As filed with the Securities and Exchange Commission on December 8, 1997
Registration No. 333-33079
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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CABLE & CO. WORLDWIDE, INC.
(Name of small business issuer in its charter)
Delaware 5139 22-3341195
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation Classification Code Number) Identification No.)
or organization)
CABLE & CO. WORLDWIDE, INC.
724 Fifth Avenue
New York, New York 10019
(212) 489-9686
(Name, address and telephone number of principal executive offices
and principal place of business)
ALAN KANDALL
Cable & Co. Worldwide, Inc.
724 Fifth Avenue
New York, New York 10019
(212) 489-9686
(Name, address and telephone number of agent for service)
-------------------
Copies to:
MARTIN C. LICHT, ESQ.
LANE & MITTENDORF LLP
320 Park Avenue
New York, New York 10022
(212) 508-3200
Approximate Date of Commencement of Proposed
Sale to the Public: From time to time after this
Registration Statement becomes effective.
--------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.|X|
<PAGE>
If this Form is filed to register additional securities for an offering pursuant
to Rule 462 (b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|
ii
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
==============================================================================================================================
Amount of
Title of Each Class of Amount to be Offering Price Per Aggregate offering Registration
Securities to be Registered Registered Security Price Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value (1) $.01 per share 13,690,000 $.40625 $5,561,562.50 $1,685.32
Total Registration Fee(2)..................... $1,685.32
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes the registration for resale of 13,690,000 shares of Common Stock
issued in a private placement in July 1997.
(2) The offering price per share is estimated pursuant to Rule 457(c) solely for
the purpose of calculating the registration fee and is based upon the average of
the bid and asked prices of the Common Stock of the Company reported on the
NASDAQ SmallCap Market on August 5, 1997 (which date is within five business
days prior to the date of the filing of this Registration Statement) The filing
fee was paid on the initial filing of this Registration Statement.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
iii
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation, or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
(Subject to Completion)
Dated December 8, 1997
CABLE & CO. WORLDWIDE, INC.
13,690,000 Shares of Common Stock
All of the shares (the "Shares") of Common Stock, $ .01 par value (the
"Common Stock"), of Cable & Co. Worldwide, Inc., a Delaware corporation (the
"Company"), offered hereby (the "Shares") are being offered by certain selling
stockholders (the "Selling Stockholders") as more fully described herein.
Pursuant to a registration rights agreement, the Company has agreed to bear all
expenses (other than underwriting discounts and selling commissions of any
underwriters, brokers, dealers or agents retained by the Selling Stockholders)
in connection with the registration and sale of the Shares being offered by the
Selling Stockholders. In addition, the Company has agreed to indemnify the
Selling Stockholders against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"). The Company will
receive none of the proceeds from any sale of the Shares by or for the account
of the Selling Stockholders. See "SELLING STOCKHOLDERS" and "PLAN OF
DISTRIBUTION."
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made on The NASDAQ SmallCap Market ("NASDAQ"), in negotiated
transactions or otherwise at prices and at terms then prevailing; at prices
related to the then current market price; or at negotiated prices. The Shares
may be sold by any one or more of the following methods: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its own account; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. In addition, any Shares that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any commissions received by such broker-dealers, agents or underwriters and any
profit on the resale of the Shares
<PAGE>
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The Common Stock is traded on NASDAQ under the symbol "CCWW." On
December __, 1997, the closing bid price per share, as reported by NASDAQ was
_____ .
The shares of Common Stock offered for resale hereby were issued in a
private placement in July 1997.
THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISKS, AND SECURITIES
SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" ON PAGE 7 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
Underwriting
Number of Price to Discounts and Proceeds to Selling
Shares Public Commissions Stockholders
- --------------------------------------------------------------------------------
Prevailing Market None Prevailing Market
TOTAL 13,690,000 Price Price
- --------------------------------------------------------------------------------
================================================================================
The date of this Prospectus is _________________, 1997.
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<PAGE>
AVAILABLE INFORMATION
A Registration Statement on Form S-3 (the "Registration Statement"),
under the Securities Act, relating to the securities offered hereby has been
filed by the Company with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Certain financial and other information relating to the
Company is contained in the documents indicated below under "Incorporation of
Certain Documents by Reference" which are not presented herein or delivered
herewith. For further information with respect to the Company and the securities
offered hereby, reference is made to such Registration Statement, exhibits and
schedules. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as exhibits to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected without charge or may be obtained from the Commission upon the payment
of certain fees prescribed by the Commission at the public reference facilities
maintained by the Commission in Washington, D.C. at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's Regional Offices in
New York at 7 World Trade Center , 13th Floor, New York, New York 10048 and in
Chicago at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information concerning
the Company may be inspected or copied at the public reference facilities at the
Commission located at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the Commission's Regional Offices in New York, 7 World Trade Center, 13th
Floor, New York, New York 10048, and in Chicago, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
documents can be obtained at the public reference section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates or by
reference to the Company on the Commission's Worldwide Web page
(http:www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-QSB for the period ended
March 31, 1997.
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<PAGE>
3. The Company's Quarterly Report on Form 10-QSB for the six months
ended June 30, 1997.
4. The Company's Quarterly Report on Form 10-QSB for the nine months
ended September 30, 1997
5. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on May 24, 1996, pursuant to
Section 12(g) of the Exchange Act.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in and to be a part of
this Prospectus from the date of filing of such reports and documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in the
Registration Statement containing this Prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents referred to above which have been or may be
incorporated herein by reference, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into the information
that this Prospectus incorporates). Requests for such documents should be
directed to: Cable & Co. Worldwide, Inc., 724 Fifth Avenue, New York, New York
10019 .
THE COMPANY
Cable & Co. Worldwide, Inc. (the "Company") designs, manufactures,
imports and markets on a wholesale basis a broad range of men's footwear bearing
the Cable & Co.(R) trademark and Bacco Bucci(R) trademark. The Company markets
its products to approximately 1,500 department and specialty store locations in
the United States. The Company's products are designed to appeal to fashion
conscious consumers. The Company's footwear consists of men's casual and dress
shoes. In August 1997 the Company acquired the rights to the Bacco Bucci
trademark from D&D Design and Details Limited ("D&D Design"), an entity
controlled by Alberto Salvucci, the Chairman of the Board, a director and a
principal stockholder of the Company. Prior to August 1997, the Company licensed
the right to use the Bacco Bucci trademark from D&D Design. The retail price of
the men's shoes sold under the Cable & Co. trademark ranges from $150 to $175
for casual shoes and from $190 to $230 for dress shoes. The retail price of the
men's casual shoes sold under the Bacco Bucci trademark ranges from $120 to
$140.
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<PAGE>
The Company believes that its footwear is comfortable, fashionable and
practical. The Company incorporates technically sophisticated designs into the
construction of its footwear, which is intended to be worn with casual or
business attire. The Company sells approximately 35 styles of men's shoes each
season bearing the Cable & Co. trademark and approximately 20 styles under the
Bacco Bucci trademark.
The Company plans to increase revenues by increasing sales to existing
accounts, establishing new accounts, developing high quality shoes with styling
and design detail to sell at competitive prices, expanding the Company's
marketing programs and globalizing the Cable & Co. and Bacco Bucci brands. In
August 1997 the Company acquired the Cable & Co. trademark from Cable & Co.
S.R.L. in many major countries throughout the world. The Company also began
manufacturing its footwear with its own machinery, equipment and staff in a
leased facility in Montegranaro Italy, in the second quarter of 1997, which the
Company believes will increase margins.
