As filed with the Securities and Exchange Commission on August 18, 1998
File No. 333-55737
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
HMG WORLDWIDE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3402432
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
475 Tenth Avenue
New York, New York 10018
(212) 736-2300
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
ROBERT V. CUDDIHY, JR.
Chief Operating Officer
475 Tenth Avenue
New York, New York 10018
(212) 736-2300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
CRAIG S. LIBSON, Esq.
PARKER DURYEE ROSOFF & HAFT
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
<PAGE>
Approximate date of proposed sale to the public: From time to time
after the effective date of this Registration Statement.
If the only securities being registered on this Form are being 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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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. [ ]
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.
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SUBJECT TO COMPLETION August 18, 1998
PROSPECTUS
3,651,116 Shares
HMG WORLDWIDE CORPORATION
Common Stock
The 3,651,116 shares of Common Stock, par value $.01 per share (the "Common
Stock"), to which this Prospectus relates (the "Shares") are being offered, from
time to time, on behalf of and for the account of certain stockholders (the
"Selling Stockholders") of HMG Worldwide Corporation (the "Company") as
identified herein under "Selling Stockholders." The Shares are comprised of
1,295,116 shares which have been issued to the Selling Stockholders ("Issued
Stock"), 596,000 shares which are issuable upon exercise of certain options and
warrants held by Selling Stockholders (the "Warrants") and 1,760,000 shares
which are issuable upon conversion of certain convertible debentures (the
"Debentures") issued to the Selling Stockholders by the Company. Of the
1,295,116 shares of Issued Stock, 1,012,500 were issued through a private
placement and 282,616 were issued to employees under the HMG Worldwide
Corporation Capital Accumulation Plan. The distribution of the Shares by the
Selling Stockholders, or by pledges, donees, distributees, transferees or other
successors in interest, may be affected from time to time by underwriters who
may be selected by the Selling Stockholders and/or broker-dealers, in one or
more transactions (which may involve crosses and block transactions) on The
Nasdaq SmallCap Market or other over-the-counter markets or, in special
offerings, exchange distributions or secondary distributions pursuant to and in
accordance with rules of such over-the-counter markets or exchanges, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. In connection with the distributions of the Shares or otherwise, the
Selling Stockholders may enter into hedging or option transactions with
broker-dealers and may sell Shares short and deliver the Shares to close out
such short positions. The Company has agreed to indemnify the Selling
Stockholders, underwriters who may be selected by the Selling Stockholders and
certain other persons against certain liabilities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"). See "Selling
Stockholders" and "Plan of Distribution."
----------------------
These securities involve a high degree of risk. See "Investment
Considerations" commencing on page 6.
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.
----------------------
The Company has agreed to pay all expenses of registration in
connection with this offering but will not receive any of the proceeds from the
sale of the Shares being offered hereby. All brokerage commissions and other
similar expenses incurred by the Selling Stockholders will be borne by such
Selling Stockholders. The aggregate proceeds to the Selling Stockholders from
the sale of the Shares will be the purchase price of the Shares sold, less the
aggregate brokerage commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company.
The Shares of Common Stock being offered hereby by the Selling
Stockholders have not been registered for sale under the securities laws of any
state or jurisdiction as of the date of this Prospectus. Brokers or dealers
effecting transactions
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in the Common Stock should confirm the registration thereof under the securities
laws of the state in which such transactions occur, or the existence of any
exemption from registration.
The Common Stock is listed for trading on The Nasdaq SmallCap Market.
On July 27, 1998, the closing bid price of the Common Stock as reported by The
Nasdaq SmallCap Market was $1.375 per share.
The date of this Prospectus is August 18, 1998.
[The following language is located on the left margin of the first page of
preliminary prospectus]
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.
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TABLE OF CONTENTS
Available Information................................1
Incorporation of Certain Documents by Reference......2
The Company..........................................3
Investment Considerations............................5
Use of Proceeds......................................8
Selling Stockholders.................................9
Plan of Distribution................................12
Legal Matters.......................................13
Experts.............................................14
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by the Selling Stockholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The delivery
of this Prospectus at any time does not imply that the information contained
herein is correct as of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, the Company files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission at 7 World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material may be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or from the Commission's web site at http://www.sec.gov.
