As filed with the Securities and Exchange Commission on April 14, 1999
Registration No. 333-74841
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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EQUITEX, INC.
(Exact name of Registrant specified in charter)
DELAWARE 84-0905189
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7315 EAST PEAKVIEW AVENUE
ENGLEWOOD, COLORADO 80111
(303) 796-8940
(Address, including zip code, and telephone number,
including area code, Registrant's principal
executive offices)
HENRY FONG, PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
7315 EAST PEAKVIEW AVENUE
ENGLEWOOD, COLORADO 80111
(303) 796-8940
(Name, address and telephone number, including area code, of agent for service)
Copies of communication, including all communication sent to the
agent for service, should be sent to:
GERALD RASKIN, ESQ.
SETH WEISS, ESQ.
FRIEDLOB SANDERSON RASKIN PAULSON & TOURTILLOTT, LLC
1400 GLENARM PLACE, SUITE 300
DENVER, COLORADO 80202
(303) 571-1400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
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If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box: |_|
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, please check this following box and
list the Securities Act registration 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. |_|
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<TABLE>
<CAPTION>
|----------------------------------------------------------------------------------------------------------------------|
| CALCULATION OF REGISTRATION FEE |
|----------------------------------------------------------------------------------------------------------------------|
|Title of each class of securities to | Amount to be | Proposed | Proposed | Amount of |
| be registered | Registered | Maximum | Maximum | Registration |
| | (1) | Offering Price | Aggregate | Fee (2) |
| | | Per Share | Offering | |
| | | | Price | |
|----------------------------------------------------------------------------------------------------------------------|
<S> <C> <C> <C> <C>
|Common Stock, $.02 par value | 449,200 | $1.16 | $579,072 | $161 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock, $.02 par value | 750,000 | $3.25 | $2,437,500 | $678 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock, $.02 par value | 20,000 | $15,4375(7) | $308,750 | $86 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying | | | | |
|Quest Warrant | 50,000 | $3.75 | $187,500 | $52 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying | | | | |
|Gainsford Warrant | 62,500 | $7.25 | $453,125 | $126 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying | | | | |
|Werbalowsky Warrant | 35,000 | $5.00 | $175,000 | $49 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying Series A | | | | |
|Convertible Preferred Stock | 216,000 | $4.16667(3) | $900,000 | $250 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying Series B | | | | |
|Convertible Preferred Stock | 144,000 | $4.16667(3) | $600,000 | $167 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying Series C | | | | |
|Convertible Preferred Stock | 144,000 | $4.16667(3) | $600,000 | $167 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying | | | | |
|Warrants Granted in Connection | | | | |
|with Series A Convertible Preferred | | | | |
|Stock Private Placement | 90,000 | $8.205(4) | $738,450 | $205 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying | | | | |
|Warrants Granted In Connection | | | | |
|with Series B Convertible Preferred | | | | |
|Stock Private Placement | 100,000 | $9.4475(5) | $944,750 | $263 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|Common Stock Underlying | | | | |
|Warrants Granted in Connection | | | | |
|with Series C Convertible Preferred | | | | |
|Stock Private Placement | 60,000 | $11.73(6) | $703,800 | $196 |
|---------------------------------------|--------------------|---------------------|-----------------|-----------------|
|TOTAL | 2,170,700 | ---- | $8,627,947 | $2,400(8) |
|----------------------------------------------------------------------------------------------------------------------|
</TABLE>
(1) Plus such indeterminable number of shares of Common Stock as may be
issuable by reason of the anti-dilution provisions of such warrants or
convertible preferred stock.
(2) The fee has been calculated in accordance with Rule 457.
(3) The per share proposed maximum offering price assumed to be $4.16667
for purposes of filing this registration statement.
(4) The per share proposed maximum offering price was calculated as
follows: $6.8375, the average closing bid price of Equitex's common
stock for the five trading days preceding January 4, 1999 (closing date
for the Series A Convertible Preferred Stock Private Placement), was
multiplied by 1.20.
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<PAGE>
(5) The per share proposed maximum offering price was calculated as the
average of (a) 50,000 warrants each exercisable at $10, and (b) 50,000
warrants each exercisable at $8.895 (the average market price of
Equitex's common stock for the five trading days preceding January 20,
1999 (closing date for the Series B Convertible Preferred Stock Private
Placement, $7.4125 was multiplied by 1.20.)
(6) The per share proposed maximum offering price was calculated as
follows: $9.775, the average closing bid price of Equitex's common
stock for the five trading days preceding February 4, 1999 (closing
date for the Series C Convertible Preferred Stock Private Placement),
was multiplied by 1.20.
(7) Pursuant to Rule 457(c), the average of the high and low price of
Equitex, Inc. common stock as quoted on the Nasdaq SmallCap Market on
Wednesday, April 7, 1999.
(8) Includes $1,969 previously paid upon filing of the original
registration statement and $431 paid concurrently with the filing of
this amendment to cover the registration of additional shares of common
stock.
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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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
--------------------
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<PAGE>
Prospectus
EQUITEX, INC.
2,170,700 Shares of Common Stock to be Offered and Sold by Selling
Securityholders
This is a public offering of shares of common stock of Equitex, Inc. by
the selling securityholders identified on pages 14-17 of this prospectus. The
selling securityholders will offer the shares from time to time at prevailing
market prices. Equitex will not receive any of the proceeds from the offering,
except for any proceeds from the cash exercise of warrants owned by the Selling
Securityholders.
Equitex's common stock trades on the Nasdaq SmallCap Market under the
symbol EQTX.
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| An investment in the stock of Equitex involves a high degree of risk. The |
| shares should only be purchased by persons who can afford a complete loss. |
| See "Risk Factors" beginning on page 3. |
- --------------------------------------------------------------------------------
The Securities and Exchange Commission has not approved or disapproved
these securities or determined that this prospectus is truthful or complete. A
representation to the contrary is a criminal offense.
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The date of this Prospectus is April 14, 1999
<PAGE>
TABLE OF CONTENTS
Risk Factors.................................................................-3-
Where You Can Find More Information..........................................-7-
Forward-Looking Statements...................................................-8-
Information About Equitex, Inc...............................................-8-
Recent Developments.........................................................-10-
Use of Proceeds.............................................................-11-
Description of the Offering.................................................-12-
Selling Securityholders.....................................................-13-
Plan of Distribution........................................................-18-
Indemnification Provided in Connection with the Offering by the
Selling Securityholders....................................................-19-
Legal Matters...............................................................-20-
Experts.....................................................................-20-
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RISK FACTORS
Prospective investors should consider carefully the following risk
factors, as well as the other information contained in this prospectus, before
making an investment in the common stock of Equitex.
