
stockholders may agree to indemnify any broker, dealer or agent that
participates in the sale of the shares against various liabilities, including
liabilities under the Securities Act.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the time a particular offer of shares is made, to the extent required
we will file a supplement to this prospectus which identifies the number of
shares being offered, the name of the selling stockholders, the name of any
participating broker or dealer, the amount of discounts and commissions, and
any other material information.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders and any other person participating in a
distribution will be subject to the applicable provisions of the Exchange Act
and its rules and regulations. For example, the anti-manipulative provisions of
Regulation&nbsp;M may limit the ability of the selling stockholders or others to
engage in stabilizing and other market making activities.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The selling stockholders may also sell their shares in accordance with
Rule&nbsp;144 under the Securities Act, rather than in connection with this
prospectus, so long as they meet the criteria and conform to the requirements
of the rule.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will not receive any of the proceeds from the sale of the shares by the
selling stockholders. We will pay the registration and other offering expenses
related to this offering, but


<P align="center" style="font-size: 10pt">10
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">the selling stockholders will pay all underwriting discounts and brokerage
commissions incurred in connection with the offering.


<DIV align="left">
<A name="107"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Legal Matters</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our outside counsel, Akin, Gump, Strauss, Hauer &#038; Feld, L.L.P., San
Antonio, Texas has issued a legal opinion about the validity of the shares
offered by this prospectus.

<DIV align="left">
<A name="108"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Experts</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The audited financial statements for the years ended December&nbsp;31, 2003,
2002 and 2001, incorporated by reference in this prospectus and elsewhere in
the registration statement have been audited by Tullius Taylor Sartain and
Sartain, LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the said firm as
experts in accounting and auditing in giving said report.

<DIV align="left">
<A name="109"></A>
</DIV>

<P align="center" style="font-size: 10pt"><B>Where You Can Find More Information</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at
the SEC&#146;s public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public at the
SEC&#146;s web site at http://www.sec.gov. In addition, reports, proxy statements
and other information concerning us can be inspected and copied at the offices
of Nasdaq, Report Section, 1735 K Street, N.W., Washington, D.C. 20006.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed with the SEC a registration statement on Form S-8 under the
Securities Act covering the shares of Class&nbsp;A common stock to be sold under
this prospectus. The SEC permits us to omit from this prospectus certain
information, exhibits, and undertakings contained in the registration
statement.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The SEC allows us to incorporate by reference the information that we file
with them, which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under sections </I><I>13(a)</I><I>, </I><I>13(c)</I><I>, 14 or </I><I>15(d)</I><I> of the Securities Exchange Act of 1934
until the selling stockholders sell all the shares.</I>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Annual Report on Form 10-K for the fiscal year
ended December&nbsp;31, 2003; and</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Quarterly Reports on Form 10-Q for the quarters
ended March&nbsp;31, 2004, June&nbsp;30, 2004 and September&nbsp;30,
2004; and</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">11
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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of the Class&nbsp;A Common Stock
contained in our Registration Statement on Form 8-A, effective
November&nbsp;13, 1989, under the Securities Exchange Act of 1934
(Registration No.&nbsp;1-10367), including any amendment or report
filed hereafter for the purpose of updating such description.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 the prospectus, at no cost, upon written or oral
request to:


<P align="center" style="font-size: 10pt">Joe G. Brooks, Chairman of
the Board<BR>
Advanced Environmental Recycling Technologies, Inc.<BR>
914 North Jefferson Street (72764)<BR>
Post Office Box 1237<BR>
Springdale, Arkansas 72765<BR>
(479)&nbsp;756-7400


<P align="left" style="font-size: 10pt"><B><I>You should rely only on the information incorporated by reference or provided
in this prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The selling stockholders will not make
an offer of these shares in any state where the offer is not permitted.</I></B>



<P align="left" style="font-size: 10pt"><B><I>This prospectus is part of a registration statement that we filed with the SEC.
More information about the shares sold by the selling stockholders is
contained in that registration statement and the exhibits filed along with the
registration statement. You may read and copy the full registration statement
and its exhibits at the SEC&#146;S public reference rooms or their web site.</I></B>



<P align="center" style="font-size: 10pt">12
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<P align="left" style="font-size: 10pt"><B>Disclosure of Commission Position on Indemnification for Securities Act
Liabilities</B>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;145 of the Delaware General Corporation Law permits us to
indemnify directors, officers, employees or agents against judgments, fines,
amounts paid in settlement, and reasonable costs, expenses and counsel fees
paid or incurred in connection with any proceeding, other than an action by or
in the right of us, to which such director, officer or employee or his legal
representative may be a party, provided such director, officer or employee
shall have acted in good faith and shall have reasonably believed (a)&nbsp;in the
case of a civil proceeding, that his conduct was in or not opposed to our best
interests, or (b)&nbsp;in the case of a criminal proceeding, that he had no
reasonable cause to believe his conduct was unlawful. In connection with an
action by or in the right of us against a director, officer, employee or agent,
we have the power to indemnify such director, officer, employee or agent for
reasonable expenses incurred in connection with such suit (a)&nbsp;if such person
acted in good faith and in a manner not opposed to our best interest, and (b)
if found liable to us, only if ordered by a court of law. Section&nbsp;145 provides
that such section is not exclusive of any other indemnification rights granted
by us to directors, officers, employees or agents.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Certificate of Incorporation provides for mandatory indemnification of
directors, officers and employees to the fullest extent permitted by Section
145, unless we prove that the person seeking indemnification did not meet the
standard set forth above. Our Certificate permits us to indemnify agents to
the extent authorized from time to time by our Board of Directors. The right
to indemnification is a contract right and includes the right to be paid by us
the expenses incurred in defending any such proceeding in advance of its final
disposition, provided that the indemnitee undertakes to repay all amounts so
advanced if it is ultimately determined that such indemnitee is not entitled to
be indemnified for such expenses.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Certificate of Incorporation also contains a provision eliminating the
liability of a director to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, other than liability for (a)&nbsp;breach of
the director&#146;s duty of loyalty to us or our stockholders, (b)&nbsp;acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (c)&nbsp;unlawful payment of a dividend or unlawful stock purchase
or redemption, or (d)&nbsp;any transaction from which the director derived an
improper personal benefit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also maintain directors and officers liability insurance for the
benefit of our directors and officers.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.