The Common Stock is traded on The Nasdaq SmallCap Market and reports and other
information concerning the Company may be inspected and copied at The Nasdaq
Stock Market, Inc. at 1735 K Street, N.W., Washington, DC 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act with respect to
the Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement, copies of
which can be obtained
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from the Public Reference Section of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by
the Company with the Commission (File No. 0-13121) under the Exchange Act:
(a) The Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1997;
(b) The Company's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1998 and June 30, 1998; and
(c) The Company's Registration Statement on Form 8-A for a description
of the Common Stock.
All documents filed by the Company with the Commission pursuant to
Sections 13, 14 and 15(d) of the Exchange Act subsequent hereto, but prior to
the termination of this offering, shall be deemed to be incorporated herein by
reference and to be a part hereof from their respective dates of filing. Any
statement contained herein or 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 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, including any
beneficial owners, to whom a copy of this Prospectus is delivered, upon the
written and oral request of any such person, a copy of any or all of the
documents referred to above which have been incorporated into this Prospectus by
reference (other than the exhibits to such documents). Requests for such copies
should be directed to Robert V. Cuddihy, Jr., Chief Operating Officer, HMG
Worldwide Corporation, 475 Tenth Avenue, New York, New York 10018; telephone
number (212) 736-2300.
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THE COMPANY
General
HMG Worldwide Corporation ("the Company"), which was incorporated in
1984, is one of the leading companies in the in-store marketing and
point-of-purchase display industry. The Company identifies the in-store
marketing objectives of its clients and integrates research, creative design,
engineering, production, package design and related services to provide
point-of-purchase merchandising display systems intended to meet such
objectives. The Company's merchandising systems are designed to increase retail
sales by attracting and influencing consumers at the point of sale. Such systems
frequently incorporate interactive displays (from basic flip-charts to
touchscreen, interactive computer systems) to guide purchase decisions. The
Company's merchandising systems are also designed to improve retail space
utilization and product organization, facilitate retail inventory management and
reduce retail labor costs.
The Company's clients include national and multi-national consumer
products companies. The Company is increasingly providing its products and
services directly to mass merchandisers, chain drugstores and supermarkets.
The Company's operations are conducted through five wholly-owned
subsidiaries being, respectively, HMG Worldwide In-Store Marketing, Inc.; HMG
Intermark Worldwide Manufacturing, Inc.; Display Depot, Inc.; HMG Schutz
International, Inc. and HMG Griffith Worldwide In-Store Marketing, Inc. with
facilities in New York, Pennsylvania, Illinois, and Toronto, Canada.
The Company's executive offices, together with those of its
subsidiaries, are located at 475 Tenth Avenue, New York, New York 10018 and its
telephone number is (212) 736-2300. Unless otherwise indicated, all references
to the Company include all of its subsidiaries.
Recent Developments
The Company implemented a series of strategic initiatives in 1997
whereby the Company (i) completed its consolidation of its principal
manufacturing operations in Reading, Pennsylvania, (ii) acquired strategic new
manufacturing equipment to further improve operations efficiencies, (iii) opened
a full service office in Toronto, Canada, (iv) continued to eliminate redundant
and other overhead costs and (v) continued its efforts to expand the client
revenue and service base. The cumulative effect of the Company's 1997
initiatives brought the Company back to profitability for the year ended
December 31, 1997 whereby the Company generated revenues of $46.3 million and
realized net income of approximately $529,000, or $0.06 basic earnings per
share.