The Company also intends to explore opportunities to license rights to
related products such as belts, wallets, accessories and other small leather
goods. There can be no assurance that the Company will be able to achieve such
objectives.
On July 1, 1997, the Company entered into a license agreement (the
"License Agreement") with Roffe Accessories, Inc. ("Roffe"), whereby the Company
granted a license to Roffe to use the Cable & Co. trademark in North America for
silk neckwear for a period of three years. Pursuant to the License Agreement,
Roffe shall pay to the Company a royalty equal to 5% of the first $500,000 of
gross sales and 6% thereafter, together with a fee equal to 2% of gross sales to
be utilized for advertising expenses. The License Agreement provides for minimum
sales of $400,000 in the first year, $600,000 in the second year and $1,100,000
in the third year.
The Company was formed on November 10, 1994 to acquire certain net
assets of Hongson, Inc. used in the sale and marketing of footwear bearing the
Cable & Co. trademark (the "Acquired Net Assets"). The Acquired Net Assets
consisted primarily of intangible assets, namely the goodwill associated with
the Cable & Co. trademark. The Company purchased the Acquired Net Assets
effective as of the close of business on January 1, 1995 for a total purchase
price of $1,401,787 (the "Acquisition"). The Company acquired all of the rights
of Hongson, Inc. to use the Cable & Co. trademark in the Western Hemisphere.
Prior to the Acquisition, Alberto Salvucci, Chairman of the Board, a
director and a principal stockholder of the Company, through Cable & Co. S.R.L.,
identified raw materials and provided design and production services for the
Cable & Co. product line of Hongson, Inc. Mr. Salvucci, through Cable & Co.
S.R.L. and D&D Design, continues to provide substantially the same services to
the Company. In addition, Alan Kandall, Chief Executive Officer, President, and
a Director of the Company, was the chief financial officer of Hongson, Inc. and
David Albahari, formerly the President, Chief Executive Officer and a director,
was
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<PAGE>
the president of the Cable & Co. product line of Hongson, Inc. See - "Recent
Developments."
The Company's principal executive office is located at 724 Fifth
Avenue, New York, New York 10019, and its telephone number is (212) 489-9686.
Recent Developments
In August 1997 the Company purchased all of the rights to the Bacco
Bucci trademark, an intangible asset, from D&D Design, an entity controlled by
Alberto Salvucci, the Chairman of the Board, a director and a principal
stockholder of the Company. The rights sold to the Company include trademarks
registered in the United States, Canada, Italy, Austria, China, France, Germany,
Portugal, Russia, Spain, Switzerland, Hong Kong, India, Korea, Sri Lanka, Taiwan
and the United Kingdom together with any other rights owned by D&D Design
whether or not registered throughout the world. Prior to the acquisition, the
Company held a license for the rights to the Bacco Bucci trademark in North,
Central and South America.
The purchase price for the Bacco Bucci trademark consists of $3,150,000 of which
$400,000 will be paid periodically by February 1, 1998, and the balance of which
shall be payable in installments.
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<PAGE>
Payments of $350,000 and $400,000 are due in January 1998 and January 1999,
respectively. The remaining balance is payable in four installments of $500,000
in January 2000 through January 2003. In addition, the Company has agreed to pay
to D&D Design annual royalties of 7% of net sales for a period of five years for
all goods bearing the Bacco Bucci trademark sold outside North, Central and
South America, commencing on the date the Company commences exploiting the Bacco
Bucci trademark in each country, but expiring no later than December 31, 2007.
The Company also issued to D&D Design an aggregate of 11,973,411 shares of
Common Stock.
The Company also acquired in many major countries throughout the world
outside of the Western Hemisphere, all of the rights to the Cable & Co.
trademark from Cable & Co. S.R.L., an entity controlled by Mr. Salvucci . Prior
to the acquisition, the Company owned the rights to the Cable & Co. trademark in
the Western Hemisphere. The rights sold to the Company include trademark
registrations in the following countries among others, Austria, Belgium, France,
Germany, India, Russia, Italy, Netherlands, Spain, Sweden and Switzerland. The
rights also include all of the rights owned by Cable & Co. S.R.L. in Africa,
Asia Minor, Australia, all of Europe and other parts of the world, except United
Kingdom and Asia. The purchase price for the rights to the Cable & Co. trademark
include the 11,973,411 shares of Common Stock discussed above, the 7% royalties
payable with respect to the Bacco Bucci trademark, together with a payment of
$100,000, which amount has been paid to Cable & Co. S.R.L.
The purchase price, including costs and expenses, for the Bacco Bucci and
Cable & Co. trademarks is approximately $5,420,000. The purchase price is being
amortized over a period of 20 years, resulting in an annual charge to earnings
of approximately $271,000. For financial statement purposes, the Company has
valued the shares of Common Stock at $2,694,017, which represents a discount to
the market price, to reflect the restrictions on transfer under the Securities
Act. In addition, the Company has discounted the future payments of the purchase
price for the Bacco Bucci trademark. The Company believes that the impact on
gross profit will not be significant.
For fiscal 1996, the Company's net sales were $13,522,166 and the Company
paid to D&D Design and Cable & Co. S.R.L. an aggregate of $661,818 or 4.9% of
net sales for royalties and commissions. If the Company had acquired the rights
to the Bacco Bucci and Cable & Co. trademarks as of January 1, 1996, the amount
payable to D&D Design and Cable & Co. S.R.L. on a pro forma basis would have
been $550,107 or 4.1% of net sales for fiscal 1996. For the nine months ended
September 30, 1997, the Company's net sales were $12,695,450 and the Company
accrued commissions payable to D&D Design and Cable & Co. S.R.L. of $574,124 or
4.5% of net sales. Although the amount of royalties are equal to 3% of net
sales, the commissions payable are based upon a percentage of the cost of the
goods, rather than net sales. Therefore, the percentages set forth above are not
equal to the average of the rate of royalties and commissions.
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<PAGE>
If the Company had acquired the rights to the Bacco Bucci trademark on January
1, 1997, the amounts payable to D&D Design and Cable & Co. S.R.L. would be the
same, since the royalties for 1997 on the Bacco Bucci footwear were waived.
Management believes that the purchase of the Bacco Bucci and Cable &
Co. trademarks is an integral part of the Company's plans for expansion. The
purchase of the Bacco Bucci trademark will result in savings on the annual
royalties payable to D&D Design with respect to sales of Bacco Bucci footwear in
North, Central and South America. For fiscal 1996, the royalties paid to D&D
Design with respect to sales of Bacco Bucci footwear were $111,711. The Company
intends to focus on expanding sales of the Bacco Bucci footwear. In the event
that sales of the Bacco Bucci footwear increase significantly, of which there
can be no assurance, the Company believes that the amount saved by the Company
in royalty payments would be substantial. The Company also plans to sell
footwear bearing the Cable & Co. and Bacco Bucci trademarks outside of the
Western Hemisphere, which rights the Company did not possess prior to the recent
acquisitions. The Company anticipates utilizing a network of distributors and
licensees to sell its footwear outside the United States. However, the network
is not established and there can be no assurance that the Company will do so.
The Company has had discussions to sell Bacco Bucci and Cable & Co. footwear in
the Middle East, Turkey, and India. However, no definitive agreements have been
reached. In addition, the Company intends to sell Bacco Bucci footwear in the
United Kingdom. However, no definitive agreements have been reached.
