As filed with the Securities and Exchange Commission on October 27, 1995
Registration Statement No. _______
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
BABYSTAR, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 5961 13-3006788
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)
---------------
Babystar, Inc.
165 University Avenue
Westwood, MA 02090
(617) 326-4100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
Mark A. Hanson
Babystar, Inc.
165 University Avenue
Westwood, MA 02090
(617) 326-4100
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------
Copies To:
Oscar D. Folger, Esq.
521 Fifth Avenue
New York, New York 10175
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement depending on
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum
of Securities Being Amount Being Offering Price Aggregate Amount of
Registered Registered per Unit Offering Price Registration
- ------------------- ------------ ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
Warrants 366,400 $1.09 (1) $400,842 $138.22
Common Stock 2,591,600 $3.16 (2) $8,180,385 $2,820.82
Total $8,581,227 $2,959.04
</TABLE>
- ---------------------------------------------------------------------------
(1) Estimated for purposes of computing the registration fee pursuant to Rule
457(c) at $1.09 per Warrant based upon the average of the bid and asked prices
of $1.063 and $1.125, respectively, on October 20, 1995.
(2) Estimated for purposes of computing the registration fee pursuant to Rule
457(c) at $3.16 per Share based upon the average of the bid and asked prices
of $3.063 and $3.250, respectively, on October 20, 1995.
_______________________
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
===========================================================================
PROSPECTUS
BABYSTAR, INC.
2,591,600 Shares of Common Stock
366,400 Warrants
________________________________
This Prospectus relates to 2,591,600 shares of Common Stock of Babystar,
Inc. (the "Company"), par value $.01 per share (the "Common Stock"), and
366,400 warrants each to purchase one share of Common Stock at $4.69
("Warrants" together with the Common Stock, the "Securities"), all of which
Securities may be offered from time to time by the selling security holders
("Selling Security Holders"). See "Selling Security Holders." This Prospectus
does not relate to the sale or issuance by the Company of any securities. Any
Securities will be offered for the respective accounts of the Selling Security
Holders, who either currently own Common Stock or who will acquire Common Stock
upon exercise of options or warrants which are owned by them. The Company will
receive the exercise prices payable upon such exercises. However, the Company
will not receive any proceeds from the sale of the Securities by the Selling
Security Holders. The Company has been advised by the Selling Security Holders
that there are no underwriting arrangements with respect to the sale of the
Securities, that the Securities will be sold from time to time in the
over-the-counter market at then prevailing prices and in private transactions at
negotiated prices, and that usual and customary brokerage fees, if any, will be
paid by the Selling Security Holders in connection therewith.
The Company's Common Stock and Warrants are traded on the Nasdaq
over-the-counter market under the symbols DATA and DATAW, respectively. As
reported by Nasdaq for October 19, 1995, the average of the bid and asked
prices for the Company's Common Stock and Warrants were $2.8125 and $1.03,
respectively.
---------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
==================================================================
Price to Underwriting Discounts Proceeds to Selling
Public (1) and Commissions Security Holders(1)
--------- --------------- -------------------
Per Share ...... -0-
Per Warrant .. -0-
Total ......... -0-
==================================================================
(1) Not determinable at present time.
The date of this Prospectus is ___________________, 1995.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports and
other information with the Securities and Exchange Commission (the
"Commission"). Reports, registration statements, proxy statements and other
information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C., and at the Commission's
Regional Offices: Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60601; 7 World Trade Center, New York, New York, and
Suite 500, 5757 Wilshire Boulevard, Los Angeles, California, and with respect
to registration statements, Suite 788, 1375 Peachtree Street, Atlanta,
Georgia. Copies of such materials can be obtained from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any and all of the information that has been incorporated by
reference in the Prospectus (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically incorporated
by reference into the information that the Prospectus incorporates). Such
request should be directed to the Secretary, Babystar, Inc., 165 University
Avenue, Westwood, Massachusetts 02090.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION TO ANY PERSON
TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES OTHER
THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY
THAT THE INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
4
THE COMPANY
Babystar, Inc. (the "Company"), through its wholly-owned subsidiary
Datatrend, Inc. ("DTI"), purchases and sells microcomputers, peripherals,
components and accessories. The Company sells new, used and refurbished
products. The Company purchases completed new and used products from numerous
sources, including manufacturers and other re-sellers. New products include
end of life models, excess inventories, close outs and other items which
manufacturers wish to dispose of at discounted prices. The Company also
purchases incomplete, defective and returned products which require
refurbishing or remanufacture in order to be resold. The Company performs
limited assembly, remanufacturing, and refurbishing activities at its
Westwood, Massachusetts facility and through certain subcontractors.
