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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 1999
REGISTRATION NO. 333-70021
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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HEALTHY PLANET PRODUCTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 2271 94-260176
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(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION (I.R.S. EMPLOYER
CODE NUMBER) IDENTIFICATION NO.)
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1700 CORPORATE CIRCLE
PETALUMA, CALIFORNIA 94954
(707) 778-2280
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
BRUCE A. WILSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1700 CORPORATE CIRCLE
PETALUMA, CALIFORNIA 94954
(707) 778-2280
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPY TO:
CHARLES P. AXELROD, ESQ.
CAMHY KARLINSKY & STEIN LLP
1740 BROADWAY, 16TH FLOOR, NEW YORK, NEW YORK 10019-4315
(212) 977-6600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
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If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than the 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 earliest
effective registration statement for the same offering: [ ]
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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 number of the earlier effective registration statement for the same
offering: [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
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PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITY TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
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Rights to Purchase Common Stock.................... 4,627,406 -- -- -- (1)
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Common Stock, $0.01 par value(2)................... 4,627,406 $1.0625(3) $4,916,619 $1,366.82
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Total.............................................. 4,627,406 $1.0625 $4,916,619 $1,366.82
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The company previously paid $884.41 in connection with the initial filing.
An additional fee in the amount of $482.41 is due, with respect to which the
company has sufficient restricted funds on deposit.
(1) In connection with this Rights Offering, each Common Stockholder and each
Series D Convertible Preferred Stockholder of record as of the Record Date
is entitled to two Rights for each share of Common Stock, or Series D
Convertible Preferred Stock, owned as of such Record Date. The Rights are
not transferable and are not assignable, and accordingly, no value is
ascribed thereto for Registration Fee purposes. Therefore, no Registration
Fee is required.
(2) Each Right entitles a stockholder to purchase one share of common stock at a
Subscription Price of $1.0625 per share, which Subscription Price is
estimated for the purpose of this Registration Statement and the calculation
of the Registration Fee. The number of shares of Common Stock is based upon
2,282,368 shares of outstanding Common Stock and 31,335 share of outstanding
Series D Convertible Preferred Stock, convertible into Common Stock on a one
to one basis.
(3) The Subscription Price is $ 5/16 above the closing price for the company's
common stock as reported by the American Stock Exchange on February 11,
1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION ACTING PURSUANT
TO SECTION 8(a) MAY DETERMINE.
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PROSPECTUS SUBJECT TO COMPLETION FEBRUARY 16, 1999
THE RIGHTS OFFERING
This investment involves a high degree of risk. You should purchase only if you
can afford a complete loss. See "Risk Factors" beginning on page 5 of the
prospectus.
This offering entitles our holders of record of our common stock and our series
D convertible preferred stock on January 11, 1999 to the following:
- - Two rights for each share of common stock or series D preferred stock you hold
of record on January 11, 1999
- - Each right entitles you to purchase one share of our common stock at $1.0625
per share. This means that for each 100 shares you subscribe for you will pay
$106.25.
- - If you exercise all your basic rights, you can elect to subscribe for
additional rights, if available, which will entitle you to purchase up to the
number of shares you subscribed for under your basic rights, at $1.0625 per
share.
- - Your rights are exercisable commencing on February 22, 1999, and continuing
until 5:00 p.m., New York time on March 15, 1999
- - The rights are not transferable and are not assignable; they will not be
listed for trading on any stock exchange or the NASDAQ Stock Market.
4,627,406 SHARES OF
COMMON STOCK
HEALTHY PLANET PRODUCTS, INC.
Our common stock is listed on the American Stock Exchange under the symbol
"HPP". On February 11, 1999, the closing price for the shares of our common
stock as reported by the American Stock Exchange was $.75 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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PER SHARE TOTAL
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Subscription Price......... $1.0625 $4,916,619
</TABLE>
In the table above, the numbers quoted in the "Total" column do not reflect
deductions for estimated expenses of this rights offering of approximately
$180,000. We will receive gross proceeds of not less than $984,938 based upon a
commitment by affiliates.
THE DATE OF THIS PROSPECTUS IS
FEBRUARY 16, 1999
THE INFORMATION CONTAINED 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 WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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[THIS PAGE INTENTIONALLY LEFT BLANK]
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PROSPECTUS SUMMARY
Because this is a summary of the terms of the rights offering, it does not
contain all the information that may be important to you. This prospectus
contains forward-looking statements. You should read the following summary, and
the "Risk Factors" section, along with the more detailed information and
Financial Statements and the notes to the Financial Statements appearing
elsewhere in this prospectus or incorporated by reference in this prospectus,
before you decide whether to participate in this rights offering.
ABOUT HEALTHY PLANET
OUR BUSINESS
We design, publish and market, predominantly throughout the United States, a
diversified line of cause related, nature and wildlife contemporary greeting
cards, note cards, holiday cards, stationery, collectibles and gifts. We publish
and market over 500 everyday and seasonal cards, including over 300 images which
comprise our principal Sierra Club card line. Our products are marketed
predominantly through approximately 130 independent sales representatives to
over 4,900 retail sales outlets comprised of card shops, stationary stores,
gift, notion and variety shops, drug stores, book stores, department stores and
miscellaneous chain and retail sales outlets. We also license the right to use
the Healthy Planet Products name, trademark and art work in connection with the
manufacture, sale and distribution of our products in certain foreign countries.
OUR HISTORY
We were originally organized under the laws of the state of California on July
12, 1979 under the name Carolyn Bean Publishing, Ltd. On April 25, 1985, we
reincorporated under the laws of the state of Delaware. The California corporate
entity was merged into a new Delaware corporation of the same name. On August 2,
1993, we changed our name to Healthy Planet Products, Inc. Our executive offices
and warehouse facilities are located at 1700 Corporate Circle, Petaluma,
California 94954, and our telephone number is (707) 778-2280, fax number (707)
778-0307.
SUMMARY OF THE TERMS OF THE RIGHTS OFFERING
Securities we are offering...... - We will be offering up to a maximum of
4,627,406 shares of our common stock, par
value $.01 per share, that will be
available on exercise of the rights we
will be distributing to our holders of
common stock and series D preferred
stock.
- You will receive two basic rights for
each share of our common stock, or series
D convertible preferred stock, that you
held of record at the close of business
on January 11, 1999.
What your basic right entitles
you to........................ - Each basic right entitles you to purchase
one share of our common stock at $1.0625
per share.
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What your oversubscription right
entitles you to............... - If you exercise all of your basic rights,
you are entitled to oversubscribe for
additional rights, which will entitle you
to purchase up to the number of shares of
common stock you were entitled to
subscribe for under your basic rights.
- The price you will pay to exercise your
oversubscription rights is $1.0625 per
share, the same as the exercise price for
your basic rights.
- If there are an insufficient number of
unpurchased shares of common stock to
fill all oversubscriptions, then the
available shares of common stock will be
allotted pro rata among the
oversubscribers based on the numbers of
shares for which they oversubscribe.
Record date to be eligible to
receive rights.................. The close of business on January 11, 1999.
Certificates representing the
rights.......................... Your rights will be evidenced by
non-transferable, non-assignable rights
certificates. They may only be exercised by
you.
Expiration date of the rights... - 5:00 p.m., New York time, on March 15,
1999.
- We may extend this period at our sole
discretion for a period of up to 30 days.
- The offering period is the period from
the date of mailing of the rights
certificates to and including the
expiration date of the rights. We
anticipate that we will mail your rights
certificates on or about February 22,
1999.
Our rights agent................ Our rights agent is American Stock Transfer
and Trust Company, 40 Wall Street, New
York, New York 10007. Telephone,
212-936-5100.
Method of exercising your
rights.......................... To exercise your basic rights, and to
subscribe for oversubscription rights, you
must complete your rights certificate, and
mail, or hand deliver it, along with your
payment, so that it is received by our
rights agent on or before 5:00 p.m. New
York time on date the rights expire. Your
payment must accompany the rights
certificate.
Payment for the shares of common
stock purchased............... Payment for the shares of common stock
purchased through the exercise of your
basic rights and oversubscription rights
may be made by check, subject to
collection, bank check or money order
payable to the order of "Healthy Planet
Products, Inc." Payment for basic rights
and oversubscription rights may also be
effected
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through wire transfer as follows: Chase
Manhattan Bank, ABA Routing Number
021000021, Account Number 323005225. If you
are a holder of our common stock registered
in the name of a broker, dealer, commercial
bank, trust company or nominee, we urge you
to contact your registered holder promptly
if you wish to subscribe.
Commitment by affiliates........ One of our directors, who is also a
principal stockholder, and two companies
which he controls which are also our
stockholders, have agreed with us to
exercise all of their respective basic
rights to purchase 927,000 shares of our
common stock.