<P align="center" style="font-size: 10pt">13
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt">Part II



<P align="center" style="font-size: 10pt">INFORMATION REQUIRED IN THE REGISTRATION STATEMENT



<P align="left" style="font-size: 10pt">Item&nbsp;3. Incorporation of Documents by Reference.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The documents listed below are expressly incorporated by reference in this
Registration Statement as of the November&nbsp;18, 2004 date of this Registration
Statement. All documents subsequently filed by us with the SEC pursuant to
Sections&nbsp;13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
prior to the filing of a post-effective amendment to this Registration
Statement that indicates that all Class&nbsp;A Common Stock to which this
Registration Statement relates has been sold or that deregisters all such Class
A Common Stock then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing such reports and documents.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following documents that we have filed with the SEC are incorporated
herein by reference:


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our annual report on Form 10-K for the year ended December
31, 2003.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our quarterly reports on Form 10-Q for the quarters ended
March&nbsp;31, 2004, June&nbsp;30, 2004 and September&nbsp;30, 2004.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" nowrap align="right">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The description of the Class&nbsp;A Common Stock contained in
our Registration Statement on Form 8-A, effective November&nbsp;13,
1989, under the Securities Exchange Act of 1934 (Registration No.
1-10367), including any amendment or report filed hereafter for the
purpose of updating such description.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">Item&nbsp;4. Description of Securities.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.


<P align="left" style="font-size: 10pt">Item&nbsp;5. Interests of Named Experts and Counsel.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.


<P align="left" style="font-size: 10pt">Item&nbsp;6. Indemnification of Directors and Officers.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section&nbsp;145 of the Delaware General Corporation Law permits the Registrant
to indemnify directors, officers, employees or agents against judgments, fines,
amounts paid in settlement, and reasonable costs, expenses and counsel fees
paid or incurred in connection with any proceeding, other than an action by or
in the right of the Registrant, to which such director, officer or employee or
his legal representative may be a party, provided such director, officer or
employee shall have acted in good faith and shall have reasonably believed (a)
in the case of a civil proceeding, that his conduct was in or not opposed to
the best interests of the Registrant, or (b)&nbsp;in the case of a criminal
proceeding, that he had no reasonable cause to believe his conduct was


<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<P align="left" style="font-size: 10pt">unlawful. In connection with an action by or in
the right of the Registrant against a director, officer, employee or agent, the
Registrant has the power to indemnify such director, officer, employee or agent
for reasonable expenses incurred in connection with such suit (a)&nbsp;if such
person acted in good faith and in a manner not opposed to the best interest of
the Registrant, and (b)&nbsp;if found liable to the Registrant, only if ordered by a
court of law. Section&nbsp;145 provides that such section is not exclusive of any
other indemnification rights granted by the Registrant to directors, officers,
employees or agents.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Certificate of Incorporation of the Registrant provides for mandatory
indemnification of directors, officers and employees to the fullest extent
permitted by Section&nbsp;145, unless the Registrant proves that the person seeking
indemnification did not meet the standard set forth above. The Certificate
permits the Registrant to indemnify agents to the extent authorized from time
to time by the Board of Directors. The right to indemnification is a contract
right and includes the right to be paid by the Registrant the expenses incurred
in defending any such proceeding in advance of its final disposition, provided
that the indemnitee undertakes to repay all amounts so advanced if it is
ultimately determined that such indemnitee is not entitled to be indemnified
for such expenses.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Certificate of Incorporation of the Registrant also contains a
provision eliminating the liability of a director to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
other than liability for (a)&nbsp;breach of the director&#146;s duty of loyalty to the
corporation or its stockholders, (b)&nbsp;acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c)
unlawful payment of a dividend or unlawful stock purchase or redemption, or (d)
any transaction from which the director derived an improper personal benefit.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also maintain directors and officers liability insurance for the
benefit of our directors and officers.




<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="left" style="font-size: 10pt">Item&nbsp;7. Exemption from Registration Claimed.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of the restricted securities issued by us to the selling stockholders
who are reoffering and reselling such restricted securities pursuant to this
Registration Statement were issued in reliance upon the exemption from
registration under Section&nbsp;4(2) of the Securities Act relating to sales by an
issuer not involving any public offering. We believe, due to the nature of the
relationship of these persons to us and the isolated nature of the
transactions, that each issuance and sale of the shares of Class&nbsp;A common stock
underlying options held by such persons was exempt from registration under the
Securities Act as a private placement pursuant to Section&nbsp;4(2) of that Act.


<P align="left" style="font-size: 10pt">Item&nbsp;8. Exhibits.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="11%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit No.</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Description of Exhibit</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Stock Option Plan (b)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Non-Employee Director Stock Option Plan (b)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman Stock Option Plan(b)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.4
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated 1997 Securities Plan (c)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>


<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Class&nbsp;A Common Stock Certificate (a)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">5
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Akin Gump Strauss Hauer &#038; Feld LLP (c)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Akin Gump Strauss Hauer &#038; Feld LLP (included in
Opinion filed as Exhibit&nbsp;5)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Tullius Taylor Sartain &#038; Sartain LLP (c)</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">24
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Powers of attorney (included in Signature Page, Page 19 of
this Registration statement)</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Incorporated by reference to the exhibits to the
Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-29593) filed
November&nbsp;8, 1989.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Incorporated by reference to the exhibits to the
Annual Report on Form 10-K for the year ended December&nbsp;31,
1994 (No.&nbsp;001-10367).</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Filed herewith.</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt">Item&nbsp;9. Undertakings.



<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The undersigned Registrant hereby undertakes:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" nowrap align="right">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="right">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To include any prospectus required by Section
10(a)(3) of the Securities Act;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="right">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To reflect in the prospectus any facts or events
arising after the effective date of the Registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="right">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>To include any material information with respect
to the plan of distribution not</TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>previously disclosed in the registration statement or any
material change to such information in the registration
statement. Provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.</TD>
</TR>

</TABLE>



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.



<P align="left" style="margin-left:3%; font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>For purposes of determining any liability under the
Securities Act, each filing of the Registrant&#146;s annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="right">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>


<P align="left" style="font-size: 10pt">Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Springdale, State of Arkansas, on
November&nbsp;17, 2004.


