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File No. 333-37100
As filed with the Securities and Exchange Commission on June 27, 2000.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT No. 1
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 Financial 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:
HERBERT F. KOZLOV, ESQ.
PARKER DURYEE ROSOFF & HAFT, P.C.
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
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. [ ]
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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.[ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
Proposed maximum
Title of securities Amount to maximum offering aggregate Amount of
to be registered be registered price Per Share offering price registration fee
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<S> <C> <C> <C> <C>
Common Stock, 453,750 $3.84375 (1) $1,744,101.56(1) $ 460.44(3)
$0.01 par value
Common Stock, 2,141,250 $2.96875 (2) $6,356,835.94(2) $1,678.20(4)
$0.01 par value
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Totals: 2,595,000 -- $8,100,937.50 $2,138.64
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
as determined in accordance with Rules 457(c) and 457(h), using the
average of the high and low sales prices per share of HMG's common
stock as reported on the NASDAQ Small Cap Market on May 10, 2000.
(2) Estimated solely for the purpose of calculating the registration fee,
as determined in accordance with Rules 457(c) and 457(h), using the
average of the high and low sales prices per share of HMG's common
stock as reported on the NASDAQ Small Cap Market on June 20, 2000.
(3) This part of the registration fee was paid with the original filing of
this Form S-3 on May 15, 2000.
(4) Amount paid herewith.
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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PROSPECTUS
SUBJECT TO COMPLETION, JUNE 27, 2000
2,595,000 Shares
HMG WORLDWIDE CORPORATION
Common Stock, par value $.01 per share
This prospectus relates to 2,595,000 shares of the common stock, par value
$.01 per share, of HMG Worldwide Corporation ("HMG" or "we"). The shares of
common stock being offered by the selling stockholder may be acquired by the
selling stockholder upon conversion of convertible notes held by it. HMG will
not receive any proceeds from the conversion of shares of the convertible notes
into shares of common stock or from the sale of shares of common stock by the
selling stockholder.
----------------------
These securities involve a high degree of risk. See "Risk Factors."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The shares of common stock being offered by the selling stockholder have
not been registered for sale under the securities laws of any state or
jurisdiction as of the date of this prospectus.
HMG's common stock is listed for trading on The NASDAQ SmallCap Market under the
symbol "HMGC." On June 26, 2000, the closing bid price of HMG's common stock, as
reported by The NASDAQ SmallCap Market, was $3.75 per share.
HMG's executive offices are located at 475 Tenth Avenue, New York, New York
10018. Its telephone number is 212-736-2300.
The date of this prospectus is June 27, 2000.
[The following language is located on the left margin of the first page of
preliminary prospectus.]
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and HMG is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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TABLE OF CONTENTS
RISK FACTORS................................................................3
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS......................7
USE OF PROCEEDS.............................................................7
SELLING STOCKHOLDER.........................................................7
PLAN OF DISTRIBUTION........................................................9
LEGAL MATTERS..............................................................11
EXPERTS....................................................................11
ADDITIONAL INFORMATION ABOUT HMG...........................................12
DOCUMENTS INCORPORATED BY REFERENCE........................................12
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 HMG. This prospectus does not constitute an offer to sell, or a solicitation
of an offer to buy, the securities offered by this prospectus 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 in this prospectus is correct as
of any time subsequent to its date.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information included in this prospectus,
including the financial statements and related notes, before you decide whether
to buy our common stock. If any of the following risks were to occur, our
business, financial condition or results of operations would be likely to
materially suffer and would raise doubt whether we could proceed with our
current business plan. In that event, you could lose all or a part of your
investment.
It is especially important to keep these risk factors in mind when you read
forward-looking statements of the type described below in the section entitled
"Cautionary Notice Regarding Forward-Looking Statements."
We lost money in the last fiscal year and could lose money in the future.
We lost $31,000 during the 1999 fiscal year. Management believes that this
loss was due to a number of unique factors that are not expected to recur. For
example, our selling, general and administrative expenses have increased as a
result of the consolidation of our manufacturing facilities and costs associated
with the integration of our most recent acquisitions. Nevertheless, we cannot
assure you that we will be profitable in 2000.