While this rights offering is being made to
you directly by us, the director of the
company and the two companies which he
controls, and who have committed to
exercise all their basic rights, may
ultimately be deemed to be underwriters in
connection with this rights offering for
purposes of the federal securities laws.
Shares of our common stock
outstanding prior to this
offering...................... 2,282,368 shares of common stock are
currently outstanding. Please note that
this number does not include:
- 465,000 shares of common stock reserved
for issuance under our senior management
incentive plan;
- 85,000 shares of common stock reserved
for issuance under our non-employee
director stock option plan;
- 360,000 shares of common stock reserved
for issuance upon exercise of certain
previously issued warrants;
- 250,000 shares of common stock reserved
for issuance upon exercise of certain
warrants to be issued in connection with
this rights offering; and
- 31,335 shares of common stock issuable
upon exercise of 31,335 shares of series
D convertible preferred stock.
Shares of our common stock that
will be outstanding after this
offering...................... 6,941,109 shares of common stock will be
outstanding after this offering if all
rights are exercised, or 3,240,703 shares
if only our director and the companies he
controls exercise their basic rights. The
actual number of shares of common stock to
be outstanding will depend upon the number
of basic rights exercised and the number of
shares of common stock purchased pursuant
to the oversubscription rights.
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RISK FACTORS
Investment in the shares of our common stock issuable upon exercise of the
rights involves a high degree of risk. You should give careful consideration to
the following factors, among others, before making an investment decision.
We have experienced operating losses in the past and we may continue to sustain
operating losses in the future.
For the fiscal year ended December 31, 1997, we experienced net operating losses
of $1,103,600, as compared to $119,800 of net operating income for the fiscal
year ended December 31, 1996. For the nine months ended September 30, 1998 and
1997, respectively, we experienced net operating losses of $2,132,257, and
$463,778. We expect that we will continue to experience losses in 1999 and
possibly beyond.
We have experienced decreased sales in the past and we may continue to sustain
decreased sales in the future.
We also experienced a decline in net sales from $4,632,400 for the year ended
December 31, 1996, to $4,099,600 for the year ended December 31, 1997, and from
$3,138,656 for the nine months ended September 30, 1997 to $2,751,652 for the
nine months ended September 30, 1998. We cannot be assured that the declining
trend in net sales will cease, or that it can be reversed by the introduction of
new product lines, or other efforts by us to increase sales. If the decline in
sales is not reversed, we are unlikely to earn a profit in the foreseeable
future.
We may take additional inventory reserves, which would adversely affect our
operating results.
For the nine months ended September 30, 1998, we recorded a reserve for
inventory that is no longer current or which is slow moving inventory of
$665,000. This inventory was the result of our ordering higher card production
runs in an effort to obtain quantity discounts from suppliers and thereby
increase our margins. We are currently considering whether an additional
inventory reserve for the last quarter of 1998 is appropriate. If an additional
reserve is recorded for the quarter, the full year operating loss and net loss
of the company for 1998 will be increased. We will continue to monitor on a
quarterly basis in 1999 and beyond whether inventory reserves may be necessary
in future periods. For additional information concerning our inventory reserves,
see our quarterly report on Form 10-QSB/A1 for the fiscal quarter ended
September 30, 1998, which has been incorporated by reference in this prospectus,
and the discussion of gross profit contained in Item 2 of this report, entitled
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations".
Fluctuations in consumer demand or preferences for particular types of cards may
effect our greeting card business.
The success of our card business is heavily dependent upon consumer demand and
preferences. Fluctuations in consumer demand or a change in consumer preference
for the types of cards we market may affect our profitability. Significant
changes or drops in consumer demand, whether caused by changes in consumer taste
for products with a nature or wild life theme, a decline in the general retail
environment, or a decline in general economic conditions, may result in our
inability to maintain sales of our principal Sierra Club card line and other
card lines. In addition, consumer demand may be effected by a decline in support
for a cause which we promote through one of our cards.
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Our collectible and figurine business is heavily dependent on consumer demand,
and fluctuations in demand for these products may effect our business.
The success of our newly acquired collectible and figurine line of business is
also heavily dependent upon consumer demand. Significant changes or drops in
consumer demand will affect our ability to successfully market this line of
business. In addition, our ability to enhance and expand our product mix and to
successfully introduce new products for this line of business which will meet
with consumer acceptance may also affect future results.
Changes in our customer purchasing plans has had, and may continue to have, a
material adverse effect on our revenues.
In September 1997, Barnes & Noble Superstores, a national chain of bookstores
which accounted for approximately 13.9% our net sales for the year ended
December 31, 1997, discontinued carrying our everyday card line. This change has
had a material adverse effect on our revenues compared to prior periods and, to
date, we have been unable to replace the lost sales, which has contributed to
our recent losses. We were advised by Barnes & Noble that this change was
prompted by its decision to centralize purchasing of greeting cards from one
central vendor, and was not attributable to any dissatisfaction with the quality
or appeal of our products. Although we have no knowledge that other retail
chains which purchase cards or other products from us have or will adopt a
similar approach to their purchases, this possibility exists and, if it occurs,
could have a further adverse effect on sales.
The subscription price for our shares of common stock is at a premium to the
current market price of our common stock; it has not been determined in
connection with our net worth, book value or any other financial measure. Prices
for our common stock after this rights offering may not necessarily be in excess
of the subscription price.
The subscription price of $1 1/16 for our shares of common stock is at a $ 5/16
premium to the closing price of $.75 for our common stock on February 11, 1999.
The subscription price was determined without regard to our present net worth,
book value or any other financial measure. There can be no assurance that our
common stock will trade at prices in excess of the subscription price at any
time after the date of this prospectus. You may be able to purchase our common
stock in open market transactions at prices below the subscription price.
If you do not exercise your rights, then your ownership interest in our company
may be substantially diluted.
We are registering up to 4,627,406 shares of common stock to cover exercise of
the rights. If you choose not to exercise your rights, your relative ownership
interests will be diluted by the issuance of shares of common stock to those
stockholders who do exercise their rights. You always have the right to seek to
purchase shares of our common stock in open market transactions at prices which
may be lower than the subscription price.
If our stockholders, other than our affiliates who have agreed to exercise all
their rights, fail to exercise their rights, our affiliates will have the
ability to influence our affairs.
At the conclusion of this rights offering, assuming no other participation in
the rights offering by other stockholders, John V. Winfield, a director and
principal stockholder of the company, as well as the InterGroup Corporation, a
company controlled by Mr. Winfield and Santa Fe Financial Corporation, a
subsidiary of InterGroup, will, at a minimum, own 502,800, 826,800 and 60,900
shares of our common stock, respectively, or
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1,390,500 shares of common stock in the aggregate. This aggregate number equals
approximately 42.9% of our issued and outstanding common stock.
They will also have the right to acquire up to an additional 641,867 shares of
our common stock through the exercise of warrants and options they currently own
and will receive in connection with this offering. After giving effect to the
shares that Mr. Winfield, InterGroup and Santa Fe can acquire through warrants
and options, they will beneficially own an aggregate of 2,032,367 shares of our
common stock, or approximately 52.3% of our company. They will therefore have
the potential to elect all of our directors, and to control our business and
policies.
The following chart details the current collective ownership of Mr. Winfield,
InterGroup and Santa Fe and their ownership as a result of the exercise of all
of their basic rights. For additional information regarding their ownership,
please see "Principal Stockholders," and the paragraphs following this table.
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BENEFICIAL OWNERSHIP AND
PERCENTAGE ON EXERCISE OF
ALL BASIC RIGHTS BY
WINFIELD AND HIS AFFILIATES.
BENEFICIAL OWNERSHIP AND THIS TABLE ASSUMES NO
PERCENTAGE OTHER SHAREHOLDER
BEFORE OFFERING PARTICIPATION IN THE RIGHTS.
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NUMBER OF NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE
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John Winfield,.......... 773,500 29.5% 2,032,367 52.3%
InterGroup and
Santa Fe
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Mr. Winfield is currently the owner of 167,600 shares of our common stock,
warrants to purchase an aggregate of 150,000 shares of our common stock at
prices ranging from $4.00 to $4.50, and director options to purchase 10,000
shares at exercise prices ranging from $1.50 to $3.40. InterGroup owns 275,600
shares of our common stock and also owns warrants to purchase common stock with
respect to an aggregate of 150,000 shares of our common stock, at prices ranging
from $4.00 to $4.50 per share. These warrants are exercisable commencing
September 29, 1997 and may be exercised through September 29, 2002. These
warrants contain anti-dilution provisions which will be triggered by this rights
offering. Santa Fe owns 20,300 shares of our common stock.