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="65%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="11%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="84%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>ADVANCED ENVIRONMENTAL
RECYCLING<br>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TECHNOLOGIES, INC.</B></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By: /s/ JOE G. BROOKS</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Joe G. Brooks,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Chairman, Co-Chief Executive Officer and President</I></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ STEPHEN W. BROOKS</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Stephen W. Brooks,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Co-Chief Executive Officer</I></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ EDWARD J. LYSEN</TD>
</TR>

<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><HR size="1" noshade>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Edward J. Lysen,</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Senior Vice President and Chief Financial Officer</I></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>POWER OF ATTORNEY</B>



<P align="left" style="font-size: 10pt">The undersigned directors and officers of Advanced Environmental Recycling
Technologies, Inc. hereby constitute and appoint Joe G. Brooks our true and
lawful attorney-in-fact and agent with full power to execute in our name and
behalf in the capacities indicated below any and all amendments to this
registration statement on Form S-8 to be filed with the Securities and Exchange
Commission and hereby ratify and confirm all that such attorney-in-fact and
agent shall lawfully do or cause to be done by virtue thereof.


<P align="left" style="font-size: 10pt">Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="17%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Title</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Date</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JOE G. BROOKS
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Chairman of the board, co-CEO</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">And president</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Joe G. Brooks
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ SAL MIWA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sal Miwa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Vice-chairman of the board
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ STEPHEN W. BROOKS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stephen W. Brooks
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Co-CEO and director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ MARJORIE S. BROOKS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Marjorie S. Brooks
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Secretary, treasurer and director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JERRY B. BURKETT</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jerry B. Burkett
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ MICHAEL M. TULL</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michael M. Tull
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ SAMUEL L. &#147;TONY&#148; MILBANK</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Samuel L. &#147;Tony&#148; Milbank
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ MELINDA DAVIS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Melinda Davis
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ JIM ROBASON</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px"><HR align="center" size="1" noshade width="75%"></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="center" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jim Robason
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;17, 2004</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">19
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<P align="center" style="font-size: 10pt"><B>EXHIBIT INDEX</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Exhibit No.</B><HR size="1" noshade></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Description of Exhibit</B><HR size="1" noshade></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">4.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Stock Option Plan (b)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">4.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Non-Employee Director Stock Option Plan (b)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">4.3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman Stock Option Plan (b)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">4.4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated 1997 Securities Plan (c)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">4.5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Class A Common Stock Certificate (a)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Opinion of Akin Gump Strauss Hauer &#038; Feld LLP (c)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">23.1</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Akin Gump Strauss Hauer &#038; Feld LLP (included in Opinion filed as Exhibit 5)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">23.2</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Tullius Taylor Sartain &#038; Sartain LLP (c)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">24</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Powers of attorney (included in Signature Page, Page 19 of this Registration statement)</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(a)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Incorporated by reference to the exhibits to the Registration Statement on Form&nbsp;S-1 (No.&nbsp;33-29593) filed November&nbsp;8, 1989.</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(b)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Incorporated by reference to the exhibits to the Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 1994 (No.&nbsp;001-10367).</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(c)</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Filed herewith.</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">
</DIV>