** 1 In fiscal 1996, the Company paid a fashion and design advisory fee of
$86,000 to D&D Design for Cable & Co. and Bacco Bucci footwear. The fee was paid
for fashion and design advisory services which were provided to the Company.
During the nine months ended September 30, 1997, the Company paid fashion and
design advisory fees to D&D Design of $43,279 and anticipates paying to D&D
Design an additional $14,425 during the fourth quarter
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<PAGE>
of fiscal 1997. The Company anticipates entering into a consulting agreement
with Mr. Salvucci for years subsequent to December 31, 1997.
As a result of the acquisition of the Bacco Bucci trademark, the
Company will no longer be obligated to pay royalties of 3% per year with respect
to net sales of Bacco Bucci footwear in North, Central and South America.
However, it is anticipated that the Company will continue to pay commissions to
D&D Design and Cable & Co. S.R.L. as directed by Alberto Salvucci, at the rate
of 7%, in the aggregate, of the cost of goods shipped to the Company. The
Company will also be obligated to pay royalties to D&D Design equal to 7% of net
sales of products bearing the Bacco Bucci trademark outside of North, Central
and South America for a period of five years commencing on the date the Company
commences exploiting the Bacco Bucci trademark in each country, but expiring no
later than December 31, 2007 It is also anticipated that the Company will
continue to pay commissions on the purchase of Cable & Co. footwear to entities
controlled by Mr. Salvucci at a rate of 8% of the cost of goods shipped to the
Company.
In October 1997, the Company entered into an agreement as of July 21,
1997, to pay David Albahari, the former President, Chief Executive Officer and a
director of the Company, $200,000 per year commencing July 1997 through
September 30, 1998, and to reimburse Mr. Albahari for certain expenses. The
employment agreement between the Company and Mr. Albahari was terminated
pursuant to such agreement. The Company also issued Mr. Albahari options to
purchase 901,756 shares of Common Stock at a purchase price of $0.01 per share.
In October 1997 Mr. Albahari exercised the options. On the date of the issuance
of the options the average of the closing bid and the closing ask price on the
NASDAQ Small Cap Market was $.34375 per share.
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<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
THE SECURITIES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN THE
LOSS OF THEIR ENTIRE INVESTMENT. IN EVALUATING AN INVESTMENT IN THE COMPANY AND
ITS BUSINESS, PRIOR TO PURCHASE PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISK FACTORS AS WELL AS OTHER INFORMATION SET FORTH ELSEWHERE IN
THIS PROSPECTUS.
Limited Operating History
The Company, which was organized in November 1994, was formed for the
purpose of acquiring the Acquired Net Assets from Hongson, Inc. For the years
ended December 31, 1995 and 1996, the Company had net losses of $103,109 and
$7,458,305 respectively, and for the nine months ended September 30, 1996 and
1997 the Company had net losses of $4,831,121 and $2,562,222, respectively. The
Company has a limited operating history and there can be no assurance of future
profitable operations. Moreover, there can be no assurance that the Company will
be able to attain improved operating results and, as a result, no assurance can
be given that the Company's financial condition will improve.
Dependence on Proposed Expansion Program
The Company's continued growth depends to a significant degree on its
ability to increase sales to existing customers, to obtain new customers and to
expand its product lines, while insuring adequate quality controls. The Company
plans to increase revenues by increasing sales to existing accounts,
establishing new accounts, including overseas sales developing high quality
shoes with styling and design detail to sell at competitive prices and expanding
the Company's marketing programs. The Company plans to increase margins through
the manufacture of its products. In addition, the Company intends to seek to
grant license rights to the Cable & Co. trademark.
The Company anticipates hiring an additional individual at the
executive level to coordinate overseas sales. In addition, the Company plans to
retain the services of an advertising and marketing firm in Italy. Initially,
the Company plans to establish a network of licensees, distributorships and
enter into similar arrangements overseas to sell Bacco Bucci and Cable & Co.
footwear. The Company intends to attempt to control its marketing costs through
entering into agreements for the distribution of its products. However, the
Company believes that additional financing of approximately $3,000,000 may be
required over the next 16 months to effectuate the Company's plans for expansion
outside of the United States and to make the additional payments that are
required in connection with the acquisition of the Bacco Bucci trademark. The
Company has had discussions to sell Bacco Bucci and Cable & Co. footwear in the
Middle East, Turkey, and India. However, no definitive agreements have been
reached. In addition, the Company intends to sell Bacco Bucci footwear in the
United
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<PAGE>
Kingdom. However, no definitive agreements have been reached. The Company has
not yet incurred any significant increase in costs with respect to the sale of
its footwear overseas.
There can be no assurance that the Company will be able to hire, train
and integrate employees and adapt its management information and other
operational systems, to the extent necessary to grow in a profitable manner. In
addition, the costs associated with the planned expansion of the Company may
have a material adverse impact upon the Company's results and prospects. In the
event that the Company's plans for expansion are not successful, there would be
a material adverse affect on the Company's business.
Need for Additional Financing
If revenues are not sufficient for the operation of the Company, or to
enable the Company to complete its present plans for expansion, then the Company
will have to seek additional financing. Such additional financing may be in the
form of indebtedness from institutional lenders or other third parties or as
equity financing. Moreover, the Company's credit facilities with Heller
Financial, Inc. ("Heller"), the Company's factor, may limit the Company's
ability to obtain additional financing. The Company is continually seeking
additional financing for expansion. The Company believes that additional
financing of approximately $3,000,000 will be required over the next 16 months
to finance the Company's plans for expansion overseas and to pay the additional
amounts due in connection with the acquisition of the Bacco Bucci trademark. In
addition, the fourth quarter of the year is generally the most unpredictable. In
the event that the results in the fourth quarter of 1997 were substantially
below expectations, additional financing may be required. There can be no
assurance that such financing will be available and, if so, on acceptable terms.
Any such financing may result in significant dilution to investors or cause the
Company to become overly leveraged. In such event, the stockholders, including
purchasers in this Offering, may lose or experience a substantial reduction in
the value of their investment in the Company.
In order to obtain the financing necessary to accelerate the Company's
plans for expansion, the Company intends to raise approximately $20,000,000 in
additional financing through the sale of convertible preferred stock which will
be offered and sold to the public in an underwritten offering in the first
quarter of 1998. It is anticipated that the preferred stock will be convertible
into shares of Common Stock at a premium to the market price of the Common Stock
and that the preferred stock will be redeemable, at the option of the Company,
if the market price of the Common Stock reaches a certain level. The offering of
the preferred stock will be made only by means of a prospectus. There can be no
assurance that such financing will be consummated on the anticipated terms, or
at all.
Secured Liens -- Liens on the Company's Assets
The Company's accounts receivable, inventory, machinery, equipment,
fixtures, instruments, documents, chattel paper, general intangibles and
contract rights (the "Secured Assets") have been pledged as collateral to secure
obligations owed to Heller. If the Company fails to comply with such
obligations, including making required payments of principal and interest,
Heller could declare the indebtedness immediately due and payable and, in
certain events, foreclose upon the Secured Assets. Moreover, to the extent that
the Company's assets continue to be pledged to secure outstanding indebtedness,
such assets will be unavailable to secure additional debt financing, which may
adversely affect the Company's ability to borrow in the future.
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<PAGE>
Dependence on Credit Facilities
The Company's operations are dependent upon the availability of credit.