We are integrating a significant new strategic component into our business plan.
We plan to expand our business by integrating an Internet services
strategy. Our new strategy is intended to leverage our significant experience in
point-of-sale marketing by using the Internet as a new medium to help our
clients reach their customers with marketing and branding messages. However, our
senior management has almost no operating history in an Internet or
web-consulting business. We can offer you no assurance that we will be able to
effectuate our new business plan successfully, that revenue growth will occur
once the plan is enacted, that any of our Internet subsidiaries will be
profitable at any time in the future or that, once they have achieved
profitability, they will be able to sustain it.
If we fail to meet our clients' expectations for on-line services, we could
damage our overall reputation.
Our senior management has almost no experience in delivering web-consulting
services. As we begin to provide Internet-based services for our existing
clients, we might not be able to provide the same quality of results that we
have delivered to our clients within our in-store marketing and merchandising
business. Accordingly, these clients may perceive any shortcoming in our
Internet businesses as an overall deterioration in the quality of our other
services. If this happens, we could damage our relationship with that client and
possibly lose business.
If we lose the services of our chairman, Michael Wahl, our chief executive
officer, Andrew Wahl, or other key personnel, our business and stock price could
suffer.
Our future success depends in large part on the continued services of a
number of our key personnel, including our chairman, Michael Wahl and our chief
executive officer, Andrew Wahl. Decision-making personnel at many of our clients
have established personal relationships with Michael Wahl, who has been with HMG
for over 25 years and Andrew Wahl who has been a part of HMG for almost 20
years. Michael Wahl relinquished the title of chief executive officer to Andrew
Wahl in February 2000. We expect that Michael Wahl will help Andrew Wahl in
continuing these relationships. Although Michael Wahl has an employment
agreement with us, we currently have no employment contract with Andrew Wahl or
any of our other key personnel. We also have no key-man insurance on any of our
personnel. The loss of the services of Michael Wahl, Andrew Wahl or any of our
other key personnel could have a material adverse effect on our business,
financial condition and results of operations. All of our key personnel are
covered by non-competition clauses in various agreements they have entered into
with us, but there can be no assurance
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that these clauses would be enforceable. If one or more of our key personnel
resigned and were not prevented from joining a competitor or forming a competing
company, we might lose existing or potential clients.
Future acquisitions or investments could disrupt our ongoing business, distract
our management and employees, increase our expenses and adversely affect our
results of operations.
We have made three acquisitions since August 1998. Management's attention
may be diverted from operations towards identifying potential acquisitions and
negotiating and consummating them. Any acquisitions or investments we make in
the future will involve risks. We may not be able to make acquisitions or
investments on commercially acceptable terms. If we do acquire a company, we
could have difficulty retaining and assimilating that company's personnel. In
addition, we could have difficulty assimilating acquired products, services or
technologies into our operations. These difficulties could disrupt our ongoing
business, distract our management and employees, increase our expenses and
materially and adversely affect our results of operations. Furthermore, we may
incur debt or issue equity securities to pay for any future acquisitions. If we
issue equity securities, your ownership share in HMG could be reduced.
The market price of our stock may fluctuate widely.
The market price of our common stock ranged between $2.50 and $9.13 since
January 1, 2000. It could also fluctuate substantially due to
- future announcements concerning us or our competitors;
- quarterly fluctuations in our operating results;
- announcements of acquisitions or technological innovations; or
- changes in earnings estimates or recommendations by analysts.
In addition, as our Internet-related business becomes more important as a
percentage of revenues, we may be perceived as a technology-oriented company.
The stock prices of many technology companies fluctuate widely for reasons that
may be unrelated to their operating results. Also, the stock prices of
technology companies have been more volatile than the stock prices of companies
in other industries, particularly in 2000. If investors begin to perceive our
stock more as an "emerging growth" stock than as a "value" stock, you should
expect increased volatility as a result. Fluctuations in our common stock's
market price may affect our ability to raise capital.