</BODY>
</HTML>
[{"type": "S-8", "sequence": "1", "filename": "d20094sv8.htm", "description": "FORM S-8", "secsgml_size_bytes": 114974}]
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sv8
Table of Contents
Registration No. 333-
As filed with the Securities and Exchange Commission
on November 18, 2004
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.
(Exact name of issuer as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
71-0675758
(I.R.S. Employer Identification No.)
914 N Jefferson Street
Springdale, Arkansas
(Address of principal executive offices)
72764
(Zip Code)
ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.:
AMENDED AND RESTATED STOCK OPTION PLAN
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
CHAIRMAN STOCK OPTION PLAN
AND 1997 SECURITIES PLAN
(Full title of the plans)
Joe G. Brooks, Chairman
Advanced Environmental Recycling Technologies, Inc.
914 N Jefferson Street
Springdale, Arkansas 72764
(Name and address of agent for service)
(479) 756-7400
(Telephone number, including area code, of agent for service)
Table of Contents
CALCULATION OF REGISTRATION FEE
Proposed
Proposed maximum
Title of Securities
Amount to be
maximum offering
aggregate offering
Amount of
to be Registered
registered (1)
price per share
price
registration fee
Class A
common stock $0.01
par value
4,634,130 shares (2)
$
1.04
(3)
$
4,819,495
$
610.63
Class A
common stock $0.01
par value
13,537 shares (4)
$
1.37
(5)
$
18,546
$
2.35
Class A
common stock $0.01
par value
335,000 shares (6)
$
1.37
(5)
$
458,950
$
58.15
Total
4,982,667
shares
—
$
5,296,991
$
671.13
(1)
Pursuant to Rule 416 under the Securities Act, there are also registered
hereby such indeterminate number of securities as may become issuable by
reason of the anti-dilution provisions of the plans referred to herein.
(2)
Issuable upon exercise of outstanding options under the Amended and
Restated Stock Option Plan (which covers 481,000 shares of Class A common
stock in the aggregate), the Non-Employee Director Stock Option Plan
(which covers 215,000 shares of Class A common stock in the aggregate),
the Chairman Stock Option Plan (which covers 500,000 shares of Class A
common stock in the aggregate) and the 1997 Securities Plan (which covers
3,438,130 shares of Class A common stock in the aggregate).
(3)
Weighted average exercise price of options outstanding under the Amended
and Restated Stock Option Plan, the Non-Employee Director Stock Option
Plan, the Chairman Stock Option Plan and the 1997 Securities Plan.
(4)
Issuable upon exercise of options and other incentive stock grants of the
Class A common stock available for grant under the 1997 Securities Plan.
(5)
Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(h) under the Securities Act. Calculated on the basis
of the average of the highest and lowest sale prices of the Class A common
stock on November 11, 2004, as reported by NASDAQ.
(6)
Shares previously issued upon exercise of options granted pursuant to the
1997 Securities Plan.
Table of Contents
EXPLANATORY NOTE
The Registrant has prepared this Registration Statement in accordance with
the requirements of Form S-8 under the Securities Act of 1933, as amended (the
"Securities Act"), to register (i) 4,634,130 shares of Class A common stock
that are issuable upon the exercise of options previously granted under the
Registrant's Amended and Restated Stock Option Plan, the Non-Employee Director
Stock Option Plan, the Chairman Stock Option Plan and the 1997 Securities Plan,
and (ii) 13,537 shares of Class A common stock issuable upon the exercise of
stock options or other forms of derivatives or other incentive stock grants
related to the shares, which may be granted by the Registrant after the date
hereof under the 1997 Securities Plan.
This Registration Statement also includes a prospectus (the "Reoffer
Prospectus") prepared in accordance with General Instruction C of Form S-8 and
in accordance with the requirements of Part I of Form S-3. This Reoffer
Prospectus may be used for reofferings or resales on a continuous or delayed
basis in the future of an aggregate of 335,000 shares of Class A common stock
that have been previously issued by the Registrant upon exercise of options
granted under the 1997 Securities Plan.
Part I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
The document(s) containing the information specified in Part I of Form S-8
will be sent or given to participants in the Amended and Restated Stock Option
Plan, the Non-Employee Director Stock Option Plan, the Chairman Stock Option
Plan and the 1997 Securities Plan as specified by Rule 428(b)(1) under the
Securities Act. Such documents are not being filed with the Securities and
Exchange Commission, but constitute along with the documents incorporated by
reference into this Registration Statement, a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
Note: The Reoffer Prospectus referred to in the Explanatory Note follows this page.
Table of Contents
Reoffer Prospectus
Advanced Environmental Recycling Technologies, Inc.
Securities to be offered:
Up To 335,000 Shares Of Class A Common Stock
This prospectus covers the resale by the selling stockholders identified
on pages 8 and 9 of some or all of the shares of our Class A common stock they
own pursuant to the exercise of options granted under our 1997
Securities Plan. The shares may be sold from time to time by the selling stockholders
through public or private transactions, at prevailing market prices or at
privately negotiated prices. We will not receive any of the proceeds from the
sale of the shares by the selling stockholders.
We will pay all costs and expenses incurred by our company in connection
with the registration of the shares under the Securities Act of 1933. The
selling stockholders will pay the costs associated with any sale of shares,
including any discounts, commissions and applicable transfer taxes.
Our Class A common stock is traded on the Nasdaq SmallCap Market under the
symbol "
AERTA
". On November 11, 2004, the last reported sale price of our
Class A common stock was $1.36 per share, as reported by the Nasdaq SmallCap
Market System.
Our principal executive offices
are located at 914 N Jefferson Street,
Springdale, Arkansas 72764, and our telephone number is (479) 756-7400.
The securities offered in this prospectus involve a high degree of risk. You
should purchase shares only if you can afford a complete loss. See "Risk
Factors" beginning on page 2.
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 November 18, 2004
Table Of Contents
Our Business
1
Risk Factors
2
Special Note Regarding Forward-Looking Statements
7
Use Of Proceeds
8
Selling Stockholders
8
Plan Of Distribution
9
Legal Matters
11
Experts
11
Where You Can Find More Information
11
Amended and Restated 1997 Securities Plan
Opinion/Consent of Akin Gump Strauss Hauer & Feld LLP
Consent of Tullius Taylor Sartain & Sartain LLP
Table of Contents
Our Business
We develop, manufacture and market composite building materials that are
used in place of traditional wood products for exterior applications in
building and remodeling homes and for certain other industrial or commercial
building purposes. Since inception in 1989, we have sold in excess of $235
million of products into the North American marketplace. Our products are made
from approximately equal amounts of waste wood fiber and reclaimed polyethylene
plastic, have been extensively tested, and are sold by leading national
companies such as the Weyerhaeuser Company (Weyerhaeuser), Lowe's Companies,
Inc. (Lowe's) and Therma-Tru Corporation. Our growing line of non-wood
alternative building materials include standard door components, windowsills,
brick mould, fascia board, and heavy industrial flooring sold under the trade
names LifeCycle®, MoistureShield®, MoistureShield® CornerLoc™ and a variety of
composite decking products under the trade name Weyerhaeuser ChoiceDek®. We
operate five manufacturing facilities. The composite building products are
manufactured in Junction, Texas and Springdale, Arkansas. There are two plastic
processing plants — one in Lowell, Arkansas and one in
Alexandria, Louisiana — and a painting, finishing and packaging plant in Tontitown, Arkansas.
You should rely only on the information contained in this prospectus or
incorporated by reference into this prospectus. We have not authorized any
other person to provide you with different information. 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 Class A common stock.
This prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, nor shall there be any sale of these shares by any person in
any jurisdiction in which it is unlawful for that person to make such an offer,
solicitation or sale.
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Risk Factors
This offering involves a high degree of risk. You should carefully
consider the risks described below and other information contained in this
prospectus before deciding to invest in shares of our Class A common stock.