RISK ASSOCIATED WITH RAPID GROWTH AND ENTRY INTO NEW BUSINESSES
Following the acquisition of First TeleServices, Equitex embarked upon
a strategic diversification of its business. Previously, Equitex had operated as
a business development company, a form of closed-end investment company.
Equitex, operating through First TeleServices, recently entered the financial
services business. The entry of Equitex into this new business has resulted in
increased demands on Equitex's personnel and systems. The development and
integration of the new businesses requires the investment of additional capital
and the continuous involvement of senior management. Equitex also must manage a
variety of businesses with differing markets, customer bases, financial
products, systems and managements. An inability to develop, integrate and manage
its businesses could have a material adverse effect on Equitex's financial
condition, results of operations and business prospects. Equitex's ability to
support and manage continued growth is dependent upon, among other things, its
ability to attract and retain senior management for each of its businesses, to
hire, train, and manage its workforce successfully in its existing and new
business lines. Equitex may not be able to successfully meet all of these
challenges.
NEED FOR ADDITIONAL FINANCING
Equitex's ability to carry out its business strategy and expand its
operations greatly depends on its ability to obtain additional indebtedness and
equity capital. Equitex has no commitments for borrowings in addition under its
current debt securities and under its credit facilities, and Equitex has no
commitments for future sales of equity capital. Equitex may not be successful in
consummating any future financing transactions on terms satisfactory to Equitex,
if at all. Factors which could affect Equitex's access to the capital markets,
or the costs of such capital, include changes in interest rates, general
economic conditions and the perception in the capital markets of Equitex's
business, results of operations, leverage, financial condition and business
prospects. Each of these factors is to a large extent subject to economic,
financial and competitive factors beyond Equitex's control. In addition,
covenants in Equitex's current and future debt securities and credit facilities
may significantly restrict Equitex's ability to incur additional indebtedness
and to issue preferred stock. Equitex's ability to repay its outstanding
indebtedness may depend on its ability to refinance that indebtedness, which may
be difficult if Equitex does not have access to the capital markets for the sale
of additional debt or equity securities through public offerings or private
placements on terms reasonably satisfactory to Equitex.
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DATABASE OF POTENTIAL CLIENTS
Equitex maintains and continues to develop a database of potential
financially sub-prime clients in need of products and services offered by
Equitex or its alliance partners. Equitex expects to generate revenues through a
variety of uses of its database. Equitex also may receive certain residual fees
for as long as the client uses the products or services of an alliance partner.
Accordingly, maintenance and continuous development of the database is essential
to Equitex's financial condition, results of operations, and business prospects.
Equitex may not be able to maintain or develop the database in such a way that
its contents are desirable to third parties such that they would purchase the
information from Equitex or negotiate to become a fee paying alliance partner
with Equitex.
DATABASE INFORMATION; CREDIT IMPAIRED CLIENTS
Information contained in Equitex's database concerns financially
sub-prime individuals who may be interested in certain products or services
offered by Equitex or its alliance partners. Generally, the individuals in the
database are considered financially sub-prime because they are unable to obtain
credit from traditional financial institutions due to factors such as an
impaired or poor credit history, low income or another adverse credit event.
Companies that provide services to these individuals are subject to various
risks, including, the risk that clients will not satisfy their debt service
obligations and that the realizable value of the assets securing their loans
will not be sufficient to repay the borrowers' debt. These risks, however, will
not be borne by Equitex but rather by the alliance partner which provides the
product or service requested by the client. Accordingly, the risk to Equitex is
that it may not receive a fee (origination or residual) for products or services
provided by the alliance partner to a delinquent or defaulting client.
PROPRIETARY NATURE OF DATABASE
Equitex regards its database as proprietary and will take steps
necessary to protect the confidential nature of the information contained
therein; however, Equitex may not be able to prevent its improper or unapproved
dissemination and use.
DEPENDENCE ON ALLIANCE PARTNERSHIP RELATIONSHIPS
Equitex's products and services will be developed and serviced through
alliance partnerships with companies specializing in those particular products
and/or services. Equitex has no control over the manner in which its alliance
partners operate their businesses. If any of these alliance partners fails to
deliver quality products or services on a timely basis, and if Equitex is unable
to develop alternative sources as required, dissatisfied clients may turn to
other sources to provide the products or services they desire.
Because Equitex has no control over alliance partners, Equitex can
provide no assurance that future regulatory, judicial, legislative or political
considerations will permit these partners to offer their products and services,
that regulators or third parties will not raise material issues regarding the
compliance of these partners with applicable laws or regulations, or that these
regulatory, judicial, legislative or political decisions will not have an
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adverse effect on the ability of these alliance partners to provide the products
and/or services. The inability of Equitex's alliance partners to provide the
products and/or services to Equitex because they cannot obtain or retain the
required governmental approvals or for any other reason related to regulatory
compliance, could have a material adverse effect on Equitex.
Because Equitex's business is ultimately dependent upon the quantity
and quality of alliance partnerships maintained by Equitex, Equitex must
actively seek out new partnerships while maintaining and evaluating its current
relationships. Equitex may not be able to develop new alliance partnerships or
maintain its current relationships.
ALLIANCE PARTNER RISKS
Equitex's alliance partners face risks that are particular to their
lines of business. To the extent an alliance partner faces a particular risk,
Equitex is also exposed, although indirectly, to that risk in that Equitex may
not receive fees (origination or residual) to which it is entitled because an
event has had a negative effect on an alliance partner. Consequently, Equitex's
financial condition, results of operations, and business prospects could be
materially adversely affected.
GENERAL ECONOMIC CONDITIONS
Fluctuating interest rates, uncertainty and volatility in the capital
markets, periods of economic slowdown, recession or inflation, are among the
factors that may adversely affect Equitex's business. Such events or periods
such as these may be accompanied by increased delinquencies, defaults or losses
on obligations owed to Equitex's alliance partners or decreased consumer demand
for the products and services offered by Equitex.
GOVERNMENT REGULATION
Many aspects of Equitex's business, including the direct marketing of
Equitex's products and services, are subject to regulation, examination and
licensing under various federal, state and local statutes and regulations that
impose requirements and restrictions affecting Equitex's business. Equitex
believes it is currently in compliance in all material respects with applicable
laws and regulations; however, Equitex might not be able to maintain compliance.
Failure to comply with, or changes in, these laws or regulations, or the
enforcement of more stringent regulatory requirements than those now in effect,
could have an adverse effect on Equitex by limiting the fee income Equitex may
generate in connection with database marketing and consumer finance divisions
and limiting the states in which Equitex may operate.