For the year ended December 31, 1997, the Company accomplished the
following:
(i) consolidated its principal manufacturing operations in Reading,
Pennsylvania in January 1997;
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(ii) acquired certain wire and metal fabrication equipment and
began operating a 21,000 square foot wire and metal fabrication facility in
Brooklyn, New York in April 1997;
(iii) commenced operating a full service office in Toronto through
the acquisition of certain assets of Griffith Communications, Inc. effective
July 1997;
(iv) converted to and implemented a new management information
system tailored to the Company's operations;
(v) exercised its option to purchase, for approximately $1.2
million, a previously leased 72,500 square foot secondary manufacturing and
warehousing facility in Reading, Pennsylvania in November 1997;
(vi) consummated a new term loan facility with a financial
institution whereby the Company obtained a $600,000 secured term loan for the
purchase of the 72,500 square foot Reading, Pennsylvania facility in November
1997. This term loan, which expires in November 1999, bears interest at the
lending institution's prime rate plus 1% per annum and is secured by the
acquired real estate;
(vii) consummated a private placement ("HMG Private Placement")
whereby the Company offered for sale up to 2.0 million shares of Common Stock at
$1.00 per share. Pursuant to the terms of the HMG Private Placement, as of
December 31, 1997, the Company sold an aggregate of 1,012,500 shares of its
Common Stock (the "Private Placement Stock") from which it derived net proceeds
of approximately $917,000. The Shares offered hereby include the Private
Placement shares which have been registered for resale under the Securities Act
pursuant to the Registration Statement; and
(viii) effective September 30, 1997, the Company issued $2.2 million
10% Convertible Debentures due September 30, 2000 ("Debentures") through a
private placement ("Private Placement"). The Debentures bear interest at the
rate of 10% per annum and are convertible, at the option of the holder at any
time, into shares of the Company's Common Stock ("Conversion Shares"), $0.01 par
value, based upon the conversion price of $1.25 per share. The Company may
prepay the Debentures on 30 days prior notice, at such time as the average
closing price of the Common Stock exceeds $1.75 per share for a 30 day period
prior to notice of such prepayment, provided that the Conversion Shares have
been registered under the Securities Act at the time of such prepayment. The
Shares offered hereby include the Conversion Shares, which have been registered
for resale under the Securities Act pursuant to the Registration Statement.
On August 12, 1998, the Company announced that it completed its acquisition
of the business of Schutz International Inc., a Chicago based point-of-purchase
company, pursuant to an Asset Purchase Agreement ("Purchase Agreement").
Pursuant to the terms of the Purchase Agreement, the Company will pay
approximately $3.5 million in deferred payments, subject to adjustment, and
issued 100,000 shares of its common stock in consideration for the acquired
assets. The Company's deferred payments commence upon the second anniversary of
the Purchase Agreement after which the Company will make 20 equal quarterly
principal installments, plus accrued interest, over five years. In addition, HMG
has agreed to make certain future contingent payments based upon revenues
generated over the next three years.
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INVESTMENT CONSIDERATIONS
Prospective investors should consider the following factors, as well as
the more detailed information contained elsewhere in this Prospectus, before
making a decision to invest in the securities offered hereby. Certain statements
contained in this Prospectus and the documents incorporated by reference are
based on current expectations. Such statements are forward looking statements
that involve a number of risks and uncertainties. Factors that could cause
actual results to differ materially include the following: (i) general economic
conditions at retail, (ii) competitive market influences, (iii) client budgetary
restrictions (iv) delays in shipment of scheduled programs to clients (v) delay
in or inability to expand the Company's client base and/or (vi) the loss of, or
reduction in spending of, existing clients.
Operating Losses
Although the Company had operating income of $1.1 million for the year
ended December 31, 1997, the Company incurred operating losses of $5.0 million
and $10.0 million for the years ended December 31, 1996 and 1995, respectively.
As of December 31, 1997, the Company had an accumulated deficit of $28.3 million
and a working capital deficit of $0.4 million. Although the Company has recently
expanded its client base, eliminated or reduced various costs and consolidated
manufacturing operations, there can be no assurance that the Company's future
operations will be profitable.
Concentration of Net Revenues
For the year ended December 31, 1997, Bristol Meyers Squibb, Procter &
Gamble ("P&G") and Wal*Mart Stores ("Wal*Mart") accounted for approximately 12%,
12% and 11%, respectively, of the Company's net revenues. For the year ended
December 31, 1996, P&G, Sara Lee International ("Sara Lee") and Wal*Mart
accounted for approximately 17%, 12%, and 11%, respectively, of the Company's
net revenues. For the year ended December 31, 1995, Sara Lee, P&G and Wal*Mart
accounted for approximately 24%, 11% and 13%, respectively, of the Company's net
revenues. Although the Company's relationship with many of its larger accounts
spans several years, none of these accounts is contractually bound to purchase
the Company's products or services. The loss of any one of such client would
have a material adverse effect on the Company.