Sale of Travel Safety Children's Products, Inc. The Company was
previously engaged in the business of marketing a juvenile car seat for
children through its wholly-owned subsidiary Travel Safety Children's
Products, Inc. ("Travel"). Due to engineering challenges with the Company's
car seat product, the Company ceased production and in November 1994 the
Company sold Travel to Travel Safety Corp.
Acquisition of DTI. Effective On February 1, 1995, the Company acquired
all of the capital stock of DTI by merging a wholly owned subsidiary of the
Company into DTI. DTI is a corporation incorporated under the laws of the
Commonwealth of Massachusetts in 1993. Unless otherwise indicated, all
references herein to the business of the Company include the business of DTI.
The Company was incorporated in New York in 1985 under the name E & C
Video Productions, Inc. The Company's name was changed to Star Classics, Inc.
in 1987, and then to Star Mark, Inc. in 1991. Effective in March of 1993, the
Company changed its name to Babystar Inc. and was reincorporated in the state
of Delaware. The executive offices of the Company are located at 165
University Avenue, Westwood, Massachusetts 02090 and its telephone number at
that address is 617-326-4100.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE A
HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD, CONSIDER CAREFULLY THE
FOLLOWING FACTORS IN ANALYZING THIS OFFERING:
Technological Changes; Profit Margins
The Company purchases completed new and used products from numerous
sources, including manufacturers and other re-sellers. New products include
end of life models, excess inventories, close outs and other items which
manufacturers wish to dispose of at discounted prices. The availability to
the Company of these products is dependent in large part on the pace of
technological change in the computer industry. In general, the faster the
changes, the greater the supply of computer equipment at discounted prices.
However, it is critical that the Company time the purchase of its products
precisely in order to take maximum advantage of the resale value of the
products. An early purchase and/or a late resale of a product may cause the
product to become obsolete and may cause the Company's profit margins to fall.
The faster the technological changes in the computer industry, the harder it
will be for the Company to time its purchases and resales and to maintain an
optimum return on its inventory.
Dependence Upon Suppliers
The Company sells new, used and refurbished products. The Company
purchases completed new and used products from numerous sources, including
manufacturers and other re-sellers. The Company has developed
5
relationships with certain manufacturers whereby the Company purchases large
quantities of goods returned to the manufacturer by customers. The Company
refurbishes and remanufactures these products and markets the products through
its distribution channels. These relationships with manufacturers are
typically not pursuant to any long term written agreements and there is no
assurance that they will continue in the future. Although the Company is in
the process of building long term relationships with a number of its
suppliers, the discontinuance of any of these arrangements may have a material
adverse impact on the Company's results of operations.
No Product Liability Insurance; Warranties
The Company conducts its business through DTI, which currently has no
product liability insurance in place. In the event that any of the products
sold by DTI were to show a defect which resulted in damage, a customer could
file suit against DTI. There can be no assurance that DTI will be able to
successfully defend itself in any such suit or that it will be able to shift
liability, if any, to the manufacturer of such product. Although the Company
is investigating the possibility of obtaining product liability insurance for
DTI, there can be no assurance that such insurance will be available on terms
acceptable to the Company.
In addition, the Company provides limited warranties to its customers.
If any of the products sold by the Company were to show a defect requiring
repair or replacement at the Company's expense, such repairs or replacement
will be paid from the Company's financial reserves set aside for such events.
However, there can be no assurance that the expenses incurred in connection
with repairs or replacements covered by warranties will not exceed the
Company's projected costs.