COMPETITION
All of the businesses in which Equitex operates are highly competitive.
Some of Equitex's principal competitors are substantially larger and better
capitalized than Equitex. Because of their resources, these companies may be
better able than Equitex to obtain new customers to pursue new business
opportunities or to survive periods of industry consolidation. Access to and the
cost of capital are critical to Equitex's ability to compete. Many of Equitex's
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competitors have superior access to capital sources and can arrange or obtain
lower cost of capital, resulting in a competitive disadvantage to Equitex with
respect to such competitors.
In addition, certain of Equitex's competitors may have higher risk
tolerances or different risk assessments, which could allow these competitors to
establish lower margin requirements and pricing levels than those established by
Equitex. If a significant number of competitors establish pricing levels below
those established by Equitex, Equitex's ability to compete would be adversely
affected.
LITIGATION
Industry participants in Equitex's lines business from time to time are
named as defendants in litigation involving alleged violations of federal and
state consumer protection or other similar laws and regulations. A judgment
against Equitex in connection with any such litigation could have a material
adverse effect on Equitex's financial condition, results of operations and
business prospects.
YEAR 2000 READINESS
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process date field containing a
two-digit year is commonly referred to as the "Year 2000 Issue." As the year
2000 approaches, such systems may recognize a date using "00" as the year 1900
rather than the year 2000 and be unable to accurately process certain date-
based information. This error could potentially result in a system failure or
miscalculation causing disruptions of operations, including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
Equitex has reviewed its computer system in order to evaluate necessary
modifications for the Year 2000 readiness. In addition, Equitex is in the
process of communicating with others with whom it does significant business to
determine their Year 2000 readiness status and the extent to which Equitex could
be affected by any third party Year 2000 readiness issues. Although Equitex has
not received responses from all third parties with whom it does business,
Equitex does not anticipate that it will be materially affected by any third
party Year 2000 readiness issues. However, the systems of Equitex or those of
other companies on which Equitex's systems rely may not be timely converted. A
failure to convert by another company, or a conversion that is incompatible with
Equitex's systems, could have a material adverse effect on Equitex.
The anticipated costs and timeliness of completion of Year 2000
modifications are based on management's best estimates, which were derived using
numerous assumptions relating to future events, including, without limitation,
the continued availability of certain resources and third party modification
plans. However, these estimates and assumptions may turn out to be inaccurate.
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WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires Equitex to file information with the
Securities and Exchange Commission concerning its business and operations.
Accordingly, Equitex files annual, quarterly, and special reports, proxy
statements and other information with the Commission. You can inspect and copy
of this information at the Public Reference Facility maintained by the
Commission at Judiciary Plaza, 450 5th Street, N.W., Room 1024, Washington, D.C.
20549. You can also do so at the following regional offices of the Commission:
* New York Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048
* Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661.
You can receive additional information about the operation of the
Commission's Public Reference Facilities by calling the Commission at 1-(800)
SEC-0330. The Commission also maintains a website at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding companies that, like Equitex, file information electronically with the
Commission.
The Commission allows Equitex to "incorporate by reference" the
information we file with them, which means we can disclose important information
to you by referring you to the other information we have filed with the
Commission. The information that we incorporate by reference is considered to be
part of this prospectus, and related information that we file with the
Commission will automatically update and supersede information we have included
in this prospectus. We also incorporate by reference any future filings we make
with the Commission under Sections 13(a), 13(c) or 15(d) of the Securities
Exchange Act of 1934, as amended, until the selling securityholders sell all of
their shares or until the registration rights of the selling securityholders
expire. This prospectus is part of a Registration Statement that we filed with
the Commission (Registration No. 333-74841).
FILING PERIOD
Annual Report on Form 10-KSB.............. Year ended December 31, 1998
The Description of Equitex's Common Stock. See Equitex's Registration Statement
on Form 8-A's filed July 21, 1983
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You can request a free copy of the above filings or any filings
subsequently incorporated by reference into this prospectus by writing or
calling us at the following address:
Equitex, Inc.
7315 East Peakview Avenue
Englewood, Colorado 80111
Telephone: (303) 796-8940
Facsimile: (303) 796-9762
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or amendment to this prospectus.
We have not authorized anyone else to provide you with different information or
additional information. Selling securityholders will not make an offer of
Equitex's Common Stock in any state where the offer is not permitted. You should
not assume that the information in this prospectus, or any supplement or
amendment to this prospectus, is accurate at any date other than the date
indicated on the cover page of such documents.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and in the documents
incorporated by reference herein, constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act, as amended, and Section 21E of
the Exchange Act, as amended. These forward-looking statements can be identified
by the use of predictive, future-tense or forward- looking terminology, such as
"believes," "anticipates," "expects," "estimates," "may," "will" or similar
terms. Forward-looking statements also include projections of financial
performance, statements regarding management's plans and objectives and
statements concerning any assumption relating to the foregoing. Certain
important factors regarding Equitex's business, operations and competitive
environment which may cause actual results to vary materially from these
forward-looking statements are discussed above under the caption "Risk Factors."
INFORMATION ABOUT EQUITEX, INC.
EQUITEX AND ITS OPERATIONS
Equitex, Inc. was organized under Delaware law in 1983 and, in 1984,
elected to become a business development company ("BDC"), which is a form of
closed-end, non-diversified investment company under the Investment Company Act
of 1940 (the "Investment Company Act"), and be subject to the applicable
provisions of the Investment Company Act. On January 4, 1999, Equitex withdrew
its election to be treated as a BDC subject to the Investment Company Act.
Equitex has elected to be treated for a maximum period of one year as a
"transient investment company" as that term is defined in Rule 3a-2 under the
Investment Company Act of 1940.
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Notwithstanding Equitex's withdrawal to be treated as a BDC, Equitex
did retain its investment interests in IntraNet Solutions, Inc. (f/k/a MacGregor
Sports & Fitness, Inc.), VP Sports, Inc. and Triumph Sports, Inc. which together
constitute a significant portion of Equitex's investment portfolio.
On August 13, 1998, Equitex acquired all of the outstanding stock of
First TeleServices Corp. in exchange for 625,000 shares of Equitex's common
stock. As a result of the transaction, First TeleServices became a wholly-owned
subsidiary of Equitex.
First TeleServices is a fee-based financial services organization
consisting of a database marketing division, consumer finance division, an
inbound/outbound calling center, and an operations center. First TeleServices
has developed strategic alliances with a number of nationwide organizations to
outsource the products and services it offers.