We have a working capital deficit
At September 30, 2004, we had a working capital deficit of $1.1 million
and at December 31, 2003, we had a working capital deficit of $1.9 million.
The working capital deficit is the result of previously incurred losses from operations
and our decision to finance capital projects with cash generated from
operations. Additionally, pursuant to our bond agreement, we are required to
maintain a debt service reserve fund in the amount of $2 million, which is
classified as a non-current asset in our balance sheet.
Our limited manufacturing capabilities could restrain our business growth
The long-term success of our operations will depend upon the manufacture
of our composite products on a substantially greater commercial scale than we
have engaged in to date or have the current production capacity to engage in.
Our primary customers and markets are large, and continued increased sales
growth will require significant capital expenditures. Although we believe
financing can be obtained to add production equipment and build additional
manufacturing facilities, there is no assurance that we will secure the
necessary financing or that the equipment and facilities will become
operational in a timely manner. We currently have one composite manufacturing
facility in Junction, Texas, and a second composite manufacturing facility in
Springdale, Arkansas, but plan to increase production capacity at both
facilities, and plan to build a third composite manufacturing facility adjacent
to our current facility in Springdale in 2005.
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Declines in construction activity may adversely affect our business
Our engineered composites have been marketed primarily to companies that
manufacture products for use by the construction industry in new home
construction and home improvement work. The construction industry is subject
to significant fluctuations in activity and to periodic downturns caused by
general economic conditions. Increases in long-term interest rates can have a
negative effect by slowing housing starts due to increased financing costs.
Reductions in construction activity could have an adverse effect on the demand
for our composites in the door and window market. However, we believe our
decking lines, which are primarily targeted to the independent
contractor-oriented lumber dealers and the remodeling market, are not as
susceptible to downturns in construction activity.
The loss of one or more of our key customers could cause a substantial
reduction in our revenues
We could be materially adversely affected if we were to lose one or more
of our large existing customers. We have limited our marketing to major
industrial companies with large market shares nationwide in the building
material, door, and window construction industries. Our principal marketing
and distribution channel for our decking material is Weyerhaeuser, which
accounted for 81% of our sales in both 2003 and 2002. Since inception, a few
large door and window construction companies have historically purchased
substantially our entire MoistureShield® product line. Most of our key door
and window customers are not contractually obligated to purchase additional
products.
Fire disruptions may adversely affect our business
Our raw materials and manufacturing processes involve a greater than
average risk of fire loss or disruption. We experienced a series of fires in
1996, which severely disrupted our manufacturing operations, although these
were determined to be instances of arson. The pattern of fires caused our fire
insurance to be cancelled, but we were subsequently able to renew it. There
was an accidental fire at our Junction, Texas facility in March 2003, which
caused substantial damage and temporarily shut down plant operations. Although
we have increased security and increased fire protection equipment at our
facilities, another major fire could occur and materially adversely affect our
operations.
We could face future litigation
We were sued in May 2000, in a federal action in the Western District of
Texas, for breach of contract seeking royalties allegedly owed but unpaid from
a 1987 settlement of prior litigation against a predecessor entity and two of
our founders in the United States District Court for the Western District. The
plaintiffs were seeking approximately $1.2 million in past royalties, plus
attorneys' fees, any applicable pre-judgment and post-judgment interest, and a
declaration that we pay an ongoing royalty in the amount of $10 per ton on
future sales from our Junction, Texas facility on production utilizing cedar
fiber and recycled plastic. In 2001, the plaintiffs amended the complaint to
include two of our founders as co-defendants. At trial, the plaintiffs obtained
a judgment for past royalties in the amount of approximately $821,000, plus
prejudgment and post-judgment interest and attorneys' fees. We settled the
lawsuit in December 2002 for $1,100,000. The court, in May 2002, declined to
enter a declaratory judgment requested by the plaintiff requiring us to pay a
royalty on a monthly basis in the future on our products, but the release
executed in connection with the December 2002 settlement does not release any
potential claims for royalties after January 1, 2002.
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Covenants in our bond agreements could restrict our ability to borrow, which
could impair the improvement and expansion of our operations
Certain covenants in our bond agreements restrict the types and amounts of
additional indebtedness that we may incur, including a requirement that, with
certain exceptions, we may only incur additional indebtedness to the extent it
would satisfy a debt incurrence coverage ratio of 250% of income
before interest, taxes, depreciation and amortization to debt
service. Those restrictions could inhibit our ability to improve our current
operations and expand our operations. Additionally, our ability to secure
adequate working capital to support our day-to-day operations as we grow could
be limited by the covenants in our bond agreements.
If we are unable to comply with certain debt covenants, our financial position
and operations could be adversely affected
The bond agreement contains financial covenants, which include a current
ratio of not less than 1.00 to 1.00 and a requirement that not more than 10% of
accounts payable be in excess of 75 days past the invoice date. We were not in
compliance with these two covenants at December 31, 2003. The accounts payable
covenant was waived, and the current ratio covenant was modified to include the
debt service reserve fund in current assets for purposes of the current ratio
calculation, resulting in our compliance with this covenant at December 31,
2003. There is no assurance that we will be able to comply with these debt
covenants in the future, or that the bondholder will waive or modify the
covenants in the future. If we are unable to comply with the covenants or
obtain a waiver or modification of the covenants in the future, then the bond
debt in the amount of $14.4 million could immediately become due and payable,
the bondholder could foreclose on the property used to secure the debt, and the
bondholder could claim our revenues pledged as part of the bond agreement.
Our common stock could be diluted or otherwise adversely affected by additional
issuances of preferred stock
Additional issuances of preferred stock may provide for rights that
adversely affect the Class A common stock or may be convertible into shares of
Class A common stock on a basis which would cause dilution. We are authorized
to issue up to 5,000,000 shares of preferred stock, 2,900 shares of which have
been issued. Our board of directors is empowered to fix the terms of the
preferred stock without stockholder approval, which terms may adversely affect
the rights of holders of the Class A common stock.
We could be required to pay liquidated damages on preferred stock
If we default under certain obligations with respect to our outstanding
preferred stock, we may be required to pay liquidated damages to the holders of
the preferred stock. Our outstanding Series A, B and C convertible preferred
stock (total stated value of $2,760,000) has a 10% per annum accreting premium
for conversion, redemption and liquidation purposes. Although the preferred
stock is not mandatorily redeemable, we could be required to pay as liquidated
damages an amount equal to 10% of the stated value of the preferred stock if we
default under the provisions of the preferred stock agreements. The liquidated
damages amount is payable at our option in either cash or shares of Class A
common stock. The redemption price is generally equal to the greater of (a)
the aggregate market value of the Class A common stock into which
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the preferred stock could be converted and (b) 115% of the sum of (i) the