As of September 30, 1997, the total amount outstanding under the Company's
credit facilities with Heller was $4,981,309, all of which is classified as a
current liability. The Company's existing credit facility with Heller expires in
February 1998. If Heller fails to renew or declares a default under or imposes a
material change in the terms of the Company's credit facilities, there could be
a material adverse affect on the Company.
The Company has not had any formal discussions with Heller with respect
to the renewal of the Company's existing credit facility. However, the Company
is exploring alternatives. The Company anticipates, although there can be no
assurance, that the Company will be able to obtain a credit facility from Heller
or another lender on substantially the same terms. The failure of the Company to
obtain a credit facility on substantially the same terms would have a material
adverse effect on the Company.
Competition
Competition in the footwear industry is intense. The Company's products
compete with other branded products within their product category. In varying
degrees, depending on the product category involved, the Company competes on the
basis of style, price, quality, comfort and brand prestige and recognition,
among other considerations. The Company competes with numerous manufacturers,
importers and distributors of men's footwear for the limited shelf-space
available for displaying products to the consumer. Moreover, the general
availability of contract manufacturing capacity allows access by new market
entrants. Some of the Company's competitors are larger, have achieved greater
recognition for their brand names, have captured greater market share and/or
have substantially greater financial, distribution, marketing and other
resources than the Company.
- 12 -
<PAGE>
Continued Relationship with Alberto Salvucci;
Dependence on Key Persons
Due to the Company's performance in fiscal 1996, the Board of Directors
believed that it was necessary to change the management structure of the
Company. As a result, in the first quarter of 1997, Alberto Salvucci was
appointed the Chairman of the Company and in July 1997, Alan Kandall, the former
Chief Financial Officer and Executive Vice President was named President and
Chief Executive Officer, replacing David Albahari. Mr. Albahari has also
resigned as a director of the Company.
The Company is dependent on the design, production and production
control services provided by Alberto Salvucci, Chairman of the Board and a
principal stockholder of the Company, individually and through Cable & Co.
S.R.L. and D&D Design. However, although the Company is in the process of
finalizing a consulting agreement with Mr. Salvucci, which contains
non-competition provisions the Company does not have any written agreements
with, Mr. Salvucci, Cable & Co. S.R.L. or D&D Design, both of which are
controlled by Mr. Salvucci. There can be no assurance that the Company will
enter into such agreements on acceptable terms. The loss or curtailment on
acceptable terms of Mr. Salvucci's services, or direct or indirect competition
with Mr. Salvucci, Cable & Co. S.R.L. or D&D Design could have a material
adverse affect on the Company's business.
The Company is also dependent upon the services of Alan Kandall the
Company's Chief Executive Officer, President, and a member of the Company's
Board of Directors. Mr. Kandall has an employment agreement with the Company
that expires on June 30, 2002. The loss or curtailment of the services of Mr.
Kandall would have a material adverse affect on the Company's operations and
prospects.
In addition, the Company has an ongoing need to expand its management,
marketing and support staff. Competition for personnel having the qualifications
required by the Company is intense and no assurance can be given that the
Company will be successful in recruiting or retaining such personnel as the need
arises.
Dependence on Major Customers
Approximately 18% of the Company's sales were made to one customer during
the year ended December 31, 1996. The loss of, or reduced purchases by, the
Company's major customer could have a material adverse affect on the Company.
Generally, the Company has not made special arrangements with its major
customers. However, from time to time, based on the type of products and the
customers' location, incentive prices are offered in management's discretion.
- 13 -
<PAGE>
Changing Consumer Demands; Uncertainty of Market Acceptance
The footwear industry is subject to changing consumer demands and
fashion trends. The Company believes that its success will depend in large part
upon its ability to identify and interpret fashion trends and to anticipate and
respond to such trends in a timely manner. There can be no assurance that the
Company will be able to meet changing consumer demands or to develop successful
styles in the future. If the Company misjudges the market for a particular
product or product line, it may result in an increased inventory of unsold and
outdated finished goods and have an adverse affect on the Company's financial
condition and results of operations. In addition, any failure by the Company to
identify and respond to changing demands and trends could adversely affect
consumer acceptance of the Company's products and diminish the Company's
business and prospects.
The Company intends to market additional lines of footwear in the
future. Achieving market acceptance for each of these products will be difficult
and may require substantial marketing efforts and the expenditure of significant
funds. There can be no assurance that the Company will have sufficient funds to
do so or that its marketing effort will be successful.
Risks of Manufacturing
The Company recently began manufacturing the Company's footwear in
Montegranaro, Italy. Previously, the Company's footwear was produced to its
specifications by manufacturers located primarily in Montegranaro Italy. There
can be no assurance that the Company will be able to manufacture its footwear to
satisfy its customers requirements or, if required, alternative suppliers will
be available in a timely manner.
Impact of Doing Business in Foreign Countries
The Company's business is subject to risks of doing business abroad,
including, but not limited to, fluctuations in exchange rates and changes in
regulations relating to imports, including quotas, duties, taxes and other
charges. Political and economic instability in countries where the Company's
products are manufactured or sold may have a material adverse affect on the
Company's operations.
In order to reduce the risk of exchange rate fluctuations, the Company
enters into forward exchange contracts to protect gross profit margins on most,
but not all of its foreign currency transactions. The Company has an aggregate
of $6,000,000 of foreign exchange lines of credit available. The Company
generally attempts to cover the currency risk in each season's outstanding
purchase orders. At any one point during the year, the Company generally has
$5,500,000 to $6,000,000 of forward foreign exchange contracts outstanding. The
Company cannot anticipate all of its currency needs and, therefore, cannot fully
hedge against such fluctuations. Thus, changes in exchange rates could adversely
affect the costs of goods purchased by the Company.
- 14 -
<PAGE>
Although the goods sold by the Company are not currently subject to
quotas, countries in which the Company's products are manufactured may, from
time to time, impose new quotas or adjust prevailing quotas or other
restrictions on exported products and the United States may impose new duties,
tariffs and other restrictions on imported products, any of which could
adversely affect the Company's operations. In accordance with the 1993
Harmonized Tariff Schedule, a fixed duty structure is in effect for the United
States. The Company pays import duties on its products of approximately 8.5%,
depending on the principal component of the product. Other import restrictions
on footwear and related products are periodically considered by the United
States Congress and no assurances can be given that new regulations will not
result in higher costs to the Company, or that import quotas will not be imposed
or made more restrictive.
The Company imports a large portion of its products from Italy. Italy
is on the "watch list" maintained by the United States Trade Representative (the
"USTR") under "Special 301" provisions of the Trade Act of 1974 for purposes of
monitoring protection of intellectual property rights. If the USTR were to
determine that Italy's actions, policies, or practices with respect to
intellectual property rights are actionable, sanctions against imports from
Italy, including higher duties, could be imposed.
Advance Marketing of Products
To minimize purchasing costs and the time necessary to fill customers'
orders and the risk of non-delivery, the Company arranges for manufacturing
before receiving customers' orders, and maintains an inventory of certain key
products which it anticipates will be in demand. However, there can be no
assurance that the Company will be able to sell the products that it has
manufactured or has in its inventory. As of September 30, 1997, the Company had
approximately $4,525,391 of finished goods inventory, including landing costs,
and approximately $546,120 of unfinished goods inventory. The Company must make
decisions regarding how much inventory to manufacture well in advance of
anticipated sale. Deviations in actual from projected demand for products could
have an adverse affect on the Company's sales and profitability. In addition, if
the Company fails to meet its delivery requirements to its customers, such
delayed delivery could result in cancellation of purchase orders and reduced
sales.