We are issuing warrants to our affiliates to purchase an aggregate of 250,000
shares of our common stock, in consideration of their commitment to exercise all
of their respective basic rights, which may result in additional dilution.
Mr. Winfield, InterGroup and Santa Fe have agreed to exercise all of their
respective basic rights. In exchange for this commitment, Mr. Winfield,
InterGroup and Santa Fe are being issued additional warrants to purchase an
aggregate of 250,000 shares of our Common Stock, to be distributed to each one,
pro rata according to their ownership percentage before this rights offering, as
follows: 90,399 to Mr. Winfield, 148,652 to InterGroup and 10,949 to Santa Fe.
We are not offering these warrants to any other stockholders to induce exercise
of their basic rights. The issuance of these warrants may result in additional
dilution to existing stockholders.
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We are heavily dependent on a license from the Sierra Club. If we lose the
Sierra Club license, we may experience a material adverse effect on our
businesses.
The Sierra Club, since June 4, 1980, has licensed us to use its name on an
exclusive worldwide basis on a line of greeting, note and seasonal cards as well
as stationery products, tablets and magnets. The loss of the Sierra Club line
would have a negative affect upon our business until such time as we develop
other lines having similar name recognition and consumer acceptance as the
Sierra Club line. The Sierra Club license continues through December 31, 2005.
Our Sierra Club line represented approximately 70.5% of our sales for the year
ended December 31, 1997 and 61.9% for the nine months ended September 30, 1998.
We incur a build up of accounts receivable in the third and fourth quarters and
increased capital carrying costs due to seasonal sales fluctuations, which may
cause a shortage of working capital.
The greeting card, social stationery, gift and figurine industries are
historically effected by seasonal sales, primarily due to the emphasis on
Christmas and holiday products. These effects generally include peak seasonal
production costs in the second and third quarters of the year, and a seasonal
buildup of accounts receivable in the third and fourth quarters, thereby
resulting in an increase in capital carrying costs during these periods. This
seasonality requires us to apply our working capital to either carry accounts
receivable during the last two quarters of the year, or to cover production
costs during peak production periods. Since we remain dependent upon our
internal cash resources to provide necessary working capital, this may result in
a shortage of working capital during certain periods of the year. During 1998,
seasonal effects on our business resulted in approximately 53% of our sales
being made in the third and fourth quarters. During fiscal year 1998,
approximately 16% of total annual sales were in accounts receivable as of
December 31, 1998, and are not collectible until the first quarter of 1999.
Approximately 63% of the cost of manufacturing inventory was incurred in the
second and third quarters of the 1998 year. In addition, if we experience a
material increase in sales of our present card lines, we may not have sufficient
cash resources with which to carry any significant and material increase in
accounts receivable. No assurance may be given that such additional capital, if
required, will be available to us in the future.
The consolidation of retailers generally has caused increased competition and
has had, and may continue to have, a material effect on our revenues.
We believe that the recent consolidation of the retail industry has decreased
shelf space for our card and collectible product lines. Consequently, we are
competing with both alternative and traditional card companies for less shelf
space. This has curtailed our products' visibility and consequently has had an
adverse effect on our revenues. This adverse effect may continue in the future.
Because we compete with card companies with greater resources than us, we are at
a competitive disadvantage. This competition may affect our ability to grow and
our revenues.
Our ability to grow and increase our revenues is affected by our competition.
Our primary competition is with alternative card companies, several of which
have sales and resources greater than those we have; e.g., Recycled Paper
Products, Paramount and Sunrise Publications, among others. We also compete with
major traditional card companies, such as Hallmark Cards, Inc., American
Greetings Corporation, and Gibson Greetings, Inc, all of which have
significantly greater financial resources, market penetration and experience
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than we have. Many of our competitors are able to offer a greater number of
linear feet of card product than we are able to do and receive more prominent
display space in retail outlets because of the depth and breadth of their card
lines. Similar competitive considerations apply to our collectibles line where
we compete with other companies with greater financial resources, market
penetration and experience than we have.
We do not maintain long term contracts with our principal suppliers, which could
make production costs unpredictable.
We do not manufacture our own products, nor do we have the equipment to do so.
Rather, we contract for the physical production of our products with independent
contractors, using different suppliers at each stage of production, so as not to
rely on any one specific supplier to satisfy our needs. However, we do not
maintain long term contracts with our principal suppliers. Consequently our
production costs could escalate without significant advance notice, in which
case our financial condition and results of operations could be adversely
affected. We believe that there are ample suppliers and production facilities
available to us at competitive costs. We also believe that other necessary
contractors and suppliers are readily available at competitive costs.
The failure of our key suppliers and customers to be Year 2000 compliant may
negatively affect our business.
Year 2000 compliance is a measure of the ability of computer hardware and
software to differentiate between the years 1900-1999 and the years 2000-2099.
The underlying problem is caused by the fact that computer programs
traditionally have been written using two digits rather than four to store year
information. Failure to address this problem could result in system failures and
the generation of erroneous data. Moreover, there are a number of software and
product design approaches to achieving Year 2000 compliance, and we may incur
additional costs in maintaining system compatibility with third party suppliers
and customers as a result of any Year 2000 compliance modifications.
We have reviewed our internal computer programs and systems to ensure that they
will be Year 2000 compliant. While we believe that our current systems are
compliant and that no additional material expenditures are required to address
Year 2000 compliance of our internal computer systems, there can be no assurance
to that effect. In addition, we cannot predict the effect of the Year 2000
problem on the vendors, customers and other entities with which we transact
business and there can be no assurance that the effect of the Year 2000 problem
on such entities will not have a material adverse effect on our business,
financial condition and results of operations.
There has been limited trading in our common stock. The issuance of additional
shares as a result of this offering may have an adverse effect on the market
price of our common stock.
For the twelve months ended December 31, 1998, the average monthly trading
volume in our common stock was approximately 497,000 shares. Consequently, sales
of substantial amounts of our common stock in the public market could adversely
affect the market price of our common stock. Immediately before the distribution
of the rights, there will be approximately 1,766,868 shares of our common stock
freely tradeable in the public market without restriction. In addition, up to
4,627,406 shares may be issued in this rights offering, which shares will be
freely tradeable upon issuance, other than those issued to affiliates.
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A portion of our shares are restricted securities but they will become eligible
for resale in the future. As these shares become eligible for resale in the open
market, their sale may have a depressive effect on the price of our common
stock.
Of the 2,282,368 shares of issued and outstanding common stock, 557,787 shares
have not been registered under the federal securities laws. The possibility of
resale of these restricted securities in the open market may have a depressive
effect on the price of our common stock. Unless registered for resale under the
Securities Act of 1933, as amended, these shares may only be sold in the public
market to the extent permitted under Rule 144 under the general rules and
regulations of the Securities Act of 1933, as amended. Rule 144 provides that a
person holding restricted securities for a period of one year may sell in
brokerage transactions an amount equal to the greater of 1% of our outstanding
common stock every three months or the average weekly trading volume, if any,
during the four calendar weeks preceding the sale. A person who is not an
affiliate of the company and who has owned restricted securities for over two
years is not subject to the volume limitation as long as the other conditions of
the rule are met. As of the date hereof, all restricted shares are eligible to
be presently sold under Rule 144. In addition, 31,335 shares of our common stock
issuable on conversion of our series D preferred stock will be eligible for
resale under Rule 144.
We have not paid dividends in the past and do not expect to in the future.
We have not paid cash dividends on our common stock and we do not expect to pay
any dividends in the foreseeable future.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read, or copy
any document we file at the Public Reference Room maintained by the SEC at 450
Fifth Street, NW, Washington, DC 20549, and at the following Regional Offices of
the Commission: New York Regional Office, Seven World Trade Center, Suite 1300,
New York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov. Our common stock is listed on the American Stock Exchange,
and reports, proxy and information statements and other information concerning
us is available for inspection at the offices of the American Stock Exchange
located at 86 Trinity Place, New York, New York 10006.
9
<PAGE> 13
If you are a stockholder, you may request a copy of these filings, at no cost,
by writing or telephoning us at the following address:
Healthy Planet Products, Inc.,
700 Corporate Circle,
Petaluma, California 94954
(707) 778-2280.
The SEC allows us to "incorporate by reference" the information we have filed
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. This prospectus is part of
registration statement number 333-70021 which we filed with the SEC. We
incorporate by reference the documents listed below.
(a) Our Annual Report on Form 10-KSB for the year ended December 31, 1997, our
Form 10-KSB/A1 for the year ended December 31, 1997; our Form 10-KSB/A2 for
the year ended December 31, 1997; and our Form 10-KSB/A3 for the year ended
December 31, 1997.