The Company may experience changes in quarter-to-quarter net revenues
due to the timing of shipments to its clients, the effect of which may be
significant depending upon the concentration of the Company's revenues with such
clients.
Dependence Upon Key Officers
The Company's success depends, in part, upon the continued services of
Michael Wahl, Chairman of the Board and Chief Executive Officer, and certain
other key personnel. The loss of the services of any one of them could have a
material adverse effect on the Company. Although Michael
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Wahl is employed by the Company pursuant to an employment agreement expiring in
2002, the Company neither has an employment contract with any other member of
senior management nor has it obtained "key-man" life insurance on the life of
any member of senior management.
Significant Outstanding Indebtedness; Loan Covenants
The Company consummated a new Loan and Security Agreement in November
1996 with a financial institution whereby the Company obtained a secured $13
million revolving line of credit and term loan facility ("Credit Agreement").
This facility, which expires in November 1999, bears interest at the lending
institution's prime rate plus 1% per annum and is secured by the Company's cash,
cash equivalents, marketable securities, accounts receivable, inventory,
equipment and all other tangible and intangible assets and a pledge of all the
common stock of the Company's wholly-owned subsidiaries. Additionally, the
Credit Agreement contains certain affirmative and negative covenants which
require the Company to maintain a certain net worth, and, among other things,
restrict (i) the declaration or payment of dividends, (ii) the incurrence of
additional indebtedness and (iii) the sale of certain assets. There can be no
assurance that the Company will be able to remain in compliance with such
covenants in the future. The Company is currently in compliance with all
restrictive covenants and other material provisions of the the Credit Agreement,
as amended.
Competition
The custom display segment of the in-store marketing industry in which
the Company primarily competes is highly competitive. Certain of the Company's
competitors, including several diversified companies, not only design and
assemble merchandising systems for their own products, but also provide such
systems and services to unaffiliated concerns. Such competitors may have greater
financial and other resources than the Company. In addition, although the
Company believes that it has certain creative, design, technological, managerial
and other advantages over certain of its competitors, there can be no assurance
that the Company will maintain such advantages.
Volatility of Market Price of Common Stock
The average daily trading volume of the Common Stock has generally been
low, which the Company believes has had a significant effect on the historical
market price of the Common Stock. As a result, such market price has been highly
volatile and may not be indicative of the market price in a more liquid market.
The market price of the Common Stock could be subject to significant
fluctuations in response to a number of factors, including the depth and
liquidity of the market for the Common Stock, public announcements by the
Company, its clients and its competitors, investor perception of the Company and
general economic and other conditions, which may or may not relate to the
Company's performance.
Control by Officers and Directors
As of July 1, 1998, the Company's executive officers and directors
beneficially owned approximately 37.00% of the Common Stock. Consequently, the
Company's executive officers and
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directors will have substantial influence on the outcome of any matters
submitted to the Company's stockholders for approval, including the election of
directors. Such concentration of ownership may also have the effect of
preventing a change in control of the Company.
Dividend Policy
The Company has not paid dividends on the Common Stock since its
inception. The Company intends to reinvest any earnings in its business to
finance future growth. Accordingly, the Board of Directors does not anticipate
declaring any cash dividends in the foreseeable future. In addition, under the
terms of the Credit Agreement, the Company is prohibited from paying cash
dividends.
Effect of Shares Eligible for Future Sale
As of July 1, 1998, the Company had outstanding 9,047,150 shares of
Common Stock. An aggregate of 4,715,828 shares of Common Stock will become
outstanding upon the exercise or conversion, as the case may be, of all of the
stock options, warrants and convertible debentures outstanding at July 1, 1998.
No prediction can be made as to the effect, if any, that sales of shares of
Common Stock or the availability of such shares for sale will have on the market
price of the Company's securities prevailing from time to time. The possibility
that substantial amounts of Common Stock may be sold under Rule 144 into the
public market may adversely affect the prevailing market price for the Common
Stock and could impair the Company's ability to raise capital in the future
through the sale of equity securities. Moreover, a total of 2,356,000 of such
shares which are issuable upon the exercise of the Warrants and Conversion of
the Debentures are being registered for resale under the Securities Act pursuant
to the Registration Statement.