Stock ownership of our officers and directors upon completion of this offering
could delay or prevent stockholder actions.
Our officers, directors and other principal stockholders beneficially own
33.8% of our outstanding common stock. While no individual will be a beneficial
owner of a majority of the outstanding shares of our common stock, these
stockholders, if they act together, may be able to control decisions on
corporate matters, including election of directors, increases in our authorized
capital stock, dissolution and merger or sale of assets, and they will be able
generally to direct our affairs. This concentration of ownership may also have
the effect of delaying, deferring or preventing a change in control of HMG and
make transactions that could give our stockholders the opportunity to realize a
premium over the then-prevailing market price for shares of common stock more
difficult or impossible.
We may not be able to hire, train, motivate, retain and manage professional
staff.
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To succeed, we must hire, train, motivate, retain and manage highly-skilled
employees. Competition for skilled employees who can perform the services we
offer is intense. We might not be able to hire enough of them or to train,
motivate, retain and manage the employees we do hire. This could hinder our
ability to complete existing projects and bid for new projects. Hiring,
training, motivating, retaining and managing employees with the skills we need
is time-consuming and expensive.
Most of our customers are in the retail or consumer-products businesses and may
be affected simultaneously by the same economic factors.
In the past, spending by any single customer has not had a significant
effect on our results of operations in any year. This diversification has
helped, to a significant extent, insulate our results from fluctuations in the
performance of individual clients. However, this diversity does not protect us
from fluctuations in the overall economy, because most of our clients are in the
retail and consumer-products businesses. These companies tend to all be
influenced at the same time by similar economic factors, for example, consumer
spending. In the event of a decline or projected decline in consumer spending,
the management of our clients may choose to cut back on spending for our
products. It is reasonable to expect that, if one customer reduces its spending
in response to a major economic factor, other customers will also decide to
reduce their spending at approximately the same time.
Our quarterly operating results may fluctuate, so the results of one quarter are
not necessarily indicative of results in the succeeding quarter.
Because most of our customers are in the retail or consumer-products
businesses and can be affected simultaneously by the same economic factors, our
operating results can vary significantly from one quarter to the next. Our
customers' spending tends to cluster in some periods, although these periods are
not the same in each year. Therefore you should not expect that our results for
any one quarter can be predictive of our performance in the next succeeding
quarter. Likewise, you should not use the results for any particular quarter to
predict our performance in the similar period in any future year.
Our HMGe subsidiary faces intense competition and may be unable to compete
successfully.
The market for Internet professional services is intensely competitive, evolving
and subject to rapid technological change. We expect the intensity of
competition to increase in the future. We believe that we must move quickly to
integrate HMGe and its current components, Ego Media, Zeffstyle and Zeff
Consulting, with our traditional core business. If we fail to do so, competitors
may copy our business strategy or take other steps to prevent us from achieving
our goals.
Many of our competitors in the Internet professional-services market have longer
operating histories, significantly greater financial, technical, marketing and
other resources, significantly greater name recognition, and a larger installed
base of Internet customers than we have. We believe, given our well-established
relationships with our current and potential customers and extensive knowledge
of our core industry, we are capable of offering consistent in-store and online
services that are beyond the scope of our current competitors. However, it is
possible that competitors of our core in-store business may someday form
alliances with competitors of our Internet professional-services business or
otherwise acquire or develop capabilities to offer services that resemble ours.
If that happens, the joint competitor may be able to respond more quickly to new
or emerging technologies or devote greater resources to the development,
promotion and sale of their services in the areas where we hope to expand and
our business may not grow as we expect.
HMG experiences temporary liquidity problems from time to time, which may cause
revenues and profits to be lower during those periods.
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Our working capital needs continue to expand as a result of increases in our
sales directly to retailers. To sell to retailers, we must maintain a
substantial investment in inventory to manage new merchandising programs and to
support existing merchandising programs, new store openings and remodeling
activities engaged by the retailer. From time to time, we have experienced
temporary liquidity problems due to the timing of cash flows while we are in
production and building inventory. Additionally, working capital was used to
achieve our recently completed capital expenditure program. Furthermore, as we
expand HMGe, our Internet and e-commerce subsidiary, we will have to support its
cash flows through our existing credit facilities and other potential resources.