Product Diversion
The Company believes that International Hongson, Inc., an affiliate of
Hongson, Inc. as a result of common ownership, owns the rights to use the Cable
& Co. trademark in parts of Asia. The Company does not control the distribution
of the footwear produced by International Hongson, Inc. or others that may have,
or acquire rights to the Cable & Co. trademark for parts of Asia or elsewhere,
and no assurances can be given that products manufactured or sold in parts of
Asia or elsewhere will not be sold in the Company's markets. Management believes
that International Hongson, Inc. retains the rights to the Cable & Co. trademark
for parts of Asia.
- 15 -
<PAGE>
Potential Limitation on Trademark Protection
The Company has been granted trademark registrations for the Cable &
Co. in the United States, Canada and in many major countries throughout the
world, except the United Kingdom and Taiwan. In addition, the Company has been
granted trademark registrations for Bacco Bucci in the United States, Canada and
many major countries throughout the world. Additional trademark registration
applications which may be filed by the Company with the United States Patent and
Trademark Office and in other countries may or may not be granted and the
breadth or degree of protection of the Company's existing or future trademarks
may not be adequate. In addition, pursuant to the asset purchase agreement
between the Company and Hongson, Inc. in connection with the Acquisition,
Hongson, Inc. was obligated to indemnify the Company for any misrepresentations
it made with respect to the Cable & Co. trademark. However, management believes
that Hongson, Inc. is no longer doing business and it is not anticipated that it
will be able to fulfill such obligation, if so requested. Moreover, the Company
may not be able to defend successfully any of its legal rights with respect to
its present or future trademarks. The failure of the Company to protect its
legal rights to its trademarks from improper appropriation or otherwise may have
a material adverse affect on the Company.
Effect of General Economic Conditions
The fashion-related segments of the Company's business are cyclical,
with consumer purchases generally declining during recessionary periods when
disposable income decreases. There can be no assurance that a poor economic
climate will not have an adverse impact on the Company's ability to compete for
limited consumer resources.
Although the retail footwear industry has experienced significant
changes and difficulties over the past several years, including consolidation of
ownership, centralization of buying decisions, restructuring, bankruptcies and
liquidations, management believes that such changes have not had a material and
adverse affect on the Company's business. However, the Company cannot predict
what effect, if any, continued changes within the retail industry will have on
its business.
Seasonality
The Company's business is subject to seasonal variations. Historically
in the footwear industry, a significant portion of the Company's sales are
realized during the spring and fall fashion seasons, and levels of sales are
generally lower during the winter and summer fashion seasons. If the Company's
sales were to be substantially below seasonal norms during the spring and fall
fashion seasons, the Company's annual results could be materially and adversely
affected.
- 16 -
<PAGE>
Authorization and Discretionary Issuance of Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
"blank check" preferred stock with such designations, rights and preferences as
may be determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividends, liquidation, conversion, voting or other rights
which could decrease the amount of earnings and assets available for
distribution to holders of Common Stock and adversely affect the relative voting
power or other rights of the holders of the Company's Common Stock. In the event
of issuance, the preferred stock could be used, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the
Company. Although the Company has no present intention to issue any additional
shares of its preferred stock, there can be no assurance that the Company will
not do so in the future.
No Dividends
The Company has not paid and does not anticipate declaring or paying
any dividends on its Common Stock in the foreseeable future. Moreover, the
Company's loan agreements with Heller prohibit the payment of dividends if such
payment would cause the Company to violate any of the Company's financial
covenants.
Benefits to Certain Selling Securityholders
In July 1997, the Company consummated a private placement at a purchase
price of $.10 per share. The prices paid by investors in this Offering may be
substantially higher than the amounts paid by the selling stockholders.
Shares Eligible for Future Sale
Of the 43,048,164 shares of Common Stock currently outstanding
27,198,260, including the Shares offered hereby, are "restricted securities" as
that term is defined in Rule 144 under the Securities Act and may only be sold
pursuant to a registration statement filed under the Securities Act or in
compliance with Rule 144 or another exemption from the registration requirements
of the Securities Act. In general, under Rule 144, subject to the satisfaction
of certain other conditions, a person, including an affiliate of the Company,
who has beneficially owned restricted shares of Common Stock for at least one
year is entitled to sell, within any three-month period, a number of shares that
does not exceed the greater of 1% of the total number of outstanding shares of
the same class, or if the Common Stock is quoted on NASDAQ or a stock exchange,
the average weekly trading volume during the four calendar weeks immediately
preceding the sale. A person who presently is not and who has not been an
affiliate of the Company for at least three months immediately preceding the
sale and who has beneficially owned the shares of Common Stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the volume limitations described above.
- 17 -
<PAGE>
The Company has 2,279,500 shares of Common Stock issuable upon the
exercise of outstanding options, warrants and conversion rights. Moreover,
280,000 shares of Common Stock will be available for issuance upon the exercise
of options which may be granted under the Company's 1996 Stock Option Plan. To
the extent that options or warrants are exercised, dilution to the interests of
the Company's stockholders may occur. Moreover, the terms upon which the Company
will be able to obtain additional equity capital may be adversely affected,
since the holders of the outstanding options or warrants can be expected to
exercise them, to the extent they are able to, at a time when the Company would,
in all likelihood, be able to obtain any needed capital on terms more favorable
to the Company than those provided in the options or warrants.
Possible Delisting of Common Stock for NASDAQ; Possible Adverse Effect on
Trading Market
The Common Stock is quoted on the NASDAQ SmallCap Market. There are a
number of continuing requirements that must be met in order for the Common Stock
to remain eligible for quotation on NASDAQ. In order to continue to be quoted on
NASDAQ, a company must maintain $2 million in total assets, a $200,000 market
value of the public float, $1 million in total capital and surplus and a minimum
of 300 shareholders. In addition, continued quotation requires two marketmakers
and a minimum bid price of $1.00 per share; provided, however, under an
alternative test if a company falls below such a minimum bid, it will remain
eligible for continued quotation on NASDAQ if the market value of the public
float is at least $1 million and the company has $2 million in capital and
surplus. The bid price of the Company's Common Stock is presently less than
$1.00, however the Company presently has capital and surplus in excess of $2
million. The failure to meet these maintenance criteria in the future could
result in the delisting of the Company's Common Stock from NASDAQ. In such
event, trading, if any, in the Common Stock may then continue to be conducted in
the non-NASDAQ over-the-counter market. As a result, an investor may find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Common Stock.
In August 1997, NASDAQ approved changes to its quantitative and
qualitative standards for issuers listing on NASDAQ, the changes will apply to
the Company commencing in February 1998. For continued listing, pursuant to the
recent changes the Company, generally, must have (i) net tangible assets of at
least $2,000,000, a market capitalization of at least $35,000,000 or net income
in two of the last three years of at least $500,000, (ii) a minimum of 500,000
shares publicly held, (iii) a minimum of $1,000,000 market value of public
float, (iv) a minimum bid price of $1.00 per share and (v) a minimum of 300
shareholders.
The Company presently has a minimum bid price of less than $1.00 per
share. The Company intends to effect a one-for-five reverse stock split in order
to increase the minimum bid price. However, there can be no assurance that the
Company will do so, or that the reverse stock split will have the desired
effect. As a result of the new rule changes, in the
- 18 -
<PAGE>
event that the minimum bid price of the Common Stock is less than $1.00, the
Common Stock would be subject to delisting in February 1998, since the
alternative test will no longer be applicable.