First TeleServices only recently began operations and has not yet
generated income. As a marketing arm for financial institutions, First
TeleServices will perform as a consumer finance company, offering a broad array
of financial products and services to the sub-prime market. These products will
be developed and serviced through correspondent relationships with companies
specializing in those particular products which include:
* debt transfer servicing
* balance transfer servicing
* secured credit cards
* sub-prime mortgage loans
* sub-prime auto loans
* prepaid calling cards
* prepaid residential long distance service
* prepaid cellular service
* insurance products
* other selected products and services
The calling center is the engine that drives the product delivery
system, eventually handling tens of thousands of inbound and outbound calls
monthly. The inbound calls will be the result of various targeted media programs
and the by-product of first TeleServices' customer base which will eventually
grow to hundreds of thousands of consumers. The outbound calls will be the
result of cross selling large data bases of customers a variety of products and
services offered on a brokered basis through Equitex's strategic alliances.
Through interactive voice response technology, the latest call center software
and hardware, and a well-trained staff of customer service representatives,
telemarketers and telebankers, First TeleServices will be able to turn these
calls into revenue while operating at the highest level of efficiency. The call
center functions have been outsourced to The Scribers, Inc. in Lansing,
Michigan, an experienced call center services company.
Initially, First TeleServices will offer secured credit cards to large
data bases of customers through its debt transfer servicing program. "Debt
transfer servicing" is a term used in the collection industry which means using
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a new loan account number to service and collect debt purchased in the secondary
market. As customers continue to make payments on their new accounts, thereby
rehabilitating their credit, Equitex will begin cross selling other financial
and telecommunications products on a fee basis without the risk of extending
credit. A debt transfer servicing agreement has already been signed with a
midwest financial services firm that has a large network of collection agencies.
First TeleServices believes that it differs from other financial
services organizations in that it understands and will specialize in handling
the sub-prime consumer and offer that consumer only those products and services
they need. Equitex will target those financial institutions which recognize the
potential in the sub-prime market and have relationships with strategic
alliances already working with this market.
On January 25, 1999, Equitex acquired a 9.9% interest in First TeleBanc
Corp. ("First TeleBanc"), a closely-held Florida corporation. First TeleBanc was
incorporated in March, 1997, for the purpose of becoming a one-bank holding
company and to acquire 100% of the outstanding stock of Boca Raton First
National Bank. The acquisition by First TeleBanc of all of the outstanding stock
of Boca Raton First National Bank was completed on December 30, 1998. As a
one-bank holding company, First TeleBanc may engage in any activity which the
Board of Governors of the Federal Reserve System has previously approved or
approves subsequent to an application.
ADDRESS AND TELEPHONE NUMBER
Equitex's executive offices are located at 7315 East Peakview Avenue,
Englewood, Colorado 80111, and its telephone number is 303-796-8940.
RECENT DEVELOPMENTS
On January 4, 1999, Equitex withdrew its election to be treated as a
BDC subject to the Investment Company Act.
On August 13, 1998, Equitex acquired all of the outstanding stock of
First TeleServices in exchange for 625,000 shares of Equitex's common stock. As
a result of the transaction, First TeleServices became a wholly-owned subsidiary
of Equitex.
On January 25, 1999, Equitex acquired a 9.9% interest in First
TeleBanc, a closely-held Florida corporation.
On March 1, 1999, First TeleServices signed a joint venture agreement
with RLG Holding, LLC ("RLG") to service and collect portfolios of consumer
debt. The initial portfolio contains over 13,000 accounts representing
receivables in excess of $100 million. The joint venture entity will be named
FirstNet Capital. The agreement calls for a fifty-fifty division of profits
after expenses and advances. In addition, RLG has an option to convert its share
of the profits into Equitex common stock based on an average market price
formula.
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On March 30, 1999, Equitex announced that First TeleServices acquired
50% of National Business Finance, LLC ("NBF"), based in Boca Raton, Florida in
exchange for loans for working capital. NBF is a Small Business Administration
loan origination and brokerage firm, which markets, originates, processes and
packages SBA loans. NBF operates in nine states and its principals have a
successful 25 year combined track record of originating over $500 million in SBA
loans throughout the United States.
On April 9, 1999, Equitex signed a letter of intent to merge First
TeleBanc with and into Equitex.
USE OF PROCEEDS
If the warrants are exercised at their current exercise prices, which is
unlikely at this time, Equitex will receive net proceeds from such exercise of
approximately $5,100,000. The proceeds will be used for working capital
purposes.
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DESCRIPTION OF THE OFFERING
The selling securityholders are offering an aggregate of 2,170,200
shares of Equitex's common stock. Of these shares, 1,269,200 are currently
outstanding and 901,500 will be issued to the selling securityholders upon the
exercise of warrants or the conversion of outstanding convertible securities
summarized in the following table:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
| | | Conversion/ | | | Common Stock |
| | Expiration | Exercise | Originally | | Issuable Upon|
|Title or Series | Date | Price | Issued | Outstanding | Exercise |
|----------------------------------------------------------------------------------------------|
| WARRANTS | | | | | |
|----------------|-------------|---------------|--------------|---------------|----------------|
<S> <C> <C> <C> <C> <C>
| Quest Warrants | 1/04/2002 | $3.75 | 50,000 | 50,000 | 50,000 |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Gainsford | | | | | |
| Warrants | 1/05/2009 | $7.25 | 62,500 | 62,500 | 62,500 |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Werbalowsky | 1/05/2009 | $5.00 | 35,000 | 35,000 | 35,000 |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Series A | 1/04/2002 | $8.205(3) | 90,000 | 90,000 | 90,000(1) |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Series B | 1/20/2002 | $9.4475(4) | 100,000 | 100,000 | 100,000(1) |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Series C | 2/04/2002 | $11.73(5) | 60,000 | 60,000 | 60,000(1) |
|----------------|-------------|---------------|--------------|---------------|----------------|
| TOTAL | | | 397,500 | 397,500 | 397,500 |
| WARRANTS | | | ======= | ======= | ======= |
|----------------|-------------|---------------|--------------|---------------|----------------|
| | | | | | |
|----------------|-------------|---------------|--------------|---------------|----------------|
| PREFERRED | | | | | |
| STOCK | | | | | |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Series A | ------- | $4.16667(2) | 900 | 900 | 216,000(1) |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Series B | ------- | $4.16667(2) | 600 | 600 | 144,000(1) |
|----------------|-------------|---------------|--------------|---------------|----------------|
| Series C | ------- | $4.16667(2) | 600 | 600 | 144,000(1) |
|----------------|-------------|---------------|--------------|---------------|----------------|
| TOTAL | | | | | |
| PREFERRED | | | 2,100 | 2,100 | 504,000 |
| STOCK | | | ===== | ===== | ======= |
|----------------|-------------|---------------|--------------|---------------|----------------|
| | | | | | |
|----------------|-------------|---------------|--------------|---------------|----------------|
| TOTAL | | | | | 901,500 |
| | | | | | ======= |
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) For purposes of this table, common stock issuable upon exercise or
conversion was calculated using the formula in the respective
certificates of designation or warrants.