When these liquidity problems occur, we may have to postpone undertaking
profitable projects for our customers or delay delivery of projects that have
not been completed. Because we get paid by our customers upon delivery of
products, it may take longer for us to realize revenues during those periods.
Future sales of our common stock in the public market could lower our stock
price and impair our ability to raise funds in new stock offerings.
HMG grants options to motivate its employees and the cash we receive from
the exercise of these options provides funding for our future growth. On the
date of this prospectus, HMG had outstanding options and warrants exercisable
for approximately 6,357,587 shares of common stock. Likewise, on the date of
this prospectus, HMG had outstanding debentures and notes convertible into up to
4,546,325 shares of common stock. This includes the maximum number of shares,
offered by this prospectus, that may be issued and sold upon the conversion of
the convertible notes held by the selling stockholder. If the holders of a large
number of these securities elect to exercise them for or convert them into
common stock and then sell the shares of common stock they acquire, the market
price of our common stock could decline. Sales by existing stockholders of a
large number of shares at any one time could adversely affect the market price
of our common stock and could impair our ability to raise funds in additional
stock offerings. Moreover, the mere possibility that these sales could be made
in the future may result in the same effect even if these sales are not actually
made.
The selling stockholder's right to convert convertible notes into shares of our
common stock according to a formula may reduce the market price of our common
stock and dilute your ownership interest in HMG.
Under the terms of the convertible notes, the selling stockholder has the
right to convert its convertible notes into shares of our common stock at a
price determined by a formula that fluctuates based on the market price of the
common stock. The conversion ratio may provide the selling stockholder the
ability to receive shares at a discount to the prevailing market price. We
cannot predict whether there will be any effect on the market price of our
common stock as a result of the conversion of the convertible notes at a
discount to that market price. Moreover, the actual number of shares the selling
stockholder may acquire will depend upon the market price of the common stock at
the time of conversion. As the market price decreases, the number of shares the
selling stockholder may obtain upon conversion increases. The sale of these
shares by the selling stockholder may cause the market price to fall further,
which may, in turn, enable the selling stockholder to acquire an even greater
number of shares upon subsequent conversions. This may result in a dilution of
your ownership interest in HMG.
If our common stock is de-listed from Nasdaq, it may be considered a "penny
stock".
SEC regulations impose additional requirements on broker-dealers when
selling penny stocks to persons other than established customers and accredited
investors. In general, an accredited investor is a person with assets in excess
of $1,000,000 or annual income exceeding $200,000 individually or $300,000
together with his or her spouse. The relevant SEC regulations generally define
"penny stocks" to include any non-Nasdaq equity security with a market price (as
defined in the regulations) of less than $5 per share. Under the penny stock
regulations, a broker-dealer must make a special suitability determination as to
the purchaser and must have the purchaser's prior written consent to the
transaction. Prior to any transaction in a
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penny stock covered by these rules, a broker-dealer must deliver a disclosure
schedule about the penny stock market prepared by the SEC. Broker-dealers must
also make disclosure concerning commissions payable to both the broker-dealer
and any registered representative and provide current quotations for the
securities. Finally, broker-dealers are required to send monthly statements
disclosing recent price information for the penny stock held in an account and
information on the limited market in penny stocks.
If our common stock were to be classified as a "penny stock," these rules
may discourage broker-dealers from effecting transactions in our common stock or
affect their ability to sell our securities. As a result, purchasers and current
holders of HMG's securities could find it more difficult to sell their
securities.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus contains forward-looking
statements within the meaning of the federal securities laws. These statements
are not historical facts, but rather are based on our current expectations,
assumptions, estimates and projections about us and our industry, and other
beliefs and assumptions using information currently available to us.
Forward-looking statements 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 our client base and/or (vi) the loss
of, or reduction in spending of existing clients.