stated value, (ii) the 10% per annum premium, and (iii) any unpaid conversion
default payment. Payment of the liquidated damages amount in common stock
would result in substantial dilution to existing holders of common stock.
The floating conversion feature of our convertible preferred stock could cause
a drop in our stock price
Conversion of a material amount of our convertible preferred stock into
Class A common stock, which would increase the total number of Class A common
stock in the marketplace, could cause a drop in our stock price. Our
convertible preferred stock is convertible into common stock at the holder's
option at any time at a conversion price equal to the lower of a fixed $1.20
conversion price or the 10-trading day average closing bid price immediately
prior to the date of conversion. At November 11, 2004, the applicable
conversion price was $1.20.
Based on these conversion price formulae, whenever the prevailing market
price of the common stock is below $1.20, the convertible preferred stock will
be convertible into a proportionately greater number of shares of common stock.
The number of shares we could be required to issue in payment of the premium on
the preferred stock would also increase whenever the market price of the common
stock is below $1.20. In that event, the lower the price of our common stock
at the time of conversion, the more shares into which the convertible preferred
stock will be convertible. There is no minimum conversion price for the
preferred stock. These increases in the number of shares issuable upon
conversion of the convertible preferred stock and upon payment of the premium
on the preferred stock could result in a substantial dilution to other holders
of Class A common stock and could cause a decline in the market price of the
Class A common stock due to the added number of shares in the market. In
addition, substantial sales by the holders of the convertible preferred stock
could place further downward pressure on our stock price and permit holders of
our convertible preferred stock to convert additional shares at a lower price,
which would further add to the number of shares in the market and cause the
price to fall further. An additional reduction of the price of Class A common
stock shares may occur if shareholders or others begin to sell the Class A
common stock short to take advantage of the falling stock price caused by
preferred stock holders converting material amounts of their preferred stock.
Future sales of shares could be dilutive and impair our ability to raise
capital
The conversion of a significant number of our outstanding derivative
securities into Class A common stock could adversely affect the market price of
the stock. At November 11, 2004, we had reserved approximately 23,339,300
shares of Class A common stock for issuance upon conversion of outstanding
preferred stock, Class B Common stock, and upon exercise of outstanding
warrants and options. Of those reserved shares, 18,705,170 are covered by
other registration statements and can be sold from time to time. This
prospectus covers the potential sale from time to time of up to 335,000 of such
reserved shares of Class A common stock.
The exercise or conversion of a material amount of such securities will
result in a dilution in interest for our other security holders. Such
convertible securities, whether converted into
5
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stock or not, could impair our ability to obtain additional capital because of
the potential for dilution. Also, the holders of such securities may be
expected to exercise their rights at a time when we would in all likelihood be
able to obtain needed capital through a new offering of our securities on terms
more favorable than those provided by the outstanding securities.
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Special Note Regarding Forward-Looking Statements
We have made statements in this prospectus, including statements under
"Our Business" and "Risk Factors," which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements are
subject to a number of risks, uncertainties and assumptions, including, among
other things:
•
our ability to obtain additional debt and equity
financing to satisfy existing debt obligations, provide
working capital and support our growth strategy;
•
our expectations and estimates concerning future
financial performance, financing plans and the impact of
competition;
•
general economic and business conditions;
•
anticipated trends in our business;
•
existing and future regulations affecting our business;
•
our ability to improve operating efficiencies and increase sales; and
•
other risk factors described in the section
entitled "Risk Factors" in this prospectus.
You can identify these forward-looking statements by forward-looking words
such as "believe," "may," "could," "will," "estimate," "continue,"
"anticipate," "intend," "seek," "plan," "expect," "should," "would" and similar
expressions in this prospectus.
In light of these risks and uncertainties, the forward-looking events and
circumstances discussed in this prospectus may not occur and actual results
could differ materially from those anticipated or implied in the
forward-looking statements.
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Use Of Proceeds
We will not receive any of the proceeds from the sale of shares of Class A
common stock by the selling stockholders. Proceeds from the exercises of
options from time to time have been used for general corporate purposes,
primarily for working capital to sustain operations and for capital
expenditures to further develop our business.
Selling Stockholders
This
prospectus covers the resale of up to 335,000 shares of Class A
common stock previously issued
to employees or consultants upon the exercise of stock options granted to them
pursuant to our 1997 Securities Plan.
1997 Securities Plan
Between
May 30, 1997 and November 11, 2004, 4,986,463 stock options were
issued under the 1997 Securities Plan that were not forfeited. Since the
original issuance of the options, 1,548,333 have been exercised and 3,438,130
remain exercisable at exercise prices ranging from $0.375 to $2.75. Each stock
option is exercisable for one share of Class A common stock. We may issue up
to an additional 13,537 shares pursuant to grants under the 1997 Securities
Plan after the date of this prospectus. The above numbers are subject to adjustment in accordance with the
anti-dilution provisions of the plan.
Selling Stockholders
The following table sets forth the names of the selling stockholders, the
number of shares of common stock owned beneficially by each of the selling
stockholders as of November 11, 2004, and the number of shares which may be
offered for sale in connection with this prospectus. Information set forth
herein with respect to each selling stockholder's beneficial ownership of
common stock has been provided by such selling stockholder. Although the
selling stockholders may offer all, some or none of their Class A common stock,
the following table has been prepared on the assumption that all shares of
common stock covered by this prospectus will be sold. Unless otherwise
indicated, the persons and entities named in the table have sole voting and
sole investment power with respect to all shares beneficially owned, subject to
community property laws where applicable. This prospectus may be
amended or supplemented from time to time to amend or supplement the
information in the table set forth below.
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Number of
% Beneficially
Number of
Name and Address of
Shares
Owned Prior
Shares
% Beneficially Owned
Selling
Beneficially
to Completion
to be
Following Completion
Stockholder (1)(2)
Owned
of Offering
Offered (3)
of Offering (4)
James Kelly Schmidt
90,575
*
90,000
*
Marcy Zahm
30,085
*
30,000
*
Florentino Sanchez
30,000
*
30,000
*
Steve Couey
30,000
*
30,000
*
Jane Kiser
27,919
*
20,000
*
David Sparks
25,000
*
25,000
*
Theresa Adams
20,000
*
10,000
*
Jane Horton
15,882
*
15,000
*
Monte Hale
15,616
*
15,000
*
Teodoro Hernandez
15,366
*
15,000
*
Eric Barnes
15,000
*
15,000
*
Jan Wilkinson
15,000
*
15,000
*
David Higgins
15,000
*
15,000
*
Kirk Ruffridge
5,920
*
5,000
*
Douglas Triplett
5,000
*
5,000
*
Totals
335,000
* Beneficially owns less than 1%
(1) Address: PO Box 1237, Springdale, AR 72765.
(2) All selling
stockholders are current or former employees of the Company with the exception
of David Higgins and Douglas Triplett who were engineering consultants.
(3) The number of shares to be offered represents shares received upon the
exercise of stock options.
(4) Assumes the sale of all shares offered hereby.
Plan Of Distribution
This prospectus covers the resale of shares of Class A common stock by the
selling stockholders and their pledgees, donees, assignees and other successors
in interest (all of whom may be "selling stockholders"). The selling
