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File No. 333-
As filed with the Securities and Exchange Commission on May 15, 2000.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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.[ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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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(1) offering price(1) registration fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 453,750 $3.84375(1) $1,744,101.56 $460.44
$0.01 par value
</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.
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, MAY 15, 2000
453,750 Shares
HMG WORLDWIDE CORPORATION
Common Stock, par value $.01 per share
This prospectus relates to 453,750 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 May 12, 2000, the closing bid price of HMG's common
stock, as reported by The NASDAQ SmallCap Market, was $4.125 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 May 15, 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................................................................5
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS......................9
USE OF PROCEEDS............................................................10
SELLING STOCKHOLDER........................................................10
PLAN OF DISTRIBUTION.......................................................12
LEGAL MATTERS..............................................................14
EXPERTS....................................................................15
ADDITIONAL INFORMATION ABOUT HMG...........................................15
DOCUMENTS INCORPORATED BY REFERENCE........................................15
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-marketing
component. 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
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 businesses 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, we could damage our reputation.
Management has limited 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 in the brick-and-mortar world. 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. Additionally, if that
client discusses its dissatisfaction with another of our clients, our overall
reputation could suffer.
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,.
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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
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. One or more of our key personnel may resign and join a competitor
or form a competing company. As a result, 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 two acquisitions since August 1998 and are currently in
the process of consummating another. Although we intend to use the proceeds of
this offering to make acquisitions, we have not had advanced conversations with
additional candidates to date. 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 buy 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 $2.06 and
$7.00 in 1999. 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, if we are successful in expanding our services relating to
the Internet, we may be perceived as "dot-com" company. The stock prices of many
of these companies fluctuate widely for reasons that may be unrelated to
operating results. Fluctuations in our common stock's market price may affect
our ability to raise capital.
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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 36.6% of our outstanding common stock. While no individual will be a
beneficial owner of a majority of the outstanding shares of our common stock,
our management, collectively, 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 public, minority 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.
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.
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HMG experiences temporary liquidity problems, which may cause revenues and
profits to be lower during those periods.
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, our working capital was used to
achieve our recently completed capital expenditure program. Furthermore, as we
expand HMGe, our Internet and e-commerce division, we will have to support the
cash flows for this division 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 exercisable for
approximately 6,491,621 shares of common stock. Likewise, on the date of this
prospectus, HMG had outstanding debentures and notes convertible into up to
2,847,075 shares of common stock. This includes the 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
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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 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
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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 453,750, all of which are being offered
under this prospectus. The maximum number includes any shares that may be issued
in 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 $9.60 per share.
However, if HMG does not satisfy both the revenue and pre-tax earnings,
components of a maintenance criterion, the conversion price per share will be
between $4.00 and $9.60. In that case, the conversion price will be determined,
subject to the maximum and minimum set forth above, based on the average of the
two lowest last reported bid prices for the common stock on Nasdaq SmallCap
Market during the 30 trading days preceding, but excluding, the date of
conversion. The minimum level of the maintenance criteria for the quarter ended
March 31, 2000 was $22,000,000 in revenue and $600,000 in pre-tax earnings.
If HMG does not meet the required revenue and pre-tax earnings targets,
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 between $4.00 and $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
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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 453,750 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.
In February 2000, the selling stockholder converted $1.0 million of its
previously acquired convertible notes and received 266,675 shares. 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 table does not reflect the limitations
on conversion of the convertible notes described in the two paragraphs
immediately following the table.
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK OWNED
OWNED COMMON STOCK AFTER OFFERING
------------------- ---------------- -----------------------
BEFORE OFFERING OFFERED NUMBER PERCENT
------------------- ---------------- ------ -------
<S> <C> <C> <C> <C>
Societe Generale 1,915,075 453,750 1,461,325 4.9%
</TABLE>
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.
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;
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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 holds 266,675 shares of our common stock
and $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;
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;
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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.
13
<PAGE>
To comply with the securities laws of some states, the shares of common
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.
14
<PAGE>
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.
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;
15
<PAGE>
(c) 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.
16
<PAGE>
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:
<TABLE>
<S> <C>
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
=======
</TABLE>
- -------------
*Estimated
Item 15. Indemnification of Directors and Officers.
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)
II-1
<PAGE>
- -----------------------
* Filed with the Company's Registration Statement on Form S-2 (File No.
33-26153), and hereby incorporated 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.
II-2
<PAGE>
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 May 15, 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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Michael Wahl
- ---------------------------- Chairman of the Board, May 15, 2000
MICHAEL WAHL and Director
/s/ Andrew Wahl
- ---------------------------- Chief Executive Officer May 15, 2000
ANDREW WAHL and Director
/s/ Robert V. Cuddihy, Jr.,
- ---------------------------- Executive Vice President, May 15, 2000
ROBERT V. CUDDIHY, JR. Principal Accounting and
Chief Financial Officer
and Chief Information
Officer and Director
/s/ L. Randy Riley
- ---------------------------- President, Chief Operating May 15, 2000
L. RANDY RILEY Officer and Director
/s/ Herbert F. Kozlov
- ---------------------------- Director May 15, 2000
HERBERT F. KOZLOV
</TABLE>
II-3
<PAGE>
EXHIBIT 5.01
May 15, 2000
HMG Worldwide Corporation
475 Tenth Avenue
New York, New York 10018
Re: Registration Statement on Form S-3 under the Securities Act of 1933
Ladies and Gentlemen:
In our capacity as counsel to HMG Worldwide Corporation (the "Company",
a Delaware corporation), we have been asked to render this opinion in connection
with a Registration Statement on Form S-3, being filed contemporaneously
herewith by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"), covering an
aggregate of 453,750 shares (the "Shares") of Common Stock (the "Common Stock"),
$0.01 par value per share, which have been included in the Registration
Statement for the account of a certain person identified in the Registration
Statement as the Selling Stockholder.
The Shares represent shares of Common Stock that are issuable upon
conversion of certain convertible note(s) (the "Notes"), each issued to the
Selling Stockholder by the Company.
In that connection, we have examined the Notes, the Certificate of
Incorporation and the By-Laws of the Company, both as amended to date, the
Registration Statement, corporate proceedings of the Company relating to the
issuance of the Common Stock and such other instruments and documents as we have
deemed relevant under the circumstances.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
us as original or photostatic copies. We have also assumed that the corporate
records furnished to us by the Company include all corporate proceedings taken
by the Company to date in connection with the issuance of the Notes and the
Shares.
<PAGE>
HMG Worldwide Corporation
May 15, 2000
Page 2
Based upon and subject to the foregoing, we are of the opinion that:
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(2) The Shares, when duly issued upon conversion of the Notes, will be
duly and validly authorized and fully paid and non-assessable.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
PARKER DURYEE ROSOFF & HAFT
a Professional Corporation
By: /s/ Edward Turney Savage
--------------------------------------
A Member of the Firm
<PAGE>
Exhibit 23.01
Consent of Independent Auditors
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 24, 1999 which appears in the
annual report on Form 10-K of HMG Worldwide Corporation and Subsidiaries for the
year ended December 31, 1999 and to the reference to our firm under the caption
"Experts" in the Prospectus.
Friedman Alpren & Green LLP
New York, New York
May 15, 2000