Generally, words including "may," "could," "would," "should," "will,"
"anticipates," "expects," "intends," "plans," "projects," "believes," "seeks,"
"estimates," "contemplates," and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors, some of
which are beyond our control, are difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. These risks and uncertainties are described in "Risk
Factors" and elsewhere in this prospectus. We caution you not to place undue
reliance on these forward-looking statements, which reflect our management's
view only as of the date of this prospectus. We do not have any obligation to
inform you if forward-looking statements or the circumstances on which they are
based change.
USE OF PROCEEDS
The shares of common stock being offered are for the account of the selling
stockholder. Accordingly, HMG will not receive any of the proceeds from the sale
of shares of common stock by the selling stockholder. HMG will not receive any
proceeds upon the conversion of the convertible notes, but this conversion, if
in full, would reduce HMG's indebtedness by $1,500,000.
SELLING STOCKHOLDER
All of the shares of common stock being offered subject to this prospectus
are being offered by the selling stockholder named in the table below. The
number of shares listed in the table as offered represents the maximum number of
shares that may be acquired by the selling stockholder upon conversion of the
convertible notes. As described below, the number of shares of common stock that
the selling stockholder may actually acquire upon conversion may be less than
the maximum. The selling stockholder will determine the actual number of shares
of common stock that it will offer to sell, which may depend upon a number of
factors, including the market price of the common stock at the time of sale.
The maximum aggregate number of shares of common stock issuable upon
conversion of the convertible notes is 2,595,000, all of which are being offered
under this prospectus. The maximum number includes any shares that may be issued
in
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payment of interest on the convertible notes. As of the date of this
prospectus, none of the convertible notes have been converted into common stock.
The convertible notes may be converted at a price of based on the average
of the two lowest last reported bid prices for the common stock on the Nasdaq
SmallCap Market during the 30 trading days preceding, but excluding, the date of
conversion. The maximum conversion price is $9.60 per share. However, if the
selling stockholder requests conversion of the convertible notes at a conversion
price of $2.50 per share or less, we have the right to redeem the convertible
notes at 110% of their par value plus any accrued but unpaid interest.
The number of shares of common stock issuable upon conversion of the
convertible notes will increase as the market price of the common stock
decreases, as long as the stock trades below $9.60. Also, as a result of this
formula, the conversion price of the convertible notes could be substantially
below the market price of the common stock on the date of conversion. To the
extent that any portion of the convertible notes is converted and the resulting
common stock is sold, the market price of the common stock could decrease due to
the additional shares in the market. This, in turn, could lead to a
proportionately greater amount of common stock being issuable upon subsequent
conversion of the convertible notes. The result could be a substantial dilution
to the interests of other holders of common stock, whether or not the shares of
common stock issued upon conversion are sold following conversion.
If the maximum number of 2,595,000 shares were to be issued upon conversion
of the convertible notes and in payment of interest on the convertible notes and
there remains any unconverted principal amount of the convertible notes, the
interest rate on the remaining principal amount would be increased to 15% per
annum and would be payable in cash.
The table below contains information furnished by the selling stockholder
concerning the beneficial ownership of common stock of the selling stockholder
as of the date of this prospectus. The shares offered relate relate exclusively
to the selling stockholder's holding of those convertible notes acquired in
March 2000. The selling stockholder also holds additional convertible notes from
a transaction that was described in HMG's registration statement on Form S-3,
file number 333-77679, which was filed on May 4, 1999. As of the date of this
prospectus, the remaining balance of the previously acquired convertible notes
held by the selling stockholder is $3.0 million. The balance of the previously
acquired convertible notes are currently convertible into a maximum of 1,461,325
shares of HMG's common stock, subject to the limitation described in the
paragraph immediately following the table.
We have assumed that the selling stockholder will sell the maximum number
of shares of common stock into which the newly acquired convertible notes could
potentially be converted based upon the conversion terms and limitations
applicable to the convertible notes. The actual number of shares of common stock
that the selling stockholder would receive upon conversion of its convertible
notes is likely to be lower than as shown in the table. Based on the current
conversion price at the date of this prospectus, conversion of the convertible
notes would result in the selling stockholder owning substantially fewer shares
of common stock than as reflected below. The table also does not reflect the
limitations on conversion of the convertible notes described in the two
paragraphs immediately following the table.