(b) Our definitive Proxy Statement/Annual Report dated June 23, 1998, in
connection with the Annual Meeting of our Stockholders held on August 5,
1998;
(c) Our Form 8-K, dated April 6, 1998, filed in connection with the resignation
of Robert Fagenson as a Director;
(d) Our Form 10-QSB for the fiscal quarter ended March 31, 1998 and our Form
10-QSB/A1 for the quarter ended March 31, 1998;
(e) Our Form 8-K, dated June 16, 1998, filed in connection with the resignation
of Joseph Furlong as a Director;
(f) Our Form 8-K, dated June 23, 1998, filed in connection with the election of
Michael G. Zybala as a Director;
(g) Our Form 10-QSB for the fiscal quarter ended June 30, 1998; and our Form
10-QSB/A1 for the fiscal quarter ended June 30, 1998;
(h) Our Form 10-QSB for the fiscal quarter ended September 30, 1998; and our
Form 10-QSB/A1 for the fiscal quarter ended September 30, 1998; and
(i) All other reports and other documents filed by us pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended, since September
30, 1998.
Any financial statements and schedules hereafter incorporated in this prospectus
that have been audited and are the subject of a report by independent
accountants will be incorporated in reliance on such reports and on the
authority of such firm as experts in accounting and auditing to the extent
covered by consents filed with the SEC.
ADDITIONAL INFORMATION
You should rely only on the information provided in this document or other
information that we have referred you to. We have not authorized anyone to
provide you with information that is different. This prospectus and this rights
offering do not constitute an offer or solicitation by anyone in any
jurisdiction in which an offer or solicitation would be unlawful.
10
<PAGE> 14
American Stock Transfer & Trust Company, our transfer agent and Registrar, has
agreed to serve as our rights agent in connection with the rights offering. If
you require assistance please contact our rights agent at 40 Wall Street, New
York, New York 10005, telephone, 212-936-5100, or Bruce Wilson, our chief
executive officer, at our executive offices, located at 1700 Corporate Circle,
Petaluma, California, 94954, telephone (707)-778-2280.
Certain statements in this prospectus constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. We
believe that the forward looking statements contained in this prospectus are
within the meaning of the safe harbor provided by section 27A of the Securities
Act of 1933, as amended. Forward-looking statements contained in this prospectus
and the other documents incorporated by reference, involve known and unknown
risks, uncertainties, and other factors which could cause our actual results,
financial or operating performance or achievements to differ from the future
results, financial or operating performance or achievements expressed or implied
by such forward looking statements.
USE OF PROCEEDS
We will receive a minimum of $804,938 from this rights offering, after estimated
expenses of $180,000. The minimum is guaranteed because of the commitment on the
part of one of our directors, who is a principal stockholder, and two companies
he controls, to exercise all of their respective basic rights for an aggregate
purchase price of $984,938. We are not sure of the amount of additional
proceeds, if any, that we will receive from the exercise of basic rights and/or
oversubscription rights by any other stockholder, but if all stockholders
participate in the rights offering, the total maximum amount of proceeds are
estimated to be $4,736,619, after estimated expenses of $180,000. Our use of
these proceeds, described below, will be the same, regardless of whether we
raise the minimum or the maximum amounts referred to above.
We intend to use these proceeds for general working capital purposes including,
but not limited to:
- internal carrying of accounts receivable, without need for lines of
credit;
- regular operating expenses; and
- to establish an available cash fund for the development or acquisition of
new and additional product lines or businesses that would complement or
benefit our business.
We are not currently engaged in, nor are we currently contemplating, potential
acquisitions.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and do
not anticipate paying cash dividends on our capital stock in the foreseeable
future.
11
<PAGE> 15
THE RIGHTS OFFERING
THE RIGHTS YOU WILL RECEIVE:
BASIC SUBSCRIPTION RIGHTS
You will receive two basic subscription rights for each share of our common
stock or series D convertible preferred stock that you held of record at the
close of business on January 11, 1999. For each right you receive, you may
purchase one share of our common stock at $1.0625 per share. This means that for
each 100 shares that you subscribe for you will pay $106.25. Your rights will be
evidenced by non-transferable rights certificates which are expected to be
mailed within five business days following the effective date of this
registration statement. To exercise a basic right, the reverse side of your
rights certificate must be properly completed and received by our rights agent,
in accordance with the procedure described below under "Method of Exercising
Rights". Payment for the shares of common stock must accompany the rights
certificate.
OVERSUBSCRIPTION RIGHTS
If you exercise all of your basic rights, you will also be eligible for
oversubscription rights, which will entitle you to purchase, at $1.0625 per
share, up to the number shares of common stock you were entitled to subscribe
for under your basic rights. The maximum number of shares which may be purchased
pursuant to the exercise of all basic rights and oversubscription rights by all
stockholders may not exceed 4,627,406.
We will not allocate shares of common stock for oversubscription rights until we
have filled all subscriptions for basic rights. We may accept or reject
oversubscriptions at our sole discretion. All subscriptions pursuant to the
exercise of oversubscription rights will be fulfilled out of the shares of
common stock not required to satisfy the basic rights which are exercised. If
the shares of common stock are not sufficient to satisfy all subscriptions
pursuant to the oversubscription rights, the available shares of common stock
will be allotted pro rata among those of you who exercised the oversubscription
rights, based on the number of shares for which each of you oversubscribed.
To exercise this oversubscription right, you must also properly complete the
portion of the exercise form on the reverse side of the rights certificate
relating to the oversubscription rights simultaneously with completion of the
portion of the form applicable to exercise of basic rights. Payment for
oversubscription shares should be included with the payment for basic shares and
should accompany the rights certificate.
You may only subscribe for full shares. Once you have exercised a basic right or
an oversubscription right, the exercise is irrevocable.
THE OFFERING PERIOD
The basic rights will be exercisable during the period commencing upon the date
of mailing of the rights certificates, and expiring at 5:00 p.m., New York time,
on March 15, 1999. We anticipate that the rights certificates will be mailed on
or about February 22, 1999. We may extend the date the rights expire in our sole
discretion, for a period of up to 30 days, by giving notice of such extension to
the rights agent at any time before 5:00 p.m. on the then existing expiration
date and issuing a press release to that effect by no later than 10:00 a.m. on
the following business day. Unless exercised before this expiration date, the
rights will automatically terminate. The unexercised rights and all rights
certificates relating to the rights will be void and have no value.
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<PAGE> 16
NON-TRANSFERABILITY OF RIGHTS
Both the basic rights and the oversubscription rights are non-transferrable and
non-assignable. Only you may exercise such rights.
METHOD OF OFFERING
The offering described in this prospectus will be made directly by us. We have
not engaged any underwriters, brokers, dealers or other agents to participate in
this offering or to solicit any exercise of the rights or sales of the shares of
common stock. We will pay no commission, finder's fees or other remuneration to
any person in connection with any sales of the shares of common stock.
RIGHTS AGENT
Our rights agent is American Stock Transfer & Trust Company, New York, New York.
American Stock Transfer & Trust Company is also the transfer agent for shares of
our common stock.
METHOD OF EXERCISING RIGHTS
To exercise your rights, you should complete and sign your rights certificate
and mail or hand deliver it, together with your payment for the shares of common
stock subscribed for by exercising your basic rights and, if desired, your
oversubscription rights, to our rights agent. The certificate and your payment
should arrive no later than 5:00 p.m. New York time, on the expiration date of
the rights. All subscriptions received after the expiration date will not be
honored.
Please note that the method of delivery of the right certificate and check or
checks is at your own risk. We suggest insured registered mail, return receipt
requested, if the mails are used. Rights certificates and payments may be mailed
or delivered to:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10007
Attn: Securities Transfer Department
(212) 936-5100
Please read the instructions accompanying the rights certificate carefully and
follow them in detail. Do not send rights certificates or payments directly to
us at the company.
We are not, nor is our rights agent, under any duty to give notification of any
defects or irregularities in your subscriptions, nor shall we or our rights
agent incur any liability for failure to give such notification.
PAYMENT FOR SHARES OF OUR COMMON STOCK ON EXERCISE OF YOUR RIGHTS
Payment for the shares of common stock purchased pursuant to the exercise of
your basic rights and oversubscription rights may be made by check, subject to
collection, bank check or money order payable to the order of "Healthy Planet
Products, Inc." Payment for basic rights and oversubscription rights may also be
effected through wire transfer as follows: Chase Manhattan Bank, ABA Routing
Number 021000021, Account Number 323005225. If you are a holder of our common
stock registered in the name of a broker, dealer, commercial bank, trust company
or nominee, we urge you to contact such registered holder promptly if you wish
to subscribe.