Dependence Upon Major Customers
During 1994, approximately 12% of the Company's revenue was derived from
sales to Damark International, Inc. ("Damark"). Damark is a mass merchant
engaged in catalogue sales of numerous different types of electronics
equipment, including computer products and accessories. During 1994, the
Company also had a substantial sales relationship with Computer City, a large
retail seller of computer equipment and peripheral. Sales to Computer City
accounted for approximately 21% of the Company's revenue during 1994. The
Company has significantly broadened and is continuing to expand its customer
base through telemarketing, retail sales and other methods to increase
profitability and eliminate dependency on individual large volume accounts.
During the first half of fiscal 1995 sales to Computer City and Damark have
been negligible. In addition, the profit derived from bulk sales to such
mass merchants is generally much lower than profit derived from sales to other
re-sellers and retail customers. Nevertheless, the loss of either of these
customers could adversely affect the Company's results of operations.
Competition
The Company has been shifting its marketing focus to the development of
its own retail chain and has made some investments in this area. To date, the
Company has concentrated its efforts on existing vendors by delivering to them
on consignment products for sale to the public. The profit margins in the
retail sector are usually higher than in the resale sector. As a consequence,
the Company expects to continue to expand its retail operations. The
microcomputer products retail industry is highly competitive. There are
numerous other companies involved in the retail business of computer
equipment, many of which have greater financial and other resources, including
major chains such as CompUSA and Computer City. As the discount retail market
for computer products proliferates, computer retail prices will continue to
decline leading to lower revenues. The Company believes that retail
competition may increase in the future, which could require the Company to
reduce prices, increase marketing expenditures or take other actions which may
have a material adverse effect on the Company's operating results. There can
be no assurance that the Company will be able to compete effectively with its
retail competitors.
6
Dependence on Management
Although the Company has a sales force consisting of approximately 11
employees, Mark A. Hanson, the President, CEO and a director of the Company
has been responsible for in excess of approximately 45% of the dollar volume
of sales of the Company in fiscal 1994. In addition, the majority of the
products purchased by the Company are purchased by Mr. Hanson and the
Company's ability to purchase products effectively is largely dependent upon
relationships developed and maintained by Mr. Hanson. The Company has a five
year employment contract with Mark A. Hanson which contains substantial
non-compete provisions. However, the loss of Mr. Hanson would, in the opinion
of the Company, significantly adversely impact on the Company's results of
operations. The Company maintains key-man life insurance on the life of Mr.
Hanson in the amount of $3 million with the Company named as the sole
benficiary.
State Sales Tax Collection
The Company collects sales tax only on sales of products to residents of
the Commonwealth of Massachusetts. Various states have tried to impose on
direct marketers the burden of collecting state sales taxes on the sale of
products shipped to that state's residents. The United States Supreme Court
has ruled that it is unconstitutional to impose tax collection obligations on
an out of state mail order company whose only contacts with the taxing state
are the distribution of catalogs and other advertising materials through the
mail and whose subsequent delivery of goods is by U.S. mail or interstate
common carriers. In the event of a change in the present law, the imposition
of a tax collection on the Company in states to which it ships products may
result in reduced demand for its products via direct marketing and additional
administrative expenses which could have a material adverse effect on the
Company's results of operations.
Dividends.
The Company has paid no dividends to date. There can be no assurance
that the operations of the Company will result in sufficient revenues to
enable the Company to pay dividends. For the foreseeable future it is
anticipated that any earnings which may be generated from operations of the
Company will be used to finance the growth of the Company and that cash
dividends will not be paid to shareholders.
Possible Delisting of Securities from Nasdaq System.
In order to maintain the listing of its securities on the Nasdaq System,
a company must, among other things, have at least $2,000,000 in total assets
and a minimum bid price for its common stock of $1.00 per share. The $1.00 per
share common stock price would not apply if the company has shareholders'
equity of at least $2,000,000 and the market value of its publicly traded
securities is at least $1,000,000.
Although the Company currently meets the continued listing requirements
of the Nasdaq, there can be no assurance that the Company will not fail to
satisfy one or more of these criteria at some future time. In such event, the
Company's listed securities will be subject to delisting from the Nasdaq
System. Trading, if any, in the listed securities would therefore be conducted
in the over-the-counter market in what are commonly referred to as the "pink
sheets." As a result, an investor may find it more difficult to dispose of, or
to obtain accurate quotations as to the value of, the Company's securities.