SHARES OF
SHARES OF COMMON STOCK OWNED
COMMON STOCK SHARES OF AFTER OFFERING
OWNED COMMON STOCK ------------------
BEFORE OFFERING OFFERED NUMBER PERCENT
--------------- ------------- ------ -------
Societe Generale 4,056,325 2,595,000 1,461,325 4.9%
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The convertible notes provide that they are convertible only to the extent
that, upon conversion, the selling stockholder and its affiliates would
beneficially own not more than 4.9% of the outstanding shares of common stock of
HMG. HMG may not waive this 4.9% ceiling on the number of shares that may be
beneficially owned by the selling stockholder and its affiliates. This 4.9%
limitation also applies to the selling stockholder's previously acquired
convertible notes, so that a partial conversion of the new notes and the old
notes cannot accidentally defeat the limit. Additionally, the selling
stockholder and its affiliates may only convert any combination of convertible
securities if the total number of shares received from all conversions during
the previous 61 days does not exceed 9.9% of HMG's outstanding shares. This 9.9%
limitation is intended to restrict the number of times within 61 days that the
selling stockholder can convert securities into HMG's common stock, sell those
shares of common stock and then convert additional securities into common stock
up to the 4.9% maximum.
The selling stockholder may convert convertible notes into common stock in
accordance with the following timetable:
o 25% of the original principal amount of the convertible notes during the
first 75 days following the issuance of the convertible notes, which took
place on March 15, 2000;
o an aggregate of 50% of the original principal amount of the convertible
notes through the 150th day following their issuance;
o an aggregate of 75% of the original principal amount of the convertible
notes through the 225th day following their issuance; and
o after that time, any remaining convertible notes.
Under an agreement between HMG and the selling stockholder, HMG has agreed
(i) to file the registration statement of which this prospectus is a part for
the purpose of registering the potential resale of the shares issuable upon
conversion of the convertible notes, (ii) to bear all expenses of the
registration and sale of the shares, other than any underwriting discounts and
conversions and (iii) to indemnify the selling stockholder against some
liabilities.
The selling stockholder has provided financing to HMG during the past three
years. The selling stockholder $3.0 million of the previously acquired
convertible notes, convertible into a maximum of 1,461,325 shares of HMG's
common stock, as referred to above. The selling stockholder does not have, and
within the past three years has not had, any other material relationship with
HMG or any of its predecessors or affiliates.
PLAN OF DISTRIBUTION
The selling stockholder may offer and sell from time to time under this
prospectus the shares received by the selling stockholder upon conversion of
convertible notes. The selling stockholder will act independently of us in
making decisions with respect to the timing, manner and size of each sale. To
the extent required, we may amend and supplement this prospectus to describe a
specific plan of distribution.
The selling stockholder may sell the shares covered by this prospectus by
several possible means. These include, but are not limited to, one or any
combination of the types of transactions described in the following list and
paragraphs:
o on the Nasdaq SmallCap Market or any other market where our common stock
may trade, at the then-prevailing prices and terms or at prices related to
the then-current market price or at negotiated prices;
o a block trade in which a broker-dealer will attempt to sell shares as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction;
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o purchases by a broker-dealer as principal and resale by that broker-dealer
for its own account under this prospectus;
o an over-the-counter distribution under the rules of the Nasdaq SmallCap
Market;
o ordinary brokerage transactions and transactions in which a broker solicits
purchasers; or
o in privately negotiated transactions.
In addition to the list above, the selling stockholder may also enter into
hedging transactions with broker-dealers or other financial institutions. In
connection with these transactions, broker-dealers or other financial
institutions may engage in short sales of our common stock in the course of
hedging the positions they assume with that selling stockholder. The selling
stockholder may also sell our common stock short and redeliver the shares to
close out short positions.