In addition, if the Common Stock were delisted from trading on NASDAQ
and the trading price of the Common Stock were less than $5.00 per share,
trading in the Common Stock would also be subject to the requirements of certain
rules promulgated under the Securities Exchange Act of 1934, which require
additional disclosure by broker dealers in connection with any trades involving
a stock defined as a penny stock (generally, any non-NASDAQ equity security that
has a market price of less than $5.00 per share, subject to certain exceptions).
Such rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers may discourage
broker-dealers from effecting transactions in penny stocks, which could reduce
the liquidity of the shares of Common Stock and thereby have a material adverse
effect on the trading market for the securities.
Non-Cash Compensation
The Company anticipates incurring a charge to earnings in fiscal 1997
and fiscal 1998 in the amounts of approximately $1,500,000 and $165,000,
respectively, as a result of shares of Common Stock issued in connection with
various agreements, including expenses relating to the issuance of options to
purchase 901,756 shares of Common Stock to David Albahari, the former President,
Chief Executive Officer and a director of the Company. See -"Significant Related
Party Transactions."
Cash Commitments
As a result of the purchase of the Bacco Bucci trademark from D&D
Design, $400,000 is payable periodically by February 1, 1998, a payment of
$350,000 is due in January, 1998 and a payment of $400,000 is due in January,
1999. The Company believes that additional financing of approximately $3,000,000
will be required over the next 16 months to finance the Company's overseas
operations and to make the additional payments required in connection with the
acquisition of the Bacco Bucci trademark. In addition, the fourth quarter is
generally the most unpredictable quarter of the year. In the event that sales
are significantly below the Company's expectations, additional financing may be
required.
- 19 -
<PAGE>
Legal Proceedings
The Company effected an underwritten initial public offering of its
securities on June 5, 1996 (the "IPO"). On July 15, 1997, as part of an inquiry
into the activities of a principal underwriter of the IPO, the Commission issued
an Order of Private Investigation relating to such underwriter and three
companies, including the Company, in which the underwriter had acted as
principal underwriter. Prior to the Commission issuing its Order of Private
Investigation, and since November 19, 1996, the Company and its officers and
directors have fully cooperated with the Commission in connection with its
present inquiry.
Separate and apart from the Commission's Order of Private
Investigation, the Company received a grand jury subpoena which the Company
believes is in connection with an investigation of the underwriter pending in
the United States District Court for the Southern District of New York. The
Company has been advised by the Assistant United States Attorney conducting the
Grand Jury investigation that the Company is not the subject or target of such
investigation.
Significant Related Party Transactions
Since June 1996, the Company has entered into a series of transactions
with the directors and officers of the Company. In August 1997, the Company
purchased the rights to the Cable & Co. and Bacco Bucci trademarks from Cable &
Co. S.R.L. and D&D Design, respectively. Alberto Salvucci, the Chairman, a
director and a principal stockholder of the Company, controls D&D Design and
Cable & Co. S.R.L. For fiscal 1996, the Company paid an aggregate of $226,931 to
D&D Design and Cable & Co. S.R.L. with respect to sales and purchases of Bacco
Bucci footwear which is comprised of $115,220 of commissions and $111,711 of
royalties. In addition, the Company paid to D&D Design $86,000 for fashion and
design advisory fees for Bacco Bucci and Cable & Co. footwear. For the nine
months ended September 30, 1997, the Company paid and accrued an aggregate of
$194,559 to D&D Design and Cable & Co. S.R.L. with respect to purchases of Bacco
Bucci footwear which is solely commissions. In addition, for the nine months
ended September 30, 1997, the Company paid to D&D Design $43,278 of fashion and
design advisory fees for Bacco Bucci and Cable & Co. footwear. No royalties for
sales of Bacco Bucci footwear were paid during the nine months ended September
30, 1997. For fiscal 1996, the Company paid an aggregate of $434,887 to Cable &
Co. S.R.L. and D&D Design with respect to purchases of Cable & Co. footwear
which is solely for commissions. For the nine months ended September 30, 1997,
the Company paid an aggregate of $379,565 to Cable & Co. S.R.L. and D&D Design
with respect to purchases of Cable & Co. footwear which is solely for
commissions. It is anticipated that the Company will continue to pay commissions
on the purchase of Cable & Co. and Bacco Bucci footwear to entities controlled
by Mr. Salvucci at a rate of 8% and 7%, respectively of the cost of goods
shipped to the Company.
In October 1997, the Company entered into an agreement as of July 21,
1997 to pay David Albahari, the former President, Chief Executive Officer and a
director, $200,000 per
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<PAGE>
year commencing July 1997 through September 30, 1998, and to reimburse Mr.
Albahari for certain expenses. The Company also issued Mr. Albahari options to
purchase 901,756 shares of Common Stock at a purchase price of $0.01 per share,
which were exercised in October 1997. In connection with the issuance of the
options, the Company recorded an expense of $309,978.
Risks Associated with Forward-Looking Statements
This Prospectus contains certain forward-looking statements regarding
the plans and objectives of management for future operations. The
forward-looking statements included herein are based on current expectations
that involve numerous risks and uncertainties. The Company's plans and
objectives are based on a successful execution of the Company's expansion
strategy and assumptions that Company's operations will be profitable, that the
footwear industry will not change materially or adversely, and that there will
be no unanticipated material adverse change in the Company's operations or
business. Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions and
future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Company. Although the
Company believes that its assumptions underlying the forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
there can be no assurance that the forward-looking statements included herein
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, particularly in view of the
Company's early stage operations, the inclusion of such information should not
be regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.
USE OF PROCEEDS
Since this Prospectus relates to the offering of Shares by the Selling
Stockholders, the Company will not receive any proceeds from the sale of the
Shares offered hereby. See "SELLING STOCKHOLDERS."
SELLING STOCKHOLDERS
The following table sets forth the name and the number of shares of
Common Stock beneficially owned by each Selling Stockholder as of August 1,
1997, the number of the shares to be offered by each Selling Stockholder
pursuant to this Prospectus and the number of shares to be beneficially owned by
each Selling Stockholder after the Offering if all of the shares offered hereby
by such Selling Stockholder are sold as described herein. The shares being
offered for resale hereby were acquired by the selling stockholders in a private
placement in July 1997. Except as noted below, the Selling Stockholders have not
held any position or office with, been employed by, or otherwise had a material
relationship with, the
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<PAGE>
Company, other than as stockholders of the Company subsequent to their
respective acquisition of shares of Common Stock. The Shares are being
registered to permit public secondary trading of the Shares, and the Selling
Stockholders may offer the Shares for resale from time to time. See "PLAN OF
DISTRIBUTION."
In recognition of the fact that Selling Stockholders may wish to be
legally permitted to sell their Shares when they deem appropriate, the Company
has filed with the Commission, under the Securities Act, a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time on NASDAQ or in privately-negotiated
transactions and has agreed to prepare and file such amendments and supplements
to the Registration Statement as may be necessary to keep the Registration
Statement effective until the Shares are no longer required to be registered for
the sale thereof by the Selling Stockholders.
The Company has agreed to pay for all costs and expenses incident to
the issuance, offer, sale and delivery of the Shares, including, but not limited
to, all expenses and fees of preparing, filing and printing the Registration
Statement and Prospectus and related exhibits, amendments and supplements
thereto and mailing of such items. The Company will not pay selling commissions
and expenses associated with any such sales by the Selling Stockholders. The
Company has agreed to indemnify the Selling Stockholders against civil
liabilities including liabilities under the Securities Act.