stockholders may sell their shares on the Nasdaq SmallCap Market, in the
over-the-counter market or through any other facility on which the shares are
traded, or in private transactions. These sales may be at market prices or at
negotiated prices. The selling stockholders may use the following methods when
selling shares:
•
ordinary brokerage transactions and transactions
in which the broker or dealer solicits purchasers;
•
block trades in which the broker or dealer
attempts 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 or dealer for its account in connection
with this prospectus;
•
privately negotiated transactions;
•
any combination of these methods of sale; or
•
any other legal method.
The selling stockholders may also pledge their shares, enter into put or
call options or enter into other transactions with broker-dealers or others
which require delivery to those persons of shares covered by this prospectus.
Brokers, dealers or other agents participating in the distribution of the
shares of Class A common stock may receive compensation in the form of
discounts or commissions from the selling stockholders, as well as the
purchaser if they act as agent for the purchaser. The discount or commission in
a particular transaction could be more than the customary amount. We know of no
existing arrangements between any selling stockholder and any underwriter,
broker, dealer or agent relating to the sale or distribution of the shares.
The selling stockholders and any brokers or dealers that participate in
the sale of the shares may be deemed to be underwriters within the meaning of
the Securities Act. Any discounts, commissions or other compensation received
by these persons and any profit on the resale of the shares by them as
principals might be deemed to be underwriters' compensation. The selling
stockholders may agree to indemnify any broker, dealer or agent that
participates in the sale of the shares against various liabilities, including
liabilities under the Securities Act.
At the time a particular offer of shares is made, to the extent required
we will file a supplement to this prospectus which identifies the number of
shares being offered, the name of the selling stockholders, the name of any
participating broker or dealer, the amount of discounts and commissions, and
any other material information.
The selling stockholders and any other person participating in a
distribution will be subject to the applicable provisions of the Exchange Act
and its rules and regulations. For example, the anti-manipulative provisions of
Regulation M may limit the ability of the selling stockholders or others to
engage in stabilizing and other market making activities.
The selling stockholders may also sell their shares in accordance with
Rule 144 under the Securities Act, rather than in connection with this
prospectus, so long as they meet the criteria and conform to the requirements
of the rule.
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders. We will pay the registration and other offering expenses
related to this offering, but
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the selling stockholders will pay all underwriting discounts and brokerage
commissions incurred in connection with the offering.
Legal Matters
Our outside counsel, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San
Antonio, Texas has issued a legal opinion about the validity of the shares
offered by this prospectus.
Experts
The audited financial statements for the years ended December 31, 2003,
2002 and 2001, incorporated by reference in this prospectus and elsewhere in
the registration statement have been audited by Tullius Taylor Sartain and
Sartain, LLP, independent public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the said firm as
experts in accounting and auditing in giving said report.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov. In addition, reports, proxy statements
and other information concerning us can be inspected and copied at the offices
of Nasdaq, Report Section, 1735 K Street, N.W., Washington, D.C. 20006.
We have filed with the SEC a registration statement on Form S-8 under the
Securities Act covering the shares of Class A common stock to be sold under
this prospectus. The SEC permits us to omit from this prospectus certain
information, exhibits, and undertakings contained in the registration
statement.
The SEC allows us to incorporate by reference the information that we file
with them, which means that we can disclose important information to you by
referring you to those documents instead of having to repeat the information in
this prospectus. The information incorporated by reference is considered to be
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under sections
13(a)
,
13(c)
, 14 or
15(d)
of the Securities Exchange Act of 1934
until the selling stockholders sell all the shares.
•
Annual Report on Form 10-K for the fiscal year
ended December 31, 2003; and
•
Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2004, June 30, 2004 and September 30,
2004; and
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•
The description of the Class A Common Stock
contained in our Registration Statement on Form 8-A, effective
November 13, 1989, under the Securities Exchange Act of 1934
(Registration No. 1-10367), including any amendment or report
filed hereafter for the purpose of updating such description.
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 the prospectus, at no cost, upon written or oral
request to:
Joe G. Brooks, Chairman of
the Board
Advanced Environmental Recycling Technologies, Inc.
914 North Jefferson Street (72764)
Post Office Box 1237
Springdale, Arkansas 72765
(479) 756-7400
You should rely only on the information incorporated by reference or provided
in this prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The selling stockholders will not make
an offer of these shares in any state where the offer is not permitted.
This prospectus is part of a registration statement that we filed with the SEC.
More information about the shares sold by the selling stockholders is
contained in that registration statement and the exhibits filed along with the
registration statement. You may read and copy the full registration statement
and its exhibits at the SEC'S public reference rooms or their web site.
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Disclosure of Commission Position on Indemnification for Securities Act
Liabilities
Section 145 of the Delaware General Corporation Law permits us to
indemnify directors, officers, employees or agents against judgments, fines,
amounts paid in settlement, and reasonable costs, expenses and counsel fees
paid or incurred in connection with any proceeding, other than an action by or
in the right of us, to which such director, officer or employee or his legal
representative may be a party, provided such director, officer or employee
shall have acted in good faith and shall have reasonably believed (a) in the
case of a civil proceeding, that his conduct was in or not opposed to our best
interests, or (b) in the case of a criminal proceeding, that he had no
reasonable cause to believe his conduct was unlawful. In connection with an
action by or in the right of us against a director, officer, employee or agent,
we have the power to indemnify such director, officer, employee or agent for
reasonable expenses incurred in connection with such suit (a) if such person
acted in good faith and in a manner not opposed to our best interest, and (b)
if found liable to us, only if ordered by a court of law. Section 145 provides
that such section is not exclusive of any other indemnification rights granted
by us to directors, officers, employees or agents.
Our Certificate of Incorporation provides for mandatory indemnification of
directors, officers and employees to the fullest extent permitted by Section
145, unless we prove that the person seeking indemnification did not meet the
standard set forth above. Our Certificate permits us to indemnify agents to
the extent authorized from time to time by our Board of Directors. The right
to indemnification is a contract right and includes the right to be paid by us
the expenses incurred in defending any such proceeding in advance of its final
disposition, provided that the indemnitee undertakes to repay all amounts so
advanced if it is ultimately determined that such indemnitee is not entitled to
be indemnified for such expenses.
Our Certificate of Incorporation also contains a provision eliminating the
liability of a director to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, other than liability for (a) breach of
the director's duty of loyalty to us or our stockholders, (b) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) unlawful payment of a dividend or unlawful stock purchase
or redemption, or (d) any transaction from which the director derived an
improper personal benefit.
We also maintain directors and officers liability insurance for the