The selling stockholder may enter into option or other transactions with
broker-dealers or other financial institutions that require that selling
stockholder to deliver the shares offered in this prospectus, and, in turn, the
broker-dealer or other financial institution may resell those shares under this
prospectus, as supplemented or amended to reflect the applicable transaction.
The selling stockholder may pledge shares of common stock to a
broker-dealer or other financial institution, and, upon a default, that
broker-dealer or other financial institution may sell the pledged shares of
common stock under this prospectus, as supplemented or amended to reflect the
applicable transaction. In addition, any shares of common stock that qualify for
sale under Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus.
The selling stockholder may sell shares of common stock directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. These broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholder
or the purchasers of shares of common stock for whom those broker-dealers may
act as agent or to whom they sell as principal or both. This compensation might
be in excess of customary commissions. Market makers and block purchasers that
purchase the shares of common stock will do so for their own account and at
their own risk. It is possible that the selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share that may be below the then-current market price.
We cannot make assurances that all or any of the shares of common stock will be
issued to, or sold by, the selling stockholder. The selling stockholder and any
brokers, dealers or agents, upon effecting the sale of any of the shares of
common stock offered by this prospectus, may be deemed "underwriters" as that
term is defined under the Securities Act or the Securities Exchange Act, or the
rules and regulations these acts.
The selling stockholder may sell all or any part of the shares of common
stock through an underwriter. HMG is not aware of any agreement the selling
stockholder may have entered into with a prospective underwriter and there is no
assurance that the selling stockholder will enter into any agreement with a
prospective underwriter. If the selling stockholder enters into an agreement or
agreements with a prospective underwriter, the relevant details will be set
forth in a supplement or revisions to this prospectus.
To comply with the securities laws of some states, the shares of common
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stock must be sold in some jurisdictions only through registered or licensed
brokers or dealers. Also, in some states the shares of common stock may not be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and there has been compliance with that requirement.
We have advised the selling stockholder that the anti-manipulation rules of
Regulation M under the Securities Exchange Act may apply to sales of shares of
common stock in the market and to the activities of the selling stockholder and
their affiliates. In addition, we will make copies of this prospectus available
to the selling stockholder and we informed them of the need for delivery of
copies of this prospectus to purchasers at or prior to the time of any sale of
the shares of common stock offered under this prospectus.
At the time a particular offer of shares of common stock is made, if
required, a prospectus supplement will be distributed that will set forth the
number of shares of common stock being offered and the terms of the offering,
including the name of any underwriter, dealer or agent, the purchase price paid
by any underwriter, any discount, commission and other item constituting
compensation, any discount, commission or concession allowed or reallowed or
paid to any dealer, and the proposed selling price to the public.
HMG anticipates that the selling stockholder will offer for sale all of the
shares being registered, to the extent that those shares are issued to the
selling stockholder upon conversion of its convertible notes. Further, because
it is possible that a significant number of shares could be sold at the same
time under this prospectus, any sales, or the possibility of sales, may depress
the market price of the common stock.
HMG will bear all costs and expenses of the registration of the selling
shareholder's shares under the Securities Act and state securities laws.
However, the selling shareholder will bear all underwriting and brokerage
commissions and underwriting expenses, if any, attributable to the sale of its
shares.
We have indemnified the selling stockholder against certain liabilities,
including liabilities under the Securities Act of 1933. We will bear all
expenses in connection with the registration and sales of the shares of common
stock being offered by the selling stockholder, other than any underwriting
discounts and selling commissions.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock being
offered by this prospectus will be passed upon for HMG by Parker Duryee Rosoff &
Haft, a Professional Corporation, New York, New York. Parker Duryee Rosoff &
Haft owns 50,000 shares of HMG's common stock. Herbert F. Kozlov, a director of
HMG, is a member of this firm. Mr. Kozlov beneficially owns 515,476 shares of
common stock as of May 10, 2000.
EXPERTS
The consolidated financial statements included in HMG's annual report on
Form 10-K for the year ended December 31, 1999, which are incorporated in this
prospectus by reference, have been audited by Friedman Alpren & Green LLP,
independent certified public accountants, as indicated in their report. The
consolidated financial statements are incorporated in this prospectus by
reference in reliance on the report of Friedman Alpren & Green LLP, given on the
authority of that firm as experts in accounting and auditing.