(2) The per share conversion price was assumed to be $4.16667.
(3) The per share exercise price was calculated as follows: $6.8375, the
average closing bid price of Equitex's common stock for the five
trading days preceding January 4, 1999 (closing date for the Series A
Convertible Preferred Stock Private Placement), was multiplied by 1.20.
-12-
<PAGE>
(4) The per share proposed maximum offering price was calculated as the
average of (a) 50,000 warrants each exercisable at $10, and (b) 50,000
warrants each exercisable at $8.895 (the average market price of
Equitex's common stock for the five trading days preceding January 20,
1999 (closing date for the Series B Convertible Preferred Stock Private
Placement, $7.4125 was multiplied by 1.20.))
(5) The per share exercise price was calculated as follows: $9.775, the
average closing bid price of Equitex's common stock for the five
trading days preceding February 4, 1999 (closing date for the Series C
Convertible Preferred Stock Private Placement), was multiplied by 1.20.
SELLING SECURITYHOLDERS
The following tables list the total number of shares of common stock of
Equitex and the total number of shares of common stock assuming the conversion
or exercise of all convertible preferred stock and warrants owned by each of the
selling securityholders and registered hereunder. Except as indicated, the
selling securityholders are offering all of the shares of common stock owned by
them or received by them upon the exercise or conversion of the warrants or
convertible preferred stock. Except as indicated in the tables, none of the
selling securityholders is the beneficial owner of one percent or more of the
outstanding shares of common stock (including the shares of common stock offered
by this prospectus).
Because the selling securityholders may offer all or part of the shares
of common stock currently owned or the shares of common stock received upon
conversion or exercise of the convertible preferred stock and/or warrants, which
they own pursuant to the offering contemplated by this prospectus, and because
their offering is not being underwritten on a firm commitment basis, no estimate
can be given as to the amount of convertible preferred stock and/or warrants
that will be held upon termination of this offering. The shares of common stock
currently owned and the shares of common stock received upon conversion or
exercise of the convertible preferred stock and/or warrants offered by this
prospectus may be offered from time to time by the selling securityholders named
below.
-13-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
| TABLE I - SHARES AND SHARES UNDERLYING CONVERTIBLE PREFERRED STOCK AND |
| WARRANTS TO BE REGISTERED AND OFFERED BY THE SELLING SECURITYHOLDERS |
|-------------------------------------------------------------------------------------------------------------------|
| | | | | | Series | Series | Series | |
| Selling | Shares | Quest |Gainsford |Werbalowsky| A | B | C | Table I Totals|
|Securityholder | | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
<S> <C> <C> <C> <C> <C> <C> <C> <C>
|David Allen | 21,000 | 0 | 0 | 0 | 0 | 0 | 0 | 21,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Gary Altman | 45,000 | 0 | 0 | 0 | 0 | 0 | 0 | 45,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|CLB Investment Corp.| 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Craig C. Avery | 50,000 | 0 | 0 | 0 | 0 | 0 | 0 | 50,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Carylyn Bell | 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Mickey L. Borders | 15,000 | 0 | 0 | 0 | 0 | 0 | 0 | 15,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Russell L. Casement | 100,000 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 |
|DDS, PC, Employee | | | | | | | | |
|Profit Sharing Plan | | | | | | | | |
|(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Regis D. Dahl | 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Guy H. Eagen | 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Ronald | 100,000 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 |
|Eibensteiner(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|James T. Emerson | 30,000 | 0 | 0 | 0 | 0 | 0 | 0 | 30,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|William G. Field, MD| 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|GBI, Inc. | 15,000 | 0 | 0 | 0 | 0 | 0 | 0 | 15,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Allen Gainsford | 15,000 | 0 | 62,500 | 0 | 0 | 0 | 0 | 62,500 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Darryl L. & Sharon | 25,000 | 0 | 0 | 0 | 0 | 0 | 0 | 25,000 |
|Getman Living Trust | | | | | | | | |
|dated 9/20/1993 | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Ralph H. Grills, Jr.| 200,000 | 0 | 0 | 0 | 0 | 0 | 0 | 200,000 |
|(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Aaron A. Grunfeld(1)| 39,200 | 0 | 0 | 0 | 0 | 0 | 0 | 39,200 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Barry S. Hollander | 12,000 | 0 | 0 | 0 | 0 | 0 | 0 | 12,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Joseph Hovorka | 3,000 | 0 | 0 | 0 | 0 | 0 | 0 | 3,000 |
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
| TABLE I - SHARES AND SHARES UNDERLYING CONVERTIBLE PREFERRED STOCK AND |
| WARRANTS TO BE REGISTERED AND OFFERED BY THE SELLING SECURITYHOLDERS |
|-------------------------------------------------------------------------------------------------------------------|
| | | | | | Series | Series | Series | |
| Selling | Shares | Quest |Gainsford |Werbalowsky| A | B | C | Table I Totals|
|Securityholder | | Warrants | Warrants | Warrants | Warrants | Warrants | Warrants | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
<S> <C> <C> <C> <C> <C> <C> <C> <C>
|John E. Joseph | 2,000 | 0 | 0 | 0 | 0 | 0 | 0 | 2,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Thomas A. Joseph | 2,000 | 0 | 0 | 0 | 0 | 0 | 0 | 2,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Richard C. | 50,000 | 0 | 0 | 0 | 0 | 0 | 0 | 50,000 |
|Lockwood | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Wayne M. Mills(1) | 100,000 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Renato Minacci | 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Allen Mitchek | 1,000 | 0 | 0 | 0 | 0 | 0 | 0 | 1,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Thomas B. Olson(1) | 10,000 | 0 | 0 | 0 || 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Ostenson Avery | 50,000 | 0 | 0 | 0 | 0 | 0 | 0 | 50,000 |
|Boulder Ridge | | | | | | | | |
|Limited Partnership | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Quest Capital | 0 | 50,000 | 0 | 0 | 0 | 0 | 0 | 50,000 |
|Services | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Marc Allen Saunders | 312 | 0 | 0 | 0 | 0 | 0 | 0 | 312 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Robert P. Schalk | 50,000 | 0 | 0 | 0 | 0 | 0 | 0 | 50,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Barbara M. | 60,000 | 0 | 0 | 0 | 0 | 0 | 0 | 60,000 |
|Schaper(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Joseph Sloves | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|John F. Stapleton(1)| 100,000 | 0 | 0 | 0 | 0 | 0 | 0 | 100,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Tabacalera Ltd. | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Taurus Enterprises, | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|LLC | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Thundercloud | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|Corporation Money | | | | | | | | |
|Purchase Pension | | | | | | | | |
|Plan | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Gary Tice | 15,000 | 0 | 0 | 0 | 0 | 0 | 0 | 15,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Lawrence | 20,000 | 0 | 0 | 0 | 0 | 0 | 0 | 20,000 |
|Underwood | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Peter Weiss | 10,000 | 0 | 0 | 0 | 0 | 0 | 0 | 10,000 |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|Jeffrey I. | 48,688 | 0 | 0 | 35,000 | 0 | 0 | 0 | 83,688 |
|Werbalowsky(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|The Augustine | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
|Fund(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|The Shaar Fund, | 0 | 0 | 0 | 0 | 90,000 | 0 | 60,000 | 150,000 |
|Ltd.(1) | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|World Capital | 20,000 | 0 | 0 | 0 | 0 | 100,000 | 0 | 70,000 |
|Financing, LLC | | | | | | | | |
|--------------------|-----------|----------|----------|-----------|----------|----------|----------|---------------|
|TOTALS | 1,269,000 | 50,000 62,500 35,000 | 90,000 | 100,000 | 60,000 | 1,666,700 |
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The selling securityholder owns one percent or more of the outstanding
common stock of Equitex.