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<PAGE> 17
Our rights agent will hold in escrow amounts paid in respect of the exercise of
oversubscription rights until this offering is terminated and the number of
available shares of common stock is determined. As soon as practicable after the
expiration date, the rights agent will refund without interest any subscriptions
or oversubscriptions not accepted. We are not required to issue any certificates
or refunds to a subscriber until the check or checks of such subscriber have
cleared and the funds have been collected.
All questions as to the validity, form, eligibility, including time of receipt,
and acceptance of any subscription or oversubscription, will be determined by
us, in our sole discretion. Our determination will be final and binding. We
reserve the absolute right to reject any subscription, if such subscription is
not in proper form or if the acceptance thereof or the issuance of shares
pursuant thereto could be deemed unlawful or is otherwise not permitted under
the terms of this offering. We also reserve the right to waive any defect with
regard to any particular subscription.
DELIVERY OF CERTIFICATES
Certificates for shares of common stock subscribed for pursuant to the basic
rights will be delivered to you as soon as practicable after receipt by the
rights agent of your duly completed and exercised rights certificate and payment
in full for the shares of common stock pursuant to the basic rights. As soon as
practicable after the expiration date of the rights, we will determine the
number of shares of common stock, if any, which have been purchased by holders
of rights who have exercised their oversubscription rights, and certificates
representing the shares of common stock so purchased will be sent to the
purchasers. If it is necessary to allocate any available shares of common stock
among those rights holders exercising oversubscription rights, overpayments for
shares of common stock not issued to such holders will be promptly refunded,
without interest.
DETERMINATION OF SUBSCRIPTION PRICE
The subscription price of the rights is at a premium to the prevailing market
price. Although the subscription price was determined without regard to our
present net worth, book value, or other financial measure, the price reflects
the judgement made by our Board of Directors that the current market price does
not adequately reflect the intrinsic value of our business. This judgement was
based, in part, on the small trading volume in the common stock and the lack of
general investor interest in micro-cap issuers such as us. The Board also
considered our long-term business prospects, which it believes are not factored
into the current market price. There can be no assurance that the common stock
will trade at prices in excess of the subscription price at any time after the
date of this prospectus.
SUBSCRIPTION COMMITMENT BY AFFILIATES
Mr. Winfield, InterGroup and Santa Fe have agreed with us that they will
exercise all of their respective basic rights.
In consideration of their agreement to exercise all of their respective basic
rights, we have agreed to issue to each of them warrants to purchase an
aggregate of 250,000 shares of common stock. These warrants are to be allocated
among them, pro rata, according to their ownership percentage before this rights
offering, as follows: 90,399 to Mr. Winfield, 148,652 to InterGroup and 10,949
to Santa Fe. The warrants are exercisable at a price not less than 110% of the
subscription price. The delivery of these warrants to the affiliates is subject
to the payment by each of them of the total price for their respective basic
rights.
14
<PAGE> 18
As a result of their agreement, at the conclusion of this rights offering, and
assuming that no other stockholders participate in this rights offering, Mr.
Winfield, InterGroup and Santa Fe will own a total of 502,800, 826,800 and
60,900 shares of our common stock, respectively, consisting of an aggregate of
1,390,500 shares of common stock (42.9%) of the company. They may be deemed to
own an aggregate of 2,032,367 shares of our common stock (52.3%) of the company,
when giving effect to;
- -warrants previously issued to Mr. Winfield and InterGroup;
- - an aggregate of 250,000 warrants issued to Mr. Winfield, InterGroup and Santa
Fe in connection with this rights offering; and
- - certain director options issued to Mr. Winfield.
While this rights offering is being made to you directly by us, Mr. Winfield,
InterGroup and Santa Fe, who have committed to exercise all their basic rights,
may be deemed to be underwriters in connection with this rights offering for
purposes of the federal securities laws. A determination of whether a person is
an underwriter, and any liability of such person, is usually made in connection
with an action that is brought against such person. The affiliates reserve the
right to assert that they are not underwriters. Generally, an underwriter is any
person who purchases, offers or sells securities of a company in connection with
a distribution of those securities or who has direct or indirect participation
in any such activity. A company includes not only the company itself, but also
any person directly or indirectly controlling or controlled by the company or
under common control with the company. This rights offering is a distribution of
our common stock.
Where a person is found to be an underwriter, the federal securities laws
generally provide for civil liability where any part of a registration statement
contains an untrue statement of a material fact or omits to state a material
fact required to be stated or necessary in order to make any statements not
misleading. This prospectus is part of our registration statement. Civil
remedies include the right to recover monetary damages as provided by statute,
subject to certain defenses that a defendant may raise. The civil liabilities
and remedies under the federal securities laws are in addition to any other
rights and remedies that you may be entitled to under the law.
STATE AND FOREIGN SECURITIES LAWS
The rights may not be exercised by any person in any jurisdiction in which such
exercise would be unlawful. Neither this prospectus, nor the rights
certificates, are an offer to sell or solicitation of an offer to purchase any
of shares of common stock. We believe that, in each of the United States and the
District of Columbia and Puerto Rico, either a registration exemption is
available or any action required by us has been taken to permit exercises of the
rights by stockholders in those jurisdictions. No action has been taken in any
jurisdiction outside the United States and Puerto Rico to permit offers and
sales of the shares of common stock. Consequently, we may reject subscriptions
pursuant to the exercise of rights by any stockholder outside the United States
unless we determine that we may lawfully accept such subscriptions. We may also
reject subscriptions from stockholders in jurisdictions within the United States
if we should later determine that we may not lawfully issue shares of common
stock to such stockholders, even if it could do so by qualifying the shares of
common stock for sale or by taking other actions in such jurisdictions.
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<PAGE> 19
RIGHTS OF SUBSCRIBERS
As holders of the rights, you will not have rights as stockholders with respect
to the shares of common stock until stock certificates representing shares for
which you have subscribed are issued to you. If you subscribe, you will not have
any right to revoke your subscriptions after delivery of the subscriptions to
our rights agent.
FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain material federal income tax
considerations applicable to you upon the distribution of the rights.
This summary is based upon laws, regulations, rulings, and decisions now in
effect, all of which are subject to change. This summary does not discuss all
aspects of federal income taxation that may be relevant to a particular investor
or to certain types of investors subject to special treatment under the federal
income tax laws, such as life insurance companies and foreign taxpayers, and
does not discuss any aspects of state, local or foreign tax laws.
DISTRIBUTION OF RIGHTS. We have been advised that under the Internal Revenue
Code of 1986, the distribution of the rights will result in no income to you for
federal income tax purposes. No ruling has been or will be requested from the
Internal Revenue Service and no assurances can be given that the Internal
Revenue Service will not successfully challenge such assumptions.
BASIS OF RIGHTS. If you exercise your rights, the basis of your rights will be
zero, unless the fair market value of the rights on the date of distribution is
15% or more of the fair market value on the date of distribution of the common
stock held by you on January 11, 1999, or you make an election to allocate part
of the basis of such stock to the rights. In either such event, your basis in
the common stock will be allocated between such common stock and the rights in
proportion to the fair market values of each on the date of distribution.
SALE OF SHARES. If you sell shares of common stock acquired by exercise of your
rights, you will recognize a gain or a loss measured by the difference between
the net proceeds from the sale and the cost basis of the shares sold. The cost
basis of the shares received by you upon the exercise of you rights will be
equal to the sum of the price paid for the shares subscribed for pursuant to the
rights and your basis in such rights, if any. The holding period for any shares
acquired through the exercise of the rights will begin on the date the rights
are exercised.
LAPSE OF RIGHTS. If you allow your rights to lapse, you will not recognize any
gain or loss, and no adjustment will be made in the basis of the common stock
you own.
Because the tax consequences of the receipt, exercise, or expiration of rights
or the sale of shares acquired pursuant to the exercise of rights may vary from
holder to holder, each holder of rights is encouraged to consult his or her own
personal tax advisor with respect to the tax consequences of this offering,
including the application and effect of state and local income and other tax
laws.