Possible Delisting of Securities from Nasdaq Systems
The Common Stock is currently listed on the Nasdaq SmallCap Market. In
order to continue to be listed on the Nasdaq SmallCap Market, however, the
Company must maintain $2,000,000 in net tangible assets and a $1,000,000 market
value on the public float. In addition, continued inclusion requires two market
makers, a minimum bid price of $1.00 per share and adherence to certain
corporate governance provisions. The failure to meet these maintenance criteria
in the future may result in the delisting of the Common Stock from the Nasdaq
SmallCap Market, and trading, in the Common Stock would thereafter be conducted
in the non-Nasdaq over-the-counter market. As a result of such delisting, an
investor could find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Common Stock.
Risks Relating to Penny Stocks
If the Common Stock were to become delisted from trading on the Nasdaq
SmallCap Market and the trading price of the Common Stock were below $5.00 per
share, trading, in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Exchange Act, 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 securitity that has a
market price of less
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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
defined as an investor with a net worth in excess of $1,000,000 or annual income
exceeding $200,000 individually or $300,000 together with a spouse). 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 the sale. The broker-dealer also must
disclose the commissions payable to the broker-dealer, current bid and offer
quotation for the penny stock and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Such information must be provided to the
customer orally or in writing before or with the written confirmation of trade
sent to the customer. Monthly statements must be sent disclosing recent price
information for the penny stock held in the account and information on the
limited market in penny stocks. The additional burdens imposed upon
broker-dealers by such requirements could, in the event the Common Stock were
deemed to be a penny stock, discourage broker-dealers from effecting
transactions in the Common Stock which could severly limit the market liquidity
of the Common Stock.
USE OF PROCEEDS
The Shares of Common Stock being offered hereby are for the account of
the Selling Stockholders. Accordingly, the Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders. The Company
will receive proceeds of up to $731,250 upon the exercise (of which there can be
no assurance) of the Warrants, but no proceeds upon the conversion of the
Debentures. The proceeds from the exercise of the Warrants would be used for
working capital. See "Selling Stockholders."
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SELLING STOCKHOLDERS
The following table sets forth certain information with respect to
Selling Stockholders. The number of Shares that may actually be sold by the
Selling Stockholders will be determined by such Selling Stockholders, and may
depend upon a number of factors, including, among other things, the market price
of the Common Stock. The table below sets forth information as of May 21, 1998,
concerning the beneficial ownership of Common Stock of the Selling Stockholders
including those of the Company Directors and Officers. All information
concerning beneficial ownership has been furnished by the Selling Stockholders.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Shares of Common Shares of Shares of Common
Stock Owned Common Stock Owned
Before Offering Stock Offered After Offering(3)
Number(1) Percent(2) Number Number(3) Percent(3)
Michael Wahl, 1,313,375 13.74% 185,000
Chairman of the Board
and Chief Executive
Officer and Director(4)
Andrew Wahl, 891,203 9.40% 175,000
President and Director(5)
Robert V. Cuddihy, Jr., 385,308 4.20% 137,500
Chief Operating Officer, Chief
Financial Officer and Director(6)
Herbert F. Kozlov, Director(7) 245,476 2.68% 35,000
L. Randy Riley, Executive 367,583 4.00% 135,000
Vice President and Director(6)
Lawrence J. Twill, Sr., Director(8) 126,150 1.40% 35,000
Louis Perlman(9)(10) 171,000 1.88% 171,000
Ivan Berkowitz, Director(11)(12) 143,000 1.58% 143,000