-15-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
| TABLE II - SHARES AND SHARES UNDERLYING CONVERTIBLE PREFERRED STOCK |
| AND WARRANTS TO BE REGISTERED AND OFFERED BY THE SELLING SECURITYHOLDERS |
|--------------------------------------------------------------------------------------------------------------------------|
| | | Series A | Series B | Series C | | Shares |
| Selling | Total from | Preferred | Preferred | Preferred | Total | Owned |
|Securityholder | Table I | Stock | Stock | Stock | Shares | after |
| | | | | | | Completion |
| | | | | | | of the Offer|
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
<S> <C> <C> <C> <C> <C> <C>
|David Allen | 21,000 | 0 | 0 | 0 | 21,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Gary Altman | 45,000 | 0 | 0 | 0 | 45,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Craig C. Avery | 50,000 | 0 | 0 | 0 | 50,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Carylyn Bell | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Mickey L. Borders | 15,000 | 0 | 0 | 0 | 15,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Russell L. Casement, DDS | 100,000 | 0 | 0 | 0 | 100,000 | 0 |
|PC, Employee Profit | | | | | | |
|Sharing Plan(1) | | | | | | |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|CLB Investment Corp. | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Regis D. Dahl | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Guy H. Eagen | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Ronald Eibensteiner(1) | 100,000 | 0 | 0 | 0 | 100,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|James T. Emerson | 30,000 | 0 | 0 | 0 | 30,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|William G. Field, MD | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|GBI, Inc. | 15,000 | 0 | 0 | 0 | 15,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Allen Gainsford | 62,500 | 0 | 0 | 0 | 62,500 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Darryl L. & Sharon Getman | 25,000 | 0 | 0 | 0 | 25,000 | 0 |
|Living Trust dated | | | | | | |
|9/20/1993 | | | | | | |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Ralph H. Grills, Jr.(1) | 200,000 | 0 | 0 | 0 | 200,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Aaron A. Grunfeld(1) | 39,200 | 0 | 0 | 0 | 39,200 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Barry S. Hollander | 12,000 | 0 | 0 | 0 | 12,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Joseph Hovorka | 3,000 | 0 | 0 | 0 | 3,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
| TABLE II - SHARES AND SHARES UNDERLYING CONVERTIBLE PREFERRED STOCK |
| AND WARRANTS TO BE REGISTERED AND OFFERED BY THE SELLING SECURITYHOLDERS |
|--------------------------------------------------------------------------------------------------------------------------|
| | | Series A | Series B | Series C | | Shares |
| Selling | Total from | Preferred | Preferred | Preferred | Total | Owned |
|Securityholder | Table I | Stock | Stock | Stock | Shares | after |
| | | | | | | Completion |
| | | | | | | of the Offer|
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
<S> <C> <C> <C> <C> <C> <C>
|John E. Joseph | 2,000 | 0 | 0 | 0 | 2,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Thomas A. Joseph | 2,000 | 0 | 0 | 0 | 2,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Richard C. Lockwood | 50,000 | 0 | 0 | 0 | 50,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Wayne W. Mills(1) | 100,000 | 0 | 0 | 0 | 100,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Renato Minacci | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Allen Mitchek | 1,000 | 0 | 0 | 0 | 1,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Thomas B. Olson (1) | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Ostenson Avery Boulder | 50,000 | 0 | 0 | 0 | 50,000 | 0 |
|Ridge Limited Partnership | | | | | | |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Quest Capital Services | 50,000 | 0 | 0 | 0 | 50,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Marc Allen Saunders | 312 | 0 | 0 | 0 | 312 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Robert P. Schalk | 50,000 | 0 | 0 | 0 | 50,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Barbara M. Schaper(1) | 60,000 | 0 | 0 | 0 | 60,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Joseph Sloves | 0 | 0 | 12,000 | 0 | 12,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|John F. Stapleton(1) | 100,000 | 0 | 0 | 0 | 100,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Tabacalera Ltd. | 0 | 0 | 12,000 | 0 | 12,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Taurus Enterprises, LLC | 0 | 0 | 6,000 | 0 | 6,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Thundercloud Corporation | 0 | 0 | 6,000 | 0 | 6,000 | 0 |
|Money Purchase Pension | | | | | | |
|Plan | | | | | | |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Gary Tice | 15,000 | 0 | 0 | 0 | 15,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Lawrence Underwood | 20,000 | 0 | 0 | 0 | 20,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Peter Weiss | 10,000 | 0 | 0 | 0 | 10,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|Jeffrey I. Werbalowsky(1) | 83,688 | 0 | 0 | 0 | 83,688 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|The Augustine Fund(1) | 0 | 0 | 96,000 | 0 | 120,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|The Shaar Fund, Ltd.(1) | 150,000 | 216,000 | 0 | 144,000 | 510,000 | 0 |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|World Capital Financing, | 70,000 | 0 | 12,000 | 0 | 50,000 | 0 |
|LLC | | | | | | |
|--------------------------|----------------|----------------|---------------|---------------|-------------|---------------|
|TOTALS | 1,554,200 | 216,000 | 144,000 | 144,000 | 2,058,200 | 0 |
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The selling securityholder owns one percent or more of the outstanding
common stock of Equitex.