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<PAGE> 20
PRICE RANGE OF OUR COMMON STOCK
Our common stock is traded on the American Stock Exchange under the symbol
"HPP". The following table sets forth for the calendar quarters indicated the
high and low closing sales prices of our common stock:
<TABLE>
<CAPTION>
1997 HIGH LOW
- ---- ---- ---
<S> <C> <C>
1st Quarter............................................... 4 1/2 3 3/4
2nd Quarter............................................... 4 1/2 3 7/16
3rd Quarter............................................... 4 1/16 3 3/8
4th Quarter............................................... 4 3/8 3 1/2
</TABLE>
<TABLE>
<CAPTION>
1998 HIGH LOW
- ---- ---- ---
<S> <C> <C>
1st Quarter............................................... 3 3/4 2 7/16
2nd Quarter............................................... 2 7/16 1 5/16
3rd Quarter............................................... 1 1/2 3/4
4th Quarter............................................... 1 1/2
</TABLE>
For the most recent closing price of our common stock, see the cover page of
this prospectus. On January 11, 1999, there were 128 record holders of our
common stock. Such number of record owners was determined from the our
shareholder records, and does not include beneficial owners of common stock
whose shares are held in the names of various security holders, dealers and
clearing agencies. We believe the number of beneficial owners of our common
stock held by others as or in nominee name to be approximately 1,500.
DESCRIPTION OF OUR CAPITAL STOCK
The following general summary of our capital stock is qualified in its entirety
by reference to our Restated Certificate of Incorporation, a copy of which is on
file with the SEC. See "Where You Can Find More Information" for a description
of the documents incorporated by reference.
We are authorized to issue 12,000,000 shares of common stock, $.01 par value,
and 750,000 shares of preferred stock, $.10 par value. As of the date hereof, we
have 2,282,368 shares of common stock issued and outstanding and 31,335 issued
and outstanding shares of series D convertible preferred stock. The outstanding
shares of series D convertible preferred stock are presently convertible into
31,335 shares of common stock.
OUR COMMON STOCK
As holders of shares of our common stock, you are entitled to dividends when and
as declared by the Board of Directors from legally available funds, and, upon
liquidation you are entitled to share pro rata in any stockholder distribution.
You also have one non-cumulative vote for each share held. There are no
pre-emptive, conversion or redemption privileges, nor sinking fund provisions
with respect to the common stock.
PREFERRED STOCK
We have designated 371,009 shares of our preferred stock as series D convertible
preferred stock, of which 31,335 are issued and outstanding. As a holders of the
series D convertible
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<PAGE> 21
preferred stock, you are not entitled to receive dividends. The series D
convertible preferred stock is redeemable at our option, at its liquidation
preference of $5.11 per share. These holders vote as a single class with the
common stock on an as-converted basis on all matters on which the holders of the
common stock are entitled to vote. Each share of series D convertible preferred
stock is convertible into one share of common stock, subject to adjustment.
PRINCIPAL STOCKHOLDERS
The table below sets forth certain information with respect to the ownership
before and after the rights offering, as of January 11, 1999. The following
information explains what each column represents:
(1) The first column sets forth the names and addresses of each officer and
director of the company, or the names and addresses of each person
known by the company to beneficially own more than 5% of the
outstanding shares of our common stock, and all executive officers and
directors of the company as a group, as the case may be.
(2) The second column sets forth the number of shares and related
percentages beneficially owned by the person or entity listed in column
one before the offering.
(3) The third column entitled "Amount and Nature of Beneficial Ownership
and Percentage Upon Exercise of Minimum Number of Basic Rights," sets
forth the number of shares and related percentage of ownership held by
the persons or entities listed in column one, giving effect to the
guarantee by Mr. Winfield, InterGroup and Santa Fe to exercise all of
their basic rights. This column assumes no oversubscription and no
participation in the rights offering by stockholders other than Mr.
Winfield and his affiliate companies. The amount of beneficial
ownership in this column includes:
- the number of shares of common stock owned before this rights
offering;
- additional shares issuable on the exercise of the basic rights;
- all vested and presently exercisable warrants and options;
- the adjustment to the number of shares issuable upon exercise of
warrants to purchase common stock owned by Mr. Winfield and InterGroup
as a result of anti-dilution provisions contained in such warrants;
and
- the issuance of an aggregate of 250,000 warrants to Mr. Winfield,
InterGroup and Santa Fe in connection with this rights offering.
(4) The fourth column entitled "Amount and Nature of Beneficial Ownership
and Percentage in Event all Basic Rights are Exercised" sets forth the
number of shares and related percentages beneficially owned by the
persons or entities listed in column one giving effect to 100%
participation in the rights offering by all stockholders, including Mr.
Winfield and his affiliated companies. The amount of beneficial
ownership in this column includes:
- the number of shares of common stock owned before the rights offering;
- additional shares issuable on the exercise of the basic rights;
- all vested and presently exercisable warrants and options;
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<PAGE> 22
- the adjustment to the number of shares issuable upon exercise of
warrants to purchase common stock owned by Mr. Winfield and InterGroup
as a result of anti-dilution provisions contained in such warrants;
and
- the issuance of an aggregate of 250,000 warrants to Mr. Winfield,
InterGroup and Santa Fe in connection with this rights offering.
Beneficial ownership is determined in accordance with the rules promulgated by
the SEC and the information is not necessarily indicative of beneficial
ownership for any other purpose. This table is based upon information supplied
to us by officers, directors and principal stockholders. Except as otherwise
indicated, we believe that the persons or entities named in the table have sole
voting power with respect to all shares of our common stock shown as
beneficially owned by them, subject to community property laws where applicable.
The table should be read in conjunction with the information which follows it.
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT OF AND NATURE
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
AMOUNT OF AND NATURE AND PERCENTAGE UPON AND PERCENTAGE
BENEFICIAL OWNERSHIP EXERCISE OF MINIMUM IN EVENT ALL
AND PERCENTAGE NUMBER OF BASIC RIGHTS
BEFORE OFFERING BASIC RIGHTS ARE EXERCISED
---------------------- ---------------------- ----------------------
NAME AND ADDRESS OF NUMBER OF NUMBER OF NUMBER OF
BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE
------------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Wilson............. 155,600 6.4% 155,600 4.7% 261,800 3.7%
1700 Corporate Circle
Petaluma, CA 94954
John V. Winfield............ 773,500 29.5% 2,032,367 52.3% 2,250,192 28.8%
2121 Avenue of the Stars
Los Angeles, CA 90067
The InterGroup 445,900 18.1% 1,238,234 34.5% 1,347,147 18.2%
Corporation...............
2121 Avenue of the Stars
Los Angeles, CA 90067
Grace & White Inc........... 238,700 10.3% 238,700 7.4% 716,100 10.3%
515 Madison Avenue
New York, NY 10022
Starr Securities, Inc....... 191,048 8.0% 191,048 5.8% 453,144 6.5%
19 Rector Street
New York, NY 10006
Paul Bluhdorn............... 181,256 7.8% 181,256 5.6% 543,768 7.8%
P.O. Box 7854
Burbank, CA 91510
Mark S. Siegel.............. 70,062 3.0% 70,062 2.2% 210,186 3.0%
P.O. Box 7854
Burbank, CA 91510
Yvette Bluhdorn............. 71,738 3.1% 71,738 2.2% 215,214 3.1%
P.O. Box 7854
Burbank, CA 91510
Estate of Ludwig 182,071 7.9% 182,071 5.6% 546,213 7.9%
Jesselson.................
1301 Avenue of the Americas
New York, NY 10019
</TABLE>
19
<PAGE> 23
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT OF AND NATURE
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
AMOUNT OF AND NATURE AND PERCENTAGE UPON AND PERCENTAGE
BENEFICIAL OWNERSHIP EXERCISE OF MINIMUM IN EVENT ALL
AND PERCENTAGE NUMBER OF BASIC RIGHTS
BEFORE OFFERING BASIC RIGHTS ARE EXERCISED
---------------------- ---------------------- ----------------------
NAME AND ADDRESS OF NUMBER OF NUMBER OF NUMBER OF
BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE SHARES PERCENTAGE
------------------- --------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael Jesselson........... 92,062 4.0% 92,062 2.8% 276,186 4.0%
1301 Avenue of the Americas
New York, NY 10019
Ricky Williams.............. 55,000 2.3% 55,000 1.7% 55,000 0.8%
1700 Corporate Circle
Petaluma, CA 94954
M. Scott Foster............. 102,500 4.2% 102,500 3.1% 102,500 1.5%
1700 Corporate Circle
Petaluma, CA 94954
Daniel R. Coleman........... 15,000 0.6% 15,000 0.5% 15,000 0.2%
500 108th Avenue, NE
Bellevue, WA 98004
Michael G. Zybala........... 5,000 0.2% 5,000 0.2% 5,000 0.1%
11315 Rancho Bernardo Road,
Suite 129
San Diego, CA 92127
William J. Nance............ 5,000 0.2% 5,000 0.2% 5,000 0.1%
ABC Entertainment Center
2040 Avenue of the Stars
Los Angeles, CA 90067
Robert W. Sweitzer, Ph.D.... 5,000 0.2% 5,000 0.2% 5,000 0.1%
The Claremont Graduate
School
925 N. Dartmouth Avenue
Claremont, CA 91711
All Officers and Directors
as a Group (6 persons in
number)................... 1,116,600 38.3% 2,375,467 56.9% 2,699,492 33.4%
</TABLE>
Mr. Wilson's beneficial ownership column includes 102,500 vested and presently
exercisable options and 53,100 restricted shares subject to vesting at the rate
of 4,000 shares per year on December 31st in each year.