In addition, if the Common Stock is delisted from trading on Nasdaq or
the trading price of the Common Stock is less than $5.00 per share, trading in
the Common Stock would also be subject to the requirements of Rule 15g-9
promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Under such rule, broker/dealers who recommend such
low-priced securities to persons other than established customers and
accredited investors must satisfy special sales practice requirements,
including a requirement that they make an individualized written suitability
determination for the purchaser and receive the purchaser's written consent
prior to the transaction.
7
The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also
requires additional disclosure in connection with any trades involving a stock
defined as a penny stock (generally, according to recent regulations adopted
by the Securities and Exchange Commission, any non-Nasdaq equity security that
has a market price of less than $5.00 per share, subject to certain
exceptions), including the delivery, prior to any penny stock transaction, of
a disclosure schedule explaining the penny stock market and the risks
associated therewith. Such requirements could severely limit the market
liquidity of the Common Stock and the ability of purchasers in this Offering
to sell their securities in the secondary market. There can be no assurance
that the Common Stock will not be delisted or treated as a penny stock.
8
SELLING SECURITY HOLDERS
The securities being offered hereby are for the accounts of the following
persons:
<TABLE>
<CAPTION>
Securities to Percentage
Securities Owned Securities to be be Owned after
Name and Address Before Offering Sold (1) after Offering Offering
- ---------------- --------------- -------- -------------- --------
<S> <C> <C> <C> <C>
Yitz Grossman (2)
40 Fulton Street
New York, NY 10038 345,800 342,000 3,800 *
Churchill Consulting &
Development Corp.
Rehov Rotchild 56
Bat Yam, Israel 400,000 400,000 -0- *
Joseph Stevens & Company, L.P.
33 Maiden Lane
New York, NY 10038 250,000 250,000 -0- *
A.S. Goldmen & Co., Inc. 366,400 Warrants 366,400 Warrants -0-
67 Wall Street 549,600 Shares 549,600 Shares -0- *
New York, NY 10005
Chava Mamoka
Rehov Hashel 14
Ashdod, Israel 100,000 100,000 -0- *
West End Capital Corp. Pty Ltd.
14 Church Street
Hawthorn 3122
Victoria, Australia 400,000 400,000 -0- *
Bodywell Inc.
P.O.B. 398388
Miami Beach, Fl 33239 300,000 300,000 -0- *
Mark Hanson (3)
165 University Avenue
Westwood, MA 02090 1,080,000 250,000 830,000 17.6%
</TABLE>
____________________
* Less than 1% shareholding.
(1) Unless otherwise indicated, all securities to be sold consist of Shares
of Common Stock held directly or Shares of Common Stock issuable upon exercise
of options and warrants.
(2) Mr. Grossman is a Director and the Secretary of the Company.
(3) Mr. Hanson is the Company's President and Chief Executive Officer and a
Director.
9
PLAN OF DISTRIBUTION
The Securities are being offered for the respective accounts of the
Selling Security Holders. The Company will not receive any proceeds from the
sale of any Securities by the Selling Security Holders, although it will
receive proceeds from the exercise of options and warrants by the Selling
Security Holders. The sale of Securities by the Selling Security Holders may
be effected from time to time in transactions in the over-the-counter market,
in negotiated transactions, or through a combination of such methods of sale,
at fixed prices, which may be charged at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Security Holders may effect such transactions by selling
the Securities to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Security Holders and/or the purchasers of the Securities for which
such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer may be in excess of
customary compensation).
The Selling Security Holders and any broker-dealers who act in connection
with the sale of the securities hereunder may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and profit on any sale of the Securities as principal might
be deemed to be underwriting discounts and commissions under the Securities
Act.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 20,000,000 shares of Common Stock,
$.01 par value, of which 4,712,800 shares are issued and outstanding as of the
date of this prospectus. All of the outstanding shares of Common Stock are,
and all shares of Common Stock issuable upon exercise of warrants and options
will be, fully paid, validly issued and, except as set forth below,
non-assessable.