Except as otherwise indicated, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect to their
securities. The information in the table concerning the Selling Stockholders who
may offer Shares hereunder from time to time is based on information provided to
the Company by such stockholders. Information concerning such Selling
Stockholders may change from time to time and any changes of which the Company
is advised will be set forth in a Prospectus Supplement to the extent required.
See "PLAN OF DISTRIBUTION."
<TABLE>
Number of Shares of Number of Shares Number of Shares
Name of Selling Common Stock of Common Stock Beneficially Owned
Stockholder Beneficially Owned(1) Offered Hereby After Offering
<S> <C> <C> <C>
JP Partners II LLP 1,725,000 1,725,000 0
Banco Cooperativo 2,000,000 2,000,000 0
Costarricense R.L.
First National 1,000,000 1,000,000 0
Funding Corp.
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<PAGE>
RBB Bank AG 5,500,000(2) 5,500,000 0
Robert B. Prag 350,000 350,000 0
Heracles Holdings 350,000 350,000 0
Mathers Associates 2,500,000 2,500,000 0
Howard Boilen 171,245 150,000 21,245
Neal Heller 100,000 100,000 0
Paul Gordon 48,139 5,000 43,139
Charles Lowlicht 105,145 10,000 95,145
Total 13,849,529 13,690,000 159,529
</TABLE>
(1) Such beneficial ownership represents the number of shares of Common Stock
beneficially owned by each such person .
(2) RBB Bank AG holds such shares of Common Stock as agent for 29 independent
investors.
The Selling Stockholders are offering the Shares for their own account,
and not for the account of the Company. The Company will not receive any
proceeds from the sale of the Shares by the Selling Stockholders.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders.
Such sales may be made through ordinary brokerage transactions, the
over-the-counter market, or otherwise at prices and at terms then prevailing, at
prices related to the then current market price or at negotiated prices. The
Shares may be sold by any one or more of the following methods: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker as principal
and resale by such broker or dealer for its account, (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
privately negotiated transactions. In addition, any Shares that qualify for
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<PAGE>
sale pursuant to Rule 144 may be sole under Rule 144 rather than pursuant to
this Prospectus.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholder in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act and
any commissions received by such broker-dealer, agent or underwriter and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Shares offered by this Prospectus may
simultaneously engage in market making activities with respect to the Common
Stock during any applicable "Cooling off" periods prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder including, without limitation, Rules 10b-6
and 10b-7, which provisions may limit the timing of purchases and sales of
Common Stock by the Selling Stockholders.
The Company has agreed to indemnify the Selling Stockholders against
liabilities incurred by the Selling Stockholders by reason of misstatements or
omissions to state material facts in connection with the statements made in this
Prospectus and the Registration Statement of which it forms a part. The Selling
Stockholders, in turn, have agreed to indemnify the Company against liabilities
incurred by the Company by reason of misstatements or omissions to state
material facts in connection with statements made in the Registration Statement
and prospectus based on information furnished in writing by the Selling
Stockholders.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
The Company undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3
or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the prospectus to provide such
interim financial information.
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<PAGE>
DESCRIPTION OF SECURITIES
General
The total authorized capital stock of the Company is 50,000,000 shares
of Common Stock, $.01 par value per share, and 1,453,020 shares of Preferred
Stock, $.01 par value per share. As of November 1, 1997, the Company had
43,048,164 shares of Common Stock issued and outstanding , which were held by
approximately 2,200 shareholders as of September 1997, and an aggregate of
2,279,500 shares of Common Stock issuable upon exercise of outstanding options,
warrants and conversion rights.
Common Stock
Each share of Common Stock entitles the holder thereof to one vote on
all matters submitted to a vote of the stockholders. Since the holders of Common
Stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of the directors of the Company then being
elected and holders of the remaining shares by themselves cannot elect any
directors. The holders of Common Stock do not have preemptive rights or rights
to convert their Common Stock into other securities. Holders of Common Stock are
entitled to receive ratably such dividends as may be declared by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of the Company, holders of the Common
Stock have the right to a ratable portion of the assets remaining after payment
of liabilities subject to any superior claims of any shares of Preferred Stock
hereafter issued. See "- Preferred Stock." All shares of Common Stock
outstanding and to be outstanding upon completion of the Offering are and will
be fully paid and nonassessable.
Preferred Stock
The Company is authorized by its Articles of Incorporation to issue a
maximum of 1,453,020 shares of preferred stock, in one or more series and
containing such rights, privileges and limitations, including voting rights,
dividend rates, conversion privileges, redemption rights and terms, redemption
prices and liquidation preferences, as the Board of Directors of the Company
may, from time to time, determine.
The issuance of shares of preferred stock pursuant to the Board's
authority could decrease the amount of earnings and assets available for
distribution to holders of Common Stock, and otherwise adversely affect the
rights and powers, including voting rights, of such holders and may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company is not required by current Delaware Law to seek stockholder approval
prior to any issuance of authorized but unissued stock and the Board of
Directors
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<PAGE>
does not currently intend to seek stockholder approval prior to any issuance of
authorized but unissued shares of preferred stock or Common Stock, unless
otherwise required by law.
LEGAL MATTERS
Certain legal matters with respect to the issuance of the securities
offered hereby will be passed upon for the Company by Lane & Mittendorf LLP, 320
Park Avenue, New York, New York 10022. Martin C. Licht, Esq. a member of Lane &
Mittendorf LLP, counsel to the Company is a member of the Board of Directors of
the Company.
EXPERTS
The financial statements of the Company incorporated herein by
reference to the Company's Annual Report on Form 10-KSB have been audited by
Goldstein Golub Kessler & Company, P.C., independent auditors. The financial
statements referred to above are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
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<PAGE>
- ------------------------------------------------
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No dealer, salesperson or any other person is authorized to give any
information or to make any representations in connection with this Prospectus
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or the Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the securities offered by this Prospectus, or an
offer to sell or a solicitation of an offer to buy any securities by anyone in
any jurisdiction in which such offer or solicitation is not authorized or is
unlawful. The delivery of this Prospectus shall not, under any circumstances,
create any implication that the information herein is correct as of any time
subsequent to the date of the Prospectus.
---------------------
TABLE OF CONTENTS
Page
THE COMPANY
RISK FACTORS
USE OF PROCEEDS
SELLING STOCK HOLDERS
PLAN OF DISTRIBUTION
DESCRIPTION OF SECURITIES
LEGAL MATTERS
EXPERTS
Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the securities, whether or not participating in the
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
=====================================================
- -----------------------------------------------------
- -----------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses which will be paid by the
Company in connection with the shares of Common Stock being registered. With the
exception of the registration fee, all amounts shown are estimates.
Registration fee...........................................$ 1,685
Printing expenses..........................................$ 2,500
Legal fees and expenses (other than Blue Sky)..............$ 27,000
Accounting fees and expenses...............................$ 2,500
Miscellaneous expenses.....................................$ 2,000
--------
Total .........................................$ 35,685
Item 15. Indemnification of Officers and Directors.