-17-
<PAGE>
PLAN OF DISTRIBUTION
Equitex is registering the shares of common stock on behalf of the
selling securityholders. As used in this prospectus, "selling securityholders"
includes donees and pledgees selling shares received from a named selling
securityholder after the date of this prospectus. All costs, expenses and fees
in connection with the registration of the shares of common stock offered will
be borne by Equitex. Brokerage commission and similar selling expenses, if any,
attributable to the sale of shares of common stock will be borne by the selling
securityholders. Sales of shares of common stock may be effected by selling
securityholders from time to time in one or more types of transactions (which
may include block transactions), in the over-the-counter market, in negotiated
transactions, through put or call options transactions relating to the shares of
common stock, through short sales of shares of common stock, or a combination of
these methods of sale, at market prices prevailing at the time of sale, or at
negotiated prices. Any of these transactions may or may not involve brokers or
dealers. The selling securityholders have advised Equitex that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there any underwriter or coordinating broker acting in connection with the
proposed sale of shares of common stock by the selling securityholders.
The selling securityholders may effect transactions by selling shares
of common stock directly to purchasers or to or through broker-dealers, which
may act as agents or principals. Broker-dealers may receive compensation in the
form of discounts, concessions, or commissions from the selling securityholders
and/or the purchasers of shares of common stock for whom those broker-dealers
may act as agents or to whom they sell as principal, or both (which compensation
as to a particular broker-dealer might be in excess of customary commissions).
The selling securityholders and any broker-dealers that act in
connection with the sale of shares of common stock might be deemed to be
underwriters within the meaning of Section 2(a)(11) of the Securities Act, and
any commissions received by those broker-dealers and any profit on the resale of
the shares of common stock sold by them while acting as principals might be
deemed to be underwriting discounts or commissions under the Securities Act.
Equitex has agreed to indemnify each selling securityholder against certain
liabilities, including liabilities arising under the Securities Act. The selling
securityholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares of common stock
against certain liabilities, including liabilities arising under the Securities
Act.
Because selling securityholders may be deemed to be underwriters within
the meaning of Section 2(a)(11) of the Securities Act, the selling
securityholders will be subject to the prospectus delivery requirements of the
Securities Act. Equitex has informed the selling securityholders that the
anti-manipulative provisions of Regulation M issued under the Exchange Act may
apply to their sales in the market.
Selling securityholders also may resell all or a portion of the shares
of common stock in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of that Rule.
-18-
<PAGE>
Upon Equitex being notified by a selling securityholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares of common stock through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, under Rule 424(b) to
the Securities Act, disclosing (a) the name of each such selling securityholder
and of the participating broker-dealer(s), (b) the number of shares of common
stock involved, (c) the price at which those shares of common stock were sold,
(d) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any investigation to verify the information contained or incorporated by
reference in this prospectus and (f) other facts material to the transaction. In
addition, upon Equitex being notified by the selling securityholder that a donee
or pledgee intends to sell more than 500 shares of common stock, a supplement to
this prospectus will be filed.
Equitex is offering the shares of common stock issuable upon exercise
of warrants and upon conversion of the convertible preferred stock to the
holders of the warrants and the convertible preferred stock and will amend or
supplement this Prospectus, from time to time, to reflect the exercise of
warrants and the conversion of the convertible preferred stock by the holders
thereof and to permit the public sale of the shares of common stock.
Equitex is unable to predict the effect which sales of the shares of
common stock offered by this prospectus might have upon Equitex's ability to
raise further capital.
In order to comply with certain states' securities laws, if applicable,
the shares of common stock will be sold in those jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
shares of common stock may not be sold unless they have been registered or
qualified for sale in those states or an exemption from registration or
qualification is available and complied with.
INDEMNIFICATION PROVIDED IN CONNECTION WITH THE OFFERING BY THE
SELLING SECURITYHOLDERS
With respect to a registration statement relating to the shares of
common stock, the selling securityholders have agreed to indemnify, to the
extent permitted by law, Equitex, its directors, certain of its officers and
each person who controls Equitex (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact or any omission or alleged
omission of a material fact required to be stated in a registration statement or
prospectus, or any amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of a prospectus, in the light of the
circumstances under which they were made) not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information or affidavits relating to the selling
securityholders furnished by the selling securityholders to Equitex for use
therein.
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<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, or persons controlling Equitex
pursuant to the foregoing provisions Equitex 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.
LEGAL MATTERS
The legality of the shares of common stock being offered will be passed
on for Equitex by Friedlob Sanderson Raskin Paulson & Tourtillott, LLC, Denver,
Colorado.
EXPERTS
The consolidated balance sheets of Equitex, Inc. as of December
31, 1998 and 1997 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the two years in the period
ended December 31, 1998, which appear in Equitex's Form 10-KSB for the
fiscal year ended December 31, 1998 have been incorporated by reference
herein in reliance upon the report dated March 27, 1999 of Davis & Co.,
CPAs, P.C., Englewood, Colorado, independent certified public accountants,
and upon the authority of said firm as experts in accounting and auditing.
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<PAGE>
EQUITEX, INC.
2,170,700 SHARES OF COMMON STOCK
April 14, 1999
------------------------------------
PROSPECTUS
------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
| No dealer, salesman or other person has been authorized to give |
| any information or to make any representations other than those |
| contained in this prospectus. Any information or representations not |
| herein contained, if given or made, must not be relied upon as having |
| been authorized by Equitex. This prospectus does not constitute an offer |
| or solicitation in respect to these securities in any jurisdiction in |
| which such offer or solicitation would be unlawful. The delivery of this |
| prospectus shall not, under any circumstances, create any implication |
| that there has been no change in the affairs of Equitex or that the |
| information contained herein is correct as of any time subsequent to the |
| date of this prospectus. However, in the event of a material change, |
| this prospectus will be amended or supplemented accordingly. |
- --------------------------------------------------------------------------------
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14 - OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by the Registrant in connection
with the issuance and distribution of the securities being offered. All
expenses are estimated except the registration fee.