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ADDITIONAL INFORMATION ABOUT HMG
HMG files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). You may read
and copy any of the information on file with the SEC at the SEC's public
reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois.
Copies of the filed documents can be obtained by mail from the Public Reference
Section of the SEC at Room 1024, 450 Fifth Street, N.W. Washington, D.C. 20549,
at prescribed rates. You may call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Filed documents are also available to
the public at the SEC's website at http://www.sec.gov.
HMG has filed with the SEC a registration statement on Form S-3 with
respect to the common stock that may be sold under this prospectus. This
prospectus does not contain all of the information set forth in that
registration statement, certain parts of which are not included in accordance
with the rules and regulations of the SEC. Copies of that registration statement
can be obtained from the Public Reference Section of the SEC at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows a company to "incorporate by reference" information it files
with the SEC, which means that HMG can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that HMG files later with
the SEC will automatically update and supersede this information. HMG
incorporates by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, until all of the shares offered under this prospectus are sold.
(a) HMG's annual report on Form 10-K for the fiscal year ended December
31, 1999;
(b) HMG's quarterly report on Form 10-Q for the fiscal quarter ended March
31, 2000;
(c) HMG's current report on Form 8-K, filed on June 20, 2000
(d) HMG's Registration Statement on Form 8-A (with respect to the
description of the common stock).
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference in this prospectus modifies
or supersedes that statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
You can request, and HMG will send to you, without charge, copies of
documents that are incorporated by reference in this prospectus but that are not
delivered to you (other than exhibits to such documents that are not
specifically incorporated by reference). You may request these copies by writing
or telephoning HMG at: HMG Worldwide Corporation, 475 Tenth Avenue, New York,
New York 10017, attention: Robert V. Cuddihy, telephone number (212) 736-2300.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth HMG's estimates of the expenses to be
incurred by it in connection with the registration and sale of the common stock
being offered hereby:
SEC Registration Fee ......................................... $ 460
Printing registration statement and other documents........... 1,000
Legal fees and expenses....................................... 15,000*
Accounting fees and expenses.................................. 2,500*
Miscellaneous expenses........................................ 4,000*
-------
Total: $22,960
=======
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*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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
4.01 Specimen Certificate representing the Common Stock*
4.02 Form of Convertible Note
4.03 Form of Securities Purchase Agreement
4.04 Form of Registration Rights Agreement
5.01 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 Power of attorney (included in the signature page of Part II of this
Registration Statement)
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----------
* Filed with the Company's Registration Statement on Form S-2 (File No.
33-26153), and incorporated herein by reference.
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 HMG'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.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of HMG
pursuant to Item 15 of Part II of the Registration Statement, or otherwise,
HMG 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 HMG of expenses incurred or paid by a director, officer or controlling
person of HMG 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, HMG will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
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SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of 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 New York, State of New York, on June 27, 2000.
HMG WORLDWIDE CORPORATION
By: /s/ Robert V. Cuddihy, Jr.
--------------------------------
ROBERT V. CUDDIHY, JR.
CHIEF FINANCIAL OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Andrew Wahl and Robert V. Cuddihy, Jr., and each
of them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them without the other, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Signature Title Date
--------- ----- ----
/s/ Michael Wahl
---------------------------- Chairman of the Board, June 27, 2000
MICHAEL WAHL and Director
/s/ Andrew Wahl
---------------------------- Chief Executive Officer June 27, 2000
ANDREW WAHL and Director
/s/ Robert V. Cuddihy, Jr.,
---------------------------- Executive Vice President, June 27, 2000
ROBERT V. CUDDIHY, JR. Principal Accounting and
Chief Financial Officer
and Chief Information
Officer and Director
/s/ L. Randy Riley
---------------------------- President, Chief Operating June 27, 2000
L. RANDY RILEY Officer and Director
/s/ Herbert F. Kozlov
---------------------------- Director June 27, 2000
HERBERT F. KOZLOV
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