The information listed for Mr. Winfield is based upon information contained in a
Form 4 dated December 24, 1998, on behalf of Mr. Winfield, InterGroup and Santa
Fe (the "Winfield Form 4"). Mr. Winfield is the Chairman and CEO of both Santa
Fe and InterGroup. This row includes:
- - 167,600 shares of common stock and warrants to purchase 150,000 shares of
common stock owned by Mr. Winfield;
- - 275,600 shares of common stock and warrants to purchase 150,000 shares of
common stock owned by InterGroup and as to which Mr. Winfield has shared
voting and dispositive power. The number of shares which may be purchased
under the warrants is subject to adjustment;
20
<PAGE> 24
- - 20,300 shares of common stock owned by Santa Fe and as to which Mr. Winfield
has shared voting and dispositive power; and
- - options to purchase 10,000 shares of common stock granted to Mr. Winfield
pursuant to our non-employee director plan.
As of November 30, 1998, Mr. Winfield owned 44.0% of InterGroup, per a proxy
dated December 11, 1998. As of December 21, 1998, InterGroup controls 51.7% of
Santa Fe. Mr. Winfield is the Chairman and CEO of both Santa Fe and InterGroup.
The beneficial ownership of InterGroup is based upon information contained in
the Winfield Form 4, and includes 275,600 shares of common stock and 150,000
warrants owned by InterGroup.
The beneficial ownership of Grace & White Inc. is based upon information
contained in an amendment to a Schedule 13G dated February 9, 1999, filed on
behalf of Grace. According to the amended Schedule 13G, Grace is a registered
investment advisor with voting power and sole dispositive power over 12,900 and
238,700 shares, respectively.
The beneficial ownership of Starr Securities is based upon: - information
contained in an amendment to a Schedule 13D dated March 3, 1992 filed on behalf
of Starr Securities, Inc. and its stockholders as members of a group (the "Starr
13D"); and - records of the company indicating a transfer by Starr of 12,500
Warrants included in the Starr 13D. The beneficial ownership includes 131,048
shares of common stock owned of record by Starr and 60,000 warrants which vested
and became exercisable on November 4, 1996. According to the Starr 13D, Starr is
a registered broker-dealer and the share ownership reported therein does not
include shares held by Starr in its trading account.
The beneficial ownership of Mr. Bludhorn is based on information contained in an
amendment to a Schedule 13D dated January 27, 1993 (the "Bluhdorn 13D"), filed
on behalf of Paul Bluhdorn, Yvette Bluhdorn and Mark Siegel. It includes 31,250
shares of our common stock owned by Mr. Bluhdorn, and 150,006 shares of common
stock issued in February, 1998 upon conversion of 150,006 shares of series D
preferred stock owned by Mr. Bluhdorn. It does not include shares of common
stock owned by Ms. Bluhdorn or Mr. Siegel, as to which shares of common stock
Mr. Bluhdorn disclaims beneficial ownership.
The beneficial ownership of Mr. Seigal is based on information contained in the
Bluhdorn 13D and our corporate records.
The beneficial ownership of Ms. Bluhdorn is based on information contained in
the Bluhdorn 13D and our corporate records. Does not include shares of common
stock owned by Mr. Bluhdorn and Mr. Siegel as to which shares of common stock
Mrs. Bluhdorn disclaims beneficial ownership.
Mr. Jesselson died on April 3, 1993. Mr. Michael Jesselson is one of four
executors of the estate of Mr. Jesselson. As Executor, Mr. Michael Jesselson
retains the authority with regard to the disposition of the shares. The
information on Mr. Jesselson's beneficial ownership is based on information
contained in an amendment to a Schedule 13D dated September 21, 1995 (the
"Jesselson 13D") on behalf of Ludwig Jesselson, Michael Jesselson, and the
Estate of Ludwig Jesselson. It includes 175,480 shares of our common stock owned
by Ludwig Jesselson and 6,583 shares of the common stock owned by a trust
created under the will of Ludwig Jesselson, of which Michael Jesselson is the
former trustee. It does not include 92,062 shares of common stock owned by
Michael Jesselson, as to which shares of common stock Ludwig Jesselson disclaims
beneficial ownership.
21
<PAGE> 25
Mr. Michael Jesselson's ownership is based on information contained in the
Jesselson 13D. It also does not include 229,821 shares of common stock
beneficially owned by Ludwig Jesselson, as to which shares of common stock
Michael Jesselson had disclaimed beneficial ownership. To the extent Michael
Jesselson may be a beneficiary under the estate of Ludwig Jesselson, Michael
Jesselson may be considered an indirect beneficial owner of these shares.
The beneficial ownership of Mr. Williams includes 55,000 vested and presently
exercisable options. The beneficial ownership of Mr. Foster includes 102,500
vested and presently exercisable options. The beneficial ownership of Mr.
Coleman includes 15,000 vested and presently exercisable options. The beneficial
ownership of Mr. Nance includes 5,000 vested and presently exercisable options.
EXPERTS
Moss Adams LLP, independent public accountants have audited our balance sheet
for each of the years ended December 31, 1997 and 1996 and the statements of
operations, shareholders' equity and cash flows for the two years ended December
31, 1997. Their reports are incorporated by reference in this prospectus in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
Any financial statements and schedules incorporated in this prospectus that have
been audited and are the subject of a report by independent accountants will be
so incorporated in reliance upon such reports and upon the authority of such
firm as experts in accounting and auditing to the extent covered by consents
filed with the Commission.
LEGAL MATTERS
Our counsel, Camhy Karlinsky & Stein LLP, 1740 Broadway, New York, New York
10019, has passed on the legality of the shares to which this prospectus
relates.
22
<PAGE> 26
- ------------------------------------------------------
- ------------------------------------------------------
YOU MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS
PROSPECTUS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR SALE OF COMMON STOCK
MEANS THAT INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AFTER THE DATE OF
THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR SOLICITATION OF AN
OFFER TO BUY THESE SHARES OF COMMON STOCK IN ANY CIRCUMSTANCES UNDER WHICH THE
OFFER OR SOLICITATION IS UNLAWFUL.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................. 1
Risk Factors....................... 4
Where You Can Find More
Information...................... 9
Additional Information............. 10
Use of Proceeds.................... 11
Dividend Policy.................... 11
The Rights Offering................ 12
Price Range of Our Common Stock.... 17
Description of Capital Stock....... 17
Principal Stockholders............. 18
Experts............................ 22
Legal Matters...................... 22
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
4,627,406 SHARES
HEALTHY PLANET PRODUCTS, INC.
COMMON STOCK
-----------------
PROSPECTUS
-----------------
FEBRUARY 16, 1999
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
Filing Fee -- Securities and Exchange Commission............ $ 1,367
Subscription Agent Fees and Expenses........................ 12,500
Accounting Fees and Expenses................................ 10,000
Legal Fees and Expenses..................................... 40,000
Printing and Engraving Expenses............................. 20,000
Listing Fee of American Stock Exchange...................... 17,500
Consulting and Miscellaneous................................ 78,633
Total Expenses.................................... $180,000
</TABLE>
- -------------------------
* All expenses are estimated.
All of the fees and other expenses of the Registration Statement will be borne
by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our By-Laws require the Company to indemnify, to the full extent authorized by
Section 145 of the Delaware Corporation Law, any person with respect to any
civil, criminal, administrative or investigative action or proceeding instituted
or threatened by reason of the fact that he, his testator or intestate is or was
a director, officer or employee of the Company or any predecessor of the Company
is or was serving at the request of the Company or a predecessor of the Company
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
Section 145(a) of the General Corporation Law of the State of Delaware provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, Partnership' joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no cause to believe their conduct was unlawful.
Section 145(b) provides that a Delaware corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if the person acted under similar standards
set forth above, except that no indemnification may be made in respect to any
II-1
<PAGE> 28
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the court in which
such action or suit was brought shall determine that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to be indemnified for such expenses that the
court shall deem proper.
Section 145 further provides that to the extent a present or former director or
officer of a corporation has been successful in the defense of any action, suit
or proceeding referred to in the previous two paragraphs, or in the defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified Party
may be entitled; and that the corporation may purchase and maintain insurance on
behalf of a director or officer of the corporation against any liability
asserted against him or incurred by him in any such capacity or arising out of
his status as such whether or not the corporation would have the power to
indemnify him against such liabilities under such Section 145.