Great Court Analysis LLC(12) 640,000 7.17% 100,000
Wynnefield Partners Small Cap Value 617,000 6.79% 160,000
L.P.(13)
HMG Worldwide Corporation Capital 282,616 3.07% 282,616
Accumulation Plan
Steve Jackson 25,000 0.28% 25,000
Spira Family Investment Partnership 75,000 0.83% 75,000
National Family Investment Partnership 100,000 1.11% 100,000
Benjamin Shabtai 100,000 1.11% 100,000
Harry D. Steck 50,000 0.56% 50,000
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Shares of Common Shares of Shares of Common
Stock Owned Common Stock Owned
Before Offering Stock Offered After Offering(3)
Number(1) Percent(2) Number Number(3) Percent(3)
David Lloyd 10,000 0.11% 10,000
Parker Duryee Rosoff & Haft, P.C. (14) 100,000 1.11% 100,000
Ed Grisick(15) 50,000 0.56% 50,000
Graeme Griffith(15) 50,000 0.56% 50,000
Eran Benzour(16) 32,000 0.36% 32,000
Dr. M. David Diamond(16) 80,000 0.89% 80,000
David & Karen Esner(16) 40,000 0.45% 40,000
Martin Elbaum(16) 40,000 0.45% 40,000
Martin Franklin(16) 80,000 0.89% 80,000
W. Bruce & Madiline Johnson(16) 160,000 1.76% 160,000
Bonnie Ezikovitz(16) 40,000 0.45% 40,000
NBD Trading A.G.(16) 80,000 0.89% 80,000
Wynnefield Partners Small Cap Value
Offshore Fund LTD 40,000 0.45% 40,000
The Nagel Family Living Trust (16) 80,000 0.89% 80,000
Norman & Sandra Pessin JTRS(16) 80,000 0.89% 80,000
Kenneth A. Robinson(16) 80,000 0.89% 80,000
Leonard Shaykin(16) 40,000 0.45% 40,000
Tsippe Tajchner(16) 160,000 1.76% 160,000
Daniel Straus(16) 200,000 2.19% 200,000
Moshael Straus(16) 200,000 2.19% 200,000
Daniel K. Weiskopf III(16) 100,000 1.11% 100,000
</TABLE>
- -------------
(1) Represents those shares of Common Stock held by the Selling
Stockholders together with those shares that such Selling Stockholder has the
right to acquire within 60 days from the date of this Prospectus including,
without limitation, shares issuable upon exercise of the Warrants and shares
issuable upon conversion of the Debentures.
(2) The percentages indicated assume that all Warrants were exercised
and Debentures were converted and the Shares purchased thereunder were issued
immediately prior to the date of this Prospectus.
(3) Because the Selling Stockholders may sell all, some or none of the
Shares that he, she or it holds, and because the offering contemplated by this
Prospectus is not now a "firm commitment" underwritten offering, no estimate can
be given as to the number of Shares that will be held by any of the Selling
Stockholders upon or prior to termination of this offering. See "Plan of
Distribution."
(4) Includes 634,828 shares issuable upon exercise of certain options,
of which 35,000 Shares issuable upon exercise of the Warrants are being offered
hereunder.
(5) Includes 551,750 shares issuable upon exercise of certain options of
which 35,000 Shares issuable upon exercise of the Warrants are being offered
hereunder and 40,000 Shares issuable upon the conversion of the Debentures, all
of which are being offered hereunder.
10
<PAGE>
(6) Includes 258,850 shares issuable upon exercise of certain options,
of which 35,000 Shares issuable upon exercise of the Warrants are being offered
hereunder.
(7) Includes 227,600 shares issuable upon exercise of certain options,
of which 35,000 Shares issuable upon exercise of the Warrants are being offered
hereunder. Does not include 100,000 shares of Common Stock beneficially owned by
Parker Duryee Rosoff & Haft, P.C., of which Mr. Kozlov is a member.
(8) Includes 115,400 Shares issuable upon exercise of certain options,
of which 35,000 Shares issuable upon exercise of the Warrants are being offered
hereunder.
(9) Includes 171,000 Shares issuable upon exercise of the Warrants, all
of which are being offered hereunder.
(10) Mr. Perlman was a director of the Company from January 1998 until
his resignation on May 13, 1998.
(11) Includes 143,000 Shares issuable upon exercise of the Warrants, all
of which are being offered hereunder. Does not include 640,000 shares of Common
Stock beneficially owned by Great Court Analysis LLC.
(12) Mr. Berkowitz is President of Great Holdings Corporation, sole
stockholder of Great Court Analysis LLC.
(13) Includes 100,000 Shares issuable upon conversion of the Debentures,
all of which are being offered hereunder.