Registration and filing fee ............................ $ 2,170
NASD filing fee ........................................ 21,707
Printing and engraving ................................. 1,500
Accounting fees and expenses ........................... 3,000
Legal fees and expenses ................................ 10,000
Blue sky fees and expenses ............................. 1,000
Transfer and Warrant Agent ............................. 2,000
Other .................................................. 623
-------
Total $42,000
=======
ITEM 15 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides for,
under certain circumstances, the indemnification of Equitex's officers,
directors, employees and agents against liabilities which they may incur in
such capacities. A summarization of the circumstances in which such
indemnifications provided for is contained herein, but that description is
qualified in its entirety by reference to the relevant Section of the
Delaware General Corporation Law.
In general, the statute provides that any director, officer,
employee or agent of a corporation may be indemnified against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred in a proceeding (including any
civil, criminal, administrative or investigative proceeding) to which the
individual was a party by reason of such status. Such indemnity may be
provided if the indemnified person's actions resulting in the liabilities:
(i) were taken in good faith; (ii) were reasonably believed to have been in
or not opposed to Equitex's best interest; and (iii) with respect to any
criminal action, such person had no reasonable cause to believe the actions
were unlawful. Unless ordered by a court, indemnification generally may be
awarded only after a determination of independent members of the Board of
Directors or a committee thereof, by independent legal counsel or by vote
of the stockholders that the applicable standard of conduct was met by the
individual to be indemnified.
The statutory provisions further provide that to the extent a
director, officer, employee or agent is wholly successful on the merits or
otherwise in defense of any proceeding to which he was a party, he is
entitled to receive indemnification against expenses, including attorneys'
fees, actually and reasonably incurred in connection with the proceeding.
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<PAGE>
Indemnification in connection with a proceeding by or in the right
of Equitex in which the director, officer, employee or agent is successful
is permitted only with respect to expenses, including attorneys' fees
actually and reasonably incurred in connection with the defense. In such
actions, the person to be indemnified must have acted in good faith, in a
manner believed to have been in Equitex's best interest and must not have
been adjudged liable to Equitex unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability, in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expense which the
Court of Chancery or such other court shall deem proper. Indemnification is
otherwise prohibited in connection with a proceeding brought on behalf of
Equitex in which a director is adjudged liable to Equitex, or in connection
with any proceeding charging improper personal benefit to the director in
which the director is adjudged liable for receipt of an improper personal
benefit.
Delaware law authorizes Equitex to reimburse or pay reasonable
expenses incurred by a director, officer, employee or agent in connection
with a proceeding in advance of a final disposition of the matter. Such
advances of expenses are permitted if the person furnishes to Equitex a
written agreement to repay such advances if it is determined that he is not
entitled to be indemnified by Equitex.
The statutory section cited above further specifies that any
provisions for indemnification of or advances for expenses does not exclude
other rights under Equitex's Certificate of Incorporation, Bylaws,
resolutions of its stockholders or disinterested directors, or otherwise.
These indemnification provisions continue for a person who has ceased to be
a director, officer, employee or agent of the corporation and inure to the
benefit of the heirs, executors and administrators of such persons.
The statutory provision cited above also grants the power to
Equitex to purchase and maintain insurance policies which protect any
director, officer, employee or agent against any liability asserted against
or incurred by him in such capacity arising out of his status as such. Such
policies may provide for indemnification whether or not the corporation
would otherwise have the power to provide for it. No such policies
providing protection against liabilities imposed under the securities laws
have been obtained by Equitex.
Article VII Section 9 of Equitex's Bylaws provides that Equitex
shall indemnify its directors, officers, employees and agents to the
fullest extent permitted by the Delaware General Corporation Law. In
addition, Equitex has entered into agreements with its directors
indemnifying them to the fullest extent permitted by the Delaware General
Corporation Law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling Equitex pursuant to the foregoing provisions, Equitex has 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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<PAGE>
ITEM 16 - EXHIBITS
- ------------------------------------------------------------------------------
The following is a complete list of exhibits filed as part of this
Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
- ------------------------------------------------------------------------------
3(i).1 Certificate of Amendment to the Certificate of Incorporation of
Equitex, Inc. - Designation of Preferences, Limitations and
Relative Rights of the Series A Convertible Preferred Stock of
Equitex, Inc. PREVIOUSLY FILED.
3(i).2 Certificate of Amendment to the Certificate of Incorporation of
Equitex, Inc. - Designation of Preferences, Limitations and
Relative Rights of the Series B Convertible Preferred Stock of
Equitex, Inc. PREVIOUSLY FILED.
3(i).3 Certificate of Amendment to the Certificate of Incorporation of
Equitex, Inc. - Designation of Preferences, Limitations and
Relative Rights of the Series C Convertible Preferred Stock of
Equitex, Inc. PREVIOUSLY FILED.
5.1 Opinion of Friedlob Sanderson Raskin Paulson & Tourtillott,
LLC. PREVIOUSLY FILED.
23.1 Consent of Friedlob Sanderson Raskin Paulson & Tourtillott, LLC
- see Exhibit 5.1
23.2 Consent of Davis & Co., CPAs, P.C. PREVIOUSLY FILED.
24. Power of Attorney - See Signature Page of Registration
Statement
- ----------------------------
ITEM 17 - UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
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<PAGE>
2. 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.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
4. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual
report pursuant to 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 the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets the requirements for filing on 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 Englewood, State of Colorado, on
April 14, 1999.
EQUITEX, INC.
By /s/ Henry Fong
------------------------------------
Henry Fong, President, Treasurer and
Chief Financial Officer
KNOW ALL MEN BY THESE PRESENCE, THAT THE UNDERSIGNED OFFICERS
AND/OR DIRECTORS OF EQUITEX, INC., BY VIRTUE OF THEIR SIGNATURES APPEARING
BELOW, HEREBY CONSTITUTE AND APPOINT HENRY FONG, WITH FULL POWER OF
SUBSTITUTION, AS ATTORNEY-IN-FACT IN THEIR NAMES, PLACES AND STEED'S TO
EXECUTE ANY AND ALL AMENDMENTS TO THIS REGISTRATION STATEMENT ON FORM S-3
IN THE CAPACITIES SET FORTH OPPOSITE THEIR NAMES BELOW AND HEREBY RATIFY
ALL THAT SAID ATTORNEY-IN-FACT MAY DO BY VIRTUE HEREOF.
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.
SIGNATURES TITLE DATE
- ---------- ----- ----
/s/ Henry Fong Principal Financial and April 14, 1999
- ----------------------- Director and Accounting
Henry Fong Officer
/s/ Russell L. Casement Director April 14, 1999
- -----------------------
Russell L. Casement
/s/ Aaron A. Grunfeld Director April 14, 1999
- -----------------------
Aaron A. Grunfeld
II-5