Section 145 of the Delaware General Corporation Law (the "DGCL")
permits, in general, a Delaware corporation to indemnify any person who was or
is a party to an action or proceeding by reason of the fact that he or she was a
director or officer of the corporation, or served another entity in any capacity
at the request of the corporation, against liability incurred in connection with
such proceeding including the estimated expenses of litigating the proceeding to
conclusion and the expenses, actually and reasonably incurred in connection with
the defense or settlement of such proceeding, including any appeal thereof, if
such person acted in good faith, for a purpose he or she reasonably believed to
be in, or not opposed to, the best interests of the corporation and, in criminal
actions or proceedings, in addition had no reasonable cause to believe that his
or her conduct was unlawful. Section 145(e) of the DGCL permits the corporation
to pay in advance of a final disposition of such action or proceeding the
expenses incurred in defending such action or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount as,
and to the extent, required by statute. Section 145(f) of the DGCL provides that
the indemnification and advancement of expense provisions contained in the DGCL
shall not be deemed exclusive of any rights to which a director or officer
seeking indemnification or advancement of expenses may be entitled.
The Company's Certificate of Incorporation provides, in general, that
the Company shall indemnify, to the fullest extent permitted by Section 145 of
the DGCL, any and all persons whom it shall have power to indemnify under said
section from and against any and all of the expenses, liabilities or other
matters referred to in, or covered by, said section. The Certificate of
Incorporation also provides that the indemnification provided for therein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any By-Law,
II-1
<PAGE>
agreement, vote of stockholders or disinterested directors or otherwise, both as
to actions taken in his or her official capacity and as to acts in another
capacity while holding such office.
In accordance with that provision of the Certificate of Incorporation,
the Company shall indemnify any officer or director (including officers and
directors serving another corporation, partnership, joint venture, trust, or
other enterprise in any capacity at the Company's request) made, or threatened
to be made, a party to an action or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he or she was
serving in any of those capacities against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorney's fees) incurred as a
result of such action or proceeding. Indemnification would not be available if a
judgment or other final adjudication adverse to such director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty or (ii) he or she personally gained
in fact a financial profit or other advantage to which he or she was not legally
entitled.
The Registration Rights Agreement contains, among other things,
provisions whereby the Selling Stockholders agree to indemnify the Company, each
officer and director of the Company who has signed the Registration Statement,
and each person who controls the Company within the meaning of Section 15 of the
Securities Act, against any losses, liabilities, claims or damages arising out
of alleged untrue statements or alleged omissions of material facts with respect
to information furnished to the Company by the Selling Stockholders for use in
the Registration Statement or Prospectus. See Item 17, "UNDERTAKINGS."
Item 16. Exhibit Index.
Number Description of Exhibit
2.1 -- Assignment of Trademark dated July 29, 1997 between D&D Design and
Details Limited and the Company(1)
2.2 -- Assignment of Trademark dated July 29, 1997 between Cable & Co. S.R.L.
and the Company(1)
2.3 -- Asset Purchase Agreement dated January 16, 1995 between Hongson, Inc.,
as seller and Cable & Co. Worldwide, Inc., as buyer(2)
3.1 -- Certificate of Incorporation of the Company, as amended(2)
3.2 -- By-Laws of the Company(2)
4.1 -- Form of Warrant Agreement between the Company and American Stock
Transfer & Trust, as warrant agent(2)
4.2 -- Specimen Certificate of the Company's Common Stock(2)
II-2
<PAGE>
4.3 -- 1996 Stock Option Plan(2)
4.4 -- Specimen Certificate of the Company's Warrant(2)
5.1 -- Opinion of Counsel of Lane & Mittendorf LLP(1)
10.1 -- Employment Agreement dated as of July 1, 1997 between the Company and
Alan Kandall(4)
10.2 -- Agreements between the Company and Heller Financial, Inc.(2)
10.3 -- Agreement dated as of the 26th day of January 1996 between U.K. Hyde
Park Consultants, Ltd. and the Company(2)
10.4 -- Lease dated July 28, 1995 between Raritan Plaza I Associates, L.P., as
landlord, and Cable & Company Enterprises, Ltd., as tenant(2)
10.5 -- Lease dated May 16, 1995 between 724 Fifth Avenue Realty Co., as
landlord, and Cable & Co. Enterprises Ltd., as tenant(2)
10.6 -- Agreement dated May 15, 1996 among D&D Design and Details Limited,
Pio Alberto Salvucci and Cable & Co. Worldwide, Inc.(2)
10.7 -- License Agreement dated July 1, 1997 between the Company and Roffe
Accessories, Inc.(3)
10.8 -- Stock Option Agreement dated as of July 21, 1997 between the Company and
David Albahari(3)
10.9 -- Agreement dated as of July 21, 1997 between the Company and David
Albahari(3)
23.1 -- Consent of Goldstein Golub Kessler and Company, P.C.(5)
23.2 -- Consent of Lane & Mittendorf LLP (included in Exhibit 5.1)(1)
99.1 -- Cable & Co. Trademark Registration from the United States Patent and
Trademark Office(2)
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(1) Previously filed with initial filing of this Registration Statement
(2) Previously filed with Registration Statement No. 333-3000
(3) Previously filed with Amendment No. 1 to this Registration Statement
(4) Previously filed with the Company's Form 10-QSB for the six months ended
June 30, 1997
(5) Filed herewith
II-3
<PAGE>
Item 17. Undertakings.
1. The undersigned, Company, hereby undertakes:
(a) To file, during any period in which the Company
offers or sells securities, a post-effective
amendment(s) to this registration statement:
(1) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(2) To reflect in the prospectus any facts or
events which, individually or together,
represent a fundamental change in the
information in the registration statement;
and
(3) To include any additional or changed material
information with respect to the plan of
distribution not previously disclosed in the
registration statement or any material change
to such information in the registration
statement;
Provided, however, that paragraphs (1)(a)(1) and 1(a)(2) do not apply
if the information required or to be included in a post effective amendment by
these paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(b) 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; and
(c) That, for the purpose of determining any liability
under the Securities Act of 1933, 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.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of
<PAGE>
expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company 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 of whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
3. That, for purposes of determining any liability under the Act, each
filing of the Company's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
SIGNATURES
The Registrant. 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 Amendment No. 3 to Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on December 5, 1997.
CABLE & CO. WORLDWIDE, INC.
By: /s/Alan Kandall
Alan Kandall, Chief Executive Officer,
and President
By: /s/Joel Brooks
Joel Brooks, Chief Financial Officer and
Principal Accounting Officer
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 dates indicated.
Signature Title Date
/s/Alan Kandall President, Chief Executive Officer December 5, 1997
----------------- and Director
Alan Kandall
/s/ Alberto Salvucci Chairman of the Board and Director December 5, 1997
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Alberto Salvucci
<PAGE>
/s/Martin C. Licht Secretary and Director December 5, 1997
-----------------
Martin C. Licht
/s/Steven Katz Director
Steven Katz December 5, 1997
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors and Shareholders of
Cable & Co. Worldwide, Inc.
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of our report dated
February 17, 1997 except for the fourth paragraph of Note 5, as to which the
date is March 18, 1997, on the consolidated balance sheet of Cable & Co.
Worldwide, Inc. and Subsidiary as of December 31, 1996, and the related
consolidated statements of operations, shareholder's equity, and cash flows for
each of the two years in the period then ended, which report appears in the
December 31, 1996 annual report on Form 10-KSB of Cable & Co. Worldwide, Inc. We
also consent to the reference to our firm under the caption "experts" in such
Prospectus.
/s/ Goldstein Golub Kessler & Company, P.C.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
December 5, 1997