(14) Does not include 245,476 shares of Common Stock beneficially owned
by Herbert Kozlov, a member of Parker Duryee Rosoff & Haft, P.C., and a Director
of the Company and 6,000 shares of Common Stock beneficially owned by two other
members of Parker Duryee Rosoff & Haft, P.C..
(15) Represents Shares issuable upon exercise of the Warrants, all of
which are being offered hereunder.
(16) Represents Shares issuable upon conversion of the Debentures, all
of which are being offered hereunder.
11
<PAGE>
The Selling Stockholders identified above may have sold, transferred or
otherwise disposed of all or a portion of their Shares since the date on which
they provided the information regarding their Common Stock in transactions
exempt from the registration requirements of the Securities Act. Additional
information concerning the above listed Selling Stockholders may be set forth
from time to time in prospectus supplements to this Prospectus. See "Plan of
Distribution."
Pursuant to certain agreements between the Company and the Selling
Stockholders, the Company has agreed to file the Registration Statement of which
this Prospectus forms a part for the purpose of registering the potential resale
of the Shares.
Except as specifically set forth herein, the Selling Stockholders have,
and within the past three years have had, no position, office or other material
relationship with the Company or any of its predecessors or affiliates.
PLAN OF DISTRIBUTION
Sales of the Shares may be made from time to time by the Selling
Stockholders, or, subject to applicable law, by pledges, donees, distributees,
transferees or other successors in interest. Such sales may be made on The
Nasdaq SmallCap Market, in another over-the-counter market, on a national
securities exchange (any of which may involve crosses and block transactions),
in privately negotiated transactions or otherwise or in a combination of such
transactions at prices and at terms then prevailing or at prices related to the
then current market price, or at privately negotiated prices. In addition, any
Shares covered by this Prospectus which qualify for sale pursuant to Section
4(1) of the Securities Act or Rule 144 promulgated thereunder may be sold under
such provisions rather than pursuant to this Prospectus. Without limiting the
generality of the foregoing, the Shares may be sold in one or more of the
following types of transactions: (a) a block trade in which the broker-dealer so
engaged will attempt to sell the Shares 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
account pursuant to this Prospectus; (c) an exchange distribution in accordance
with the rules of such exchange; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholder may
arrange for other brokers or dealers to participate in the resales.
In connection with distributions of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the Shares registered hereunder in the course of hedging the positions they
assume with the Selling Stockholders. The Selling Stockholders may also sell
Shares short and deliver the Shares to close out such short positions. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares
registered hereunder, which the broker-dealer may resell pursuant to this
Prospectus. The
12
<PAGE>
Selling Stockholders may also pledge the Shares registered hereunder to a broker
or dealer and upon a default, the broker or dealer may effect sales of the
pledged Shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholder in amounts to be
negotiated in connection with the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act.
Information as to whether underwriters who may be selected by the
Selling Stockholders, or any other broker-dealer, is acting as principal or
agent for the Selling Stockholder, the compensation to be received by
underwriters who may be selected by the Selling Stockholders, or any
broker-dealer, acting as principal or agent for the Selling Stockholders and the
compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
Prospectus (the "Prospectus Supplement"). Any dealer or broker participating in
any distribution of the Shares may be required to deliver a copy of this
Prospectus, including the Prospectus Supplement, if any, to any person who
purchases any of the Shares from or through such dealer or broker.
The Company has advised the Selling Stockholders that during such time
as they may be engaged in a distribution of the Shares included herein they are
required to comply with Regulation M promulgated under the Exchange Act. In
general, Regulation M precludes the Selling Shareholders, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. A "distribution" is defined in the
rules as an offering of securities that is distinguished from ordinary trading
activities and depends on the "magnitude of the offering and the presence of
special selling efforts and selling methods." Regulation M also prohibits any
bids or purchases made in order to stabilize the price of a security in
connection with the distribution of that security.
It is anticipated that the Selling Stockholders will offer all of the
Shares for sale. Further, because it is possible that a significant number of
Shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the Company's
Common Stock.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Parker Duryee Rosoff & Haft, New
York, New York 10017. Parker Duryee Rosoff & Haft owns 100,000 shares of Common
Stock and is a Selling Stockholder pursuant to this
13
<PAGE>
Prospectus. In addition, members of Parker Duryee Rosoff & Haft beneficially own
an aggregate of 251,476 shares of Common Stock as of July 1, 1998, including
245,476 shares that are beneficially owned by Herbert F. Kozlov, a member of
such Firm and a director of the Company and a Selling Stockholder pursuant to
this Prospectus.