benefit of our directors and officers.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
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Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The documents listed below are expressly incorporated by reference in this
Registration Statement as of the November 18, 2004 date of this Registration
Statement. All documents subsequently filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
prior to the filing of a post-effective amendment to this Registration
Statement that indicates that all Class A Common Stock to which this
Registration Statement relates has been sold or that deregisters all such Class
A Common Stock then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing such reports and documents.
The following documents that we have filed with the SEC are incorporated
herein by reference:
(a)
Our annual report on Form 10-K for the year ended December
31, 2003.
(b)
Our quarterly reports on Form 10-Q for the quarters ended
March 31, 2004, June 30, 2004 and September 30, 2004.
(c)
The description of the Class A Common Stock contained in
our Registration Statement on Form 8-A, effective November 13,
1989, under the Securities Exchange Act of 1934 (Registration No.
1-10367), including any amendment or report filed hereafter for the
purpose of updating such description.
Item 4. Description of Securities.
Not applicable.
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 the Registrant
to indemnify directors, officers, employees or agents against judgments, fines,
amounts paid in settlement, and reasonable costs, expenses and counsel fees
paid or incurred in connection with any proceeding, other than an action by or
in the right of the Registrant, to which such director, officer or employee or
his legal representative may be a party, provided such director, officer or
employee shall have acted in good faith and shall have reasonably believed (a)
in the case of a civil proceeding, that his conduct was in or not opposed to
the best interests of the Registrant, or (b) in the case of a criminal
proceeding, that he had no reasonable cause to believe his conduct was
14
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unlawful. In connection with an action by or in
the right of the Registrant against a director, officer, employee or agent, the
Registrant has the power to indemnify such director, officer, employee or agent
for reasonable expenses incurred in connection with such suit (a) if such
person acted in good faith and in a manner not opposed to the best interest of
the Registrant, and (b) if found liable to the Registrant, only if ordered by a
court of law. Section 145 provides that such section is not exclusive of any
other indemnification rights granted by the Registrant to directors, officers,
employees or agents.
The Certificate of Incorporation of the Registrant provides for mandatory
indemnification of directors, officers and employees to the fullest extent
permitted by Section 145, unless the Registrant proves that the person seeking
indemnification did not meet the standard set forth above. The Certificate
permits the Registrant to indemnify agents to the extent authorized from time
to time by the Board of Directors. The right to indemnification is a contract
right and includes the right to be paid by the Registrant the expenses incurred
in defending any such proceeding in advance of its final disposition, provided
that the indemnitee undertakes to repay all amounts so advanced if it is
ultimately determined that such indemnitee is not entitled to be indemnified
for such expenses.
The Certificate of Incorporation of the Registrant also contains a
provision eliminating the liability of a director to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
other than liability for (a) breach of the director's duty of loyalty to the
corporation or its stockholders, (b) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c)
unlawful payment of a dividend or unlawful stock purchase or redemption, or (d)
any transaction from which the director derived an improper personal benefit.
We also maintain directors and officers liability insurance for the
benefit of our directors and officers.
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Item 7. Exemption from Registration Claimed.
All of the restricted securities issued by us to the selling stockholders
who are reoffering and reselling such restricted securities pursuant to this
Registration Statement were issued in reliance upon the exemption from
registration under Section 4(2) of the Securities Act relating to sales by an
issuer not involving any public offering. We believe, due to the nature of the
relationship of these persons to us and the isolated nature of the
transactions, that each issuance and sale of the shares of Class A common stock
underlying options held by such persons was exempt from registration under the
Securities Act as a private placement pursuant to Section 4(2) of that Act.
Item 8. Exhibits.
Exhibit No.
Description of Exhibit
4.1
Amended and Restated Stock Option Plan (b)
4.2
Non-Employee Director Stock Option Plan (b)
4.3
Chairman Stock Option Plan(b)
4.4
Amended and Restated 1997 Securities Plan (c)
4.5
Form of Class A Common Stock Certificate (a)
5
Opinion of Akin Gump Strauss Hauer & Feld LLP (c)
23.1
Consent of Akin Gump Strauss Hauer & Feld LLP (included in
Opinion filed as Exhibit 5)
23.2
Consent of Tullius Taylor Sartain & Sartain LLP (c)
24
Powers of attorney (included in Signature Page, Page 19 of
this Registration statement)
(a)
Incorporated by reference to the exhibits to the
Registration Statement on Form S-1 (No. 33-29593) filed
November 8, 1989.
(b)
Incorporated by reference to the exhibits to the
Annual Report on Form 10-K for the year ended December 31,
1994 (No. 001-10367).
(c)
Filed herewith.
Item 9. Undertakings.
(a)
The undersigned Registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(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 the registration
statement;
(iii)
To include any material information with respect
to the plan of distribution not
16
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previously disclosed in the registration statement or any
material change to such information in the registration
statement. Provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b)
For purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c)
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Springdale, State of Arkansas, on
November 17, 2004.
ADVANCED ENVIRONMENTAL
RECYCLING
TECHNOLOGIES, INC.
By: /s/ JOE G. BROOKS
Joe G. Brooks,
Chairman, Co-Chief Executive Officer and President
/s/ STEPHEN W. BROOKS
Stephen W. Brooks,
Co-Chief Executive Officer
/s/ EDWARD J. LYSEN
Edward J. Lysen,
Senior Vice President and Chief Financial Officer
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POWER OF ATTORNEY
The undersigned directors and officers of Advanced Environmental Recycling
Technologies, Inc. hereby constitute and appoint Joe G. Brooks our true and
lawful attorney-in-fact and agent with full power to execute in our name and
behalf in the capacities indicated below any and all amendments to this
registration statement on Form S-8 to be filed with the Securities and Exchange
Commission and hereby ratify and confirm all that such attorney-in-fact and
agent shall lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
Signature
Title
Date
/s/ JOE G. BROOKS
Chairman of the board, co-CEO
And president
November 17, 2004
Joe G. Brooks
/s/ SAL MIWA
Sal Miwa
Vice-chairman of the board
November 17, 2004
/s/ STEPHEN W. BROOKS
Stephen W. Brooks
Co-CEO and director
November 17, 2004
/s/ MARJORIE S. BROOKS
Marjorie S. Brooks
Secretary, treasurer and director
November 17, 2004
/s/ JERRY B. BURKETT
Jerry B. Burkett
Director
November 17, 2004
/s/ MICHAEL M. TULL
Michael M. Tull
Director
November 17, 2004
/s/ SAMUEL L. "TONY" MILBANK
Samuel L. "Tony" Milbank
Director
November 17, 2004
/s/ MELINDA DAVIS
Melinda Davis
Director
November 17, 2004
/s/ JIM ROBASON
Jim Robason
Director
November 17, 2004
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EXHIBIT INDEX
Exhibit No.
Description of Exhibit
4.1
Amended and Restated Stock Option Plan (b)
4.2
Non-Employee Director Stock Option Plan (b)
4.3
Chairman Stock Option Plan (b)
4.4
Amended and Restated 1997 Securities Plan (c)
4.5
Form of Class A Common Stock Certificate (a)
5
Opinion of Akin Gump Strauss Hauer & Feld LLP (c)
23.1
Consent of Akin Gump Strauss Hauer & Feld LLP (included in Opinion filed as Exhibit 5)
23.2
Consent of Tullius Taylor Sartain & Sartain LLP (c)
24
Powers of attorney (included in Signature Page, Page 19 of this Registration statement)
(a)
Incorporated by reference to the exhibits to the Registration Statement on Form S-1 (No. 33-29593) filed November 8, 1989.
(b)
Incorporated by reference to the exhibits to the Annual Report on Form 10-K for the year ended December 31, 1994 (No. 001-10367).
(c)
Filed herewith.