Section 102(b)(7) provides that a corporation in its original certificate of
incorporation or an amendment thereto validly approved by stockholders may
eliminate or limit personal liability of members of its board of directors for
monetary damages for breach of a director's fiduciary duty. However, no such
provision may eliminate or limit the liability of a director for breaching his
duty of loyalty, failing to act in good faith, engaging in intentional
misconduct or knowingly violating a law, paying a dividend or approving a stock
repurchase which was illegal, or obtaining an improper personal benefit. A
provision of this type has no effect on the availability of equitable remedies,
such as injunction or rescission, for breach of fiduciary duty.
The Company also maintains directors' and officers' liability insurance covering
certain liabilities incurred by the directors and officers of the Company in
connection with the performance of their duties.
II-2
<PAGE> 29
EXHIBIT INDEX
The exhibits designated with an asterisk (*) have previously been filed with the
Commission and, pursuant to 17 C.F.R. Secs. 201.24 and 240.12b-32, are
incorporated by reference to the document referenced in brackets following the
descriptions of such exhibits. Those exhibits designated with a double asterisk
(**) have been filed with the initial filing of this Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
4.3* Form of Common Stock Certificate [Exhibit 4 to Quarterly
Report on
Form 10-Q for the quarterly period ended June 30, 1990]
4.4* Form of Rights, Designation and Preferences of Series D
Preferred Stock [Exhibit 4 to Current Report on Form 8-K
dated January 8, 1993]
5.1 Opinion re: Legality of Camhy Karlinsky & Stein LLP
5.2 Consent of Camhy Karlinsky & Stein (included on signature
page of Exhibit 5.1)
23 Consent of Moss Adams LLP Independent Auditors
24 ** Power of Attorney (included on signature page).
99.1** Subscription Commitment Agreement.
99.2** Warrant Agreement of John V. Winfield with Form of Warrant
Certificate attached thereto.
99.3** Warrant Agreement of The InterGroup Corporation with Form of
Warrant Certificate attached thereto.
99.4** Warrant Agreement of Santa Fe Financial Corporation with
Form of Warrant Certificate attached thereto.
99.5** Registration Rights Agreement of John V. Winfield, The
InterGroup Corporation and Santa Fe Financial Corporation.
99.6** Rights Agent Agreement with Form of Rights Certificate
attached thereto.
99.7** Form of Letter to stockholders of record as of January 11,
1999.
</TABLE>
ITEM 17. UNDERTAKINGS.
A. Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, (the "Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. If a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant 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 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 30
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the registrants annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
C. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission Pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee", table in the effective
registration statement.
(iii) 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) For the purpose of determining any liability under the Securities Act
of 1933, as amended, 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.
II-4
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Amendment No. 2 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City Petaluma,
State of California, on February 16, 1999.
HEALTHY PLANET PRODUCTS, INC.
By /s/ BRUCE A. WILSON
------------------------------------
Bruce A. Wilson
President and Chief Executive
Officer.
Pursuant to the requirements of the Securities Act of 1933, as amended,
Amendment No. 2 to this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRUCE A. WILSON President and Chief Executive February 16, 1999
- --------------------------------------------------- Officer (Principal Executive,
Bruce A. Wilson Financial and Accounting
Officer)
/s/ JOHN V. WINFIELD* Chairman of the Board February 16, 1999
- ---------------------------------------------------
John V. Winfield
/s/ MICHAEL G. ZYBALA* Director February 16, 1999
- ---------------------------------------------------
Michael G. Zybala
/s/ DANIEL R. COLEMAN* Director February 16, 1999
- ---------------------------------------------------
Daniel R. Coleman
/s/ WILLIAM J. NANCE* Director February 16, 1999
- ---------------------------------------------------
William J. Nance
/s/ ROBERT W. SWEITZER, PH.D* Director February 16, 1999
- ---------------------------------------------------
Robert W. Sweitzer
*By: /s/ BRUCE A. WILSON
-----------------------------------------------
Name: Bruce A. Wilson
Attorney in Fact
</TABLE>
II-5
<PAGE> 1
Letterhead of Camhy Karlinsky & Stein LLP
1740 Broadway, 16th Floor
New York, NY 10019
OPINION RE: LEGALITY EXHIBIT 5.1
February 16, 1999
Board of Directors
Healthy Planet Products, Inc.
1700 Corporate Circle
Petaluma, CA 94956
Re: HEALTHY PLANET PRODUCTS, INC. (the "Company")
Gentlemen:
We have reviewed the Registration Statement to be filed by the Company with the
Securities and Exchange Commission, (the "Commission") on Form S-3 under the
Securities Act of 1933, as amended (the "Act") relating to the Rights Offering
as filed with the Commission on December 31, 1998. Capitalized terms used herein
without definition have the meanings given to them in the Registration
Statement.
The Registration Statement has been filed for the purpose of registering the
following securities of the Company under the Act:
(1) 4,627,406 Rights for distribution to the holders of the common stock and
Series D Convertible Preferred Stock on the Rights Record Date; and
(2) 4,627,406 shares of common stock, $.01 par value, issuable by the Company
upon exercise of subscriptions pursuant to the Rights.
In rendering the opinions hereafter, we have examined the Restated Articles of
Incorporation, as amended, the By-laws, and, to the extent relevant for purposes
of these opinions, minutes of meetings and written consents of the Boards of
Directors and shareholders of the Company. We have also reviewed the Rights
Agent Agreement, and accompanying exhibits, the Subscription Commitment
Agreement, and the Warrant Agreement, and we have relied upon such other
documents and instruments as we have deemed appropriate including, with respect
to certain factual matters, the certificate of officers of the Company.
In conducting our examination, we have assumed, without investigation, the
genuineness of all signatures, the correctness of all certificates, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, and the accuracy
and completeness of all records made available to us by the Company and public
officials. In addition, we have assumed, without investigation, the accuracy of
representations and statements as to factual matters made by officers and
employees of the Company and by public officials. In making our examination of
documents and instruments, we have assumed, without investigation, that each
party (other than the Company) to such documents and instruments has: (i) the
power and capacity to enter into and perform all its obligations under such
documents and instruments, (ii) duly authorized all requisite action with
respect to such documents and instruments, and (iii) duly executed and delivered
such documents and instruments.
<PAGE> 2
In addition, the opinions hereinafter expressed are subject to the following
qualifications:
(1) Our opinions in paragraph 1 below as to the good standing of the Company are
based solely upon certificates from public officials.
(2) Our opinions below are limited to the matters expressly set forth in this
opinion letter, and no opinion is to be implied or may be inferred beyond the
matters expressly so stated.
(3) We are members of the Bar of the State of New York. Our opinions below are
limited to the effect of the laws of the State of New York, of the federal laws
of the United States and, solely with respect to matters governed by the General
Corporation Law of the State of Delaware, of the laws of the State of Delaware.
<PAGE> 3
Based upon and subject to the foregoing, we are of the opinion that:
(1) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority required to carry
on its business as it is currently being conducted and to own, lease and
operate its properties.
(2) The Company is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the business, operations, properties or
assets of the Company.
(3) The Company has an authorized capitalization of 12,750,000
consisting of 12,000,000 shares of Common Stock, $.01 par value and 750,000
shares of Preferred Stock, $.10 par value.
(4) The Rights have been duly authorized and when issued and
distributed as described in the Registration Statement, will be validly
issued and constitute the valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws generally affecting creditors' rights or remedies
and general principles of equity.
(5) The Shares have been duly authorized and when issued, sold and
paid for upon the exercise if the Rights in accordance with the terms of
the Right, will be validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Opinions" in
the Prospectus forming a part of the Registration Statement.
Very truly yours,
/s/ CAMHY KARLINSKY & STEIN LLP
--------------------------------------
Camhy Karlinsky & Stein LLP
<PAGE> 1
EXHIBIT 23
LETTERHEAD OF MOSS ADAMS LLP
438 FIRST STREET, SUITE 320
SANTA ROSA, CALIFORNIA 95401
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------
The Board of Directors and Stockholders of
Healthy Planet Products, Inc.
We consent to the incorporation by reference in the registration statement of
Healthy Planet Products, Inc., on Form S-3 (File No. 333-70021) of our report
dated February 6, 1998, on our audits of the financial statements of Healthy
Planet Products, Inc. as of December 31, 1997 and 1996, and for each of the two
fiscal years in the period ended December 31, 1997, and to the reference of our
firm under the caption "Experts."
/s/ Moss Adams LLP
Santa Rosa, California
February 12, 1999