EXPERTS
The consolidated financial statements of the Company included in the
Company's annual report on Form 10-K for the year ended December 31, 1997
incorporated herein by reference have been audited by Friedman Alpren & Green
LLP, independent certified public accountants, as indicated in their report with
respect thereto, and are incorporated herein by reference in reliance upon the
report of said firm given upon their authority as experts in accounting and
auditing.
14
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the Company's estimates of the expenses
to be incurred by it in connection with the Common Stock being offered hereby:
SEC Registration Fee....................................$ 2,019.53
Printing registration statement and other documents..... - 0 -
Legal fees and expenses................................. 15,000.00*
Accounting fees and expenses............................ - 0 -
Miscellaneous expenses.................................. 3,000.00*
$20,019.53
* Estimated
Item 15. Indemnification of Directors and Officers.
Articles 8 and 9 of the Certificate of Incorporation of HMG Worldwide
Corporation ("Registrant") provide that Registrant shall, to the full extent
permitted by Section 145 of the Delaware General Corporation Law, indemnify all
persons whom it may indemnify pursuant thereto.
Pursuant to Section 145 of the Delaware General Corporation Law,
Registrant has the power, under certain circumstances, to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or contemplated action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of Registrant, or is or was serving at the
request of Registrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including attorneys' fees, and judgments against, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding.
The Company has purchased a policy of insurance for benefit of itself
and its directors and officers against liability incurred by them in the
performance of their duties as directors or officers of Registrant. The
approximate amount of the annual premium charged in respect of this policy on
account of directors' and officers' liability is approximately $75,000. The
premiums are paid by Registrant. The aggregate amount of coverage under the
policy is $2,000,000.
15
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
Exhibit
Number Description of Exhibit
4.01(1) -- Specimen Certificate representing the Common
Stock
5.01(2) -- Opinion of Parker Duryee Rosoff & Haft
23.01 -- Consent of Friedman Alpren & Green LLP
23.02 -- Consent of Parker Duryee Rosoff & Haft
(included in Exhibit 5.01 hereof)
24.01(2) -- Power of attorney (included in the signature
page of Part II of this Registration
Statement)
- -----------
(1) Filed with the Company's Registration Statement on Form S-2 (File No.
33-26153), and hereby incorporated by reference.
(2) Previously filed.
Item 17. Undertakings.
The undersigned Company 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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, that is
incorporated by reference in the Registration Statement, shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
16
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to Item 15 of Part II of the Registration Statement, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of 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 whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment to the 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 August 18, 1998.
HMG WORLDWIDE CORPORATION
By: /s/ Robert V. Cuddihy, Jr.
Robert V. Cuddihy, Jr.
Chief Operating Officer
In accordance with the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement was signed by the following persons in
the capacities and on the dates stated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
*
Michael Wahl Chairman of the Board, Chief August 18, 1998
Executive Officer and Director
(Principal Executive Officer)
*
Andrew Wahl Vice President and Director August 18, 1998
/s/ Robert V. Cuddihy, Jr.
Robert V. Cuddihy, Jr. Chief Operating Officer, Chief August 18, 1998
Financial Officer and Director
(Principal Financial and Accounting
Officer)
*
L. Randy Riley Executive Vice President and Director August 18, 1998
*
Herbert F. Kozlov Director August 18, 1998
</TABLE>
* Robert V. Cuddihy, Jr. pursuant to Powers of Attorney (executed by each
of the officers and directors listed above and filed with the Securities and
Exchange Commission), by signing his name hereto does hereby sign and execute
this Amendment to the Registration Statement on behalf of the persons referenced
above.
18
Friedman Alpren & Green LLP
Exhibit 23.01
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 20, 1998 which appears in the
annual report on Form 10-K of HMG Worldwide Corporation and Subsidiaries for the
year ended December 31, 1997 and to the reference to our firm under the caption
"Experts" in the Prospectus.
Friedman Alpren & Green LLP
New York, New York
August 18, 1998