Holders of shares of Common Stock of the Company are entitled to share
equally on a per share basis in such dividends as may be declared by the Board
of Directors out of funds legally available therefor. There are presently no
plans to pay dividends with respect to the shares of Common Stock. Upon
liquidation, dissolution or winding-up of the Company, after payment of
creditors and the holders of any senior securities of the Company, the assets
of the Company will be divided pro rata on a per share basis among the holders
of the shares of Common Stock. There are no conversion or redemption
privileges nor any sinking fund provisions with respect to the Common Stock.
Holders of shares of Common Stock of the Company are entitled to cast one
vote for each share held at all stockholders' meetings for all purposes,
including the election of directors. The Common Stock does not have
cumulative voting rights, which means that the holders of more than 50% of the
Common Stock can elect 100% of the Directors of the Company if they choose to
do so. The By-laws of the Company require that only a majority of the issued
and outstanding shares of Common Stock of the Company need be represented to
constitute a quorum and to transact business at a stockholders' meeting.
Warrants
Each Warrant entitles the registered holder thereof to purchase one share
of Common Stock at a price of $4.69 per share, subject to adjustment. No
fractional shares will be issued on exercise of the Warrants. The Warrants
expire on June 22, 1998. The Warrants offered hereby are not redeemable.
The exercise price of the Warrants and the number and kind of shares of
Common Stock or other securities and property to be obtained upon exercise of
the Warrants are subject to adjustment in certain circumstances including
10
a stock split of, or stock dividend on, or a subdivision, combination or
recapitalization of, the Common Stock. Additionally, an adjustment would be
made upon the sale of all or substantially all of the assets of the Company so
as to enable Warrant holders to purchase the kind and number of shares of
stock or other securities or property (including cash) receivable in such
event by a holder of the number of shares of Common Stock that might otherwise
have been purchased upon exercise of such Warrant. No adjustment for
previously paid cash dividends, if any, will be made upon exercise of the
Warrants.
The Warrants do not confer upon the holder any voting or any other rights
of a stockholder of the Company. Upon notice to the Warrant holders, the
Company has the right to reduce the exercise price or extend the expiration
date of the Warrants.
The Warrants may be exercised upon surrender of the Warrant certificate
on or prior to the respective expiration date (or earlier redemption date) of
such Warrants at the offices of American Stock Transfer Company (the "Warrant
Agent"), with the form of "Election to Purchase" on the reverse side of the
Warrant certificate completed and executed as indicated, accompanied by
payment of the full exercise price (by certified check payable to the order of
the Warrant Agent) for the number of Warrants being exercised.
EXPERTS
Financial statements and the related supplemental schedules have been
incorporated in this Prospectus by reference from the Company's report on Form
10-KSB for the year ended December 31, 1994. The financial statements for the
years ended December 31, 1994 and 1993 have been audited by Richard A. Eisner
& Company, LLP., independent auditors, as stated in their report, and are
included in reliance upon such report and upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering are being passed
upon for the Company by Oscar D. Folger, Esq., 521 Fifth Avenue, New York, New
York 10175. Mr. Folger's wife owns 7,600 shares of Common Stock.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are incorporated in this Prospectus and made a
part hereof by reference:
1. The Company's annual report on Form 10-KSB for the year ended
December 31, 1994, as filed with the Commission pursuant to Section
13 of the Securities Exchange Act of 1934.
2. The Company's report on Form 8-K dated February 13, 1995,
as amended, filed with the Commission pursuant to Section 13 of
the Securities Exchange Act of 1934.
3. The Company's quarterly report on Form 10-QSB for the quarter
ended March 31, 1995, filed with the Commission on May 18, 1995,
pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended on August 25, 1995, and as further amended on October 10,
1995.
11
4. The Company's quarterly report on Form 10-QSB for the quarter
ended June 30, 1995, filed with the Commission on August 18, 1995,
pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended on October 10, 1995.
The Commission file number for all of the foregoing is 0-15929. In
addition, any amendments to the foregoing documents and all other reports,
proxy statements and other documents of the Company hereafter filed with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the termination of the offering of the
securities covered by this Prospectus, shall be deemed to be incorporated in
this Prospectus and made a part hereof by reference from the date of filing
each such document. Any statement contained in an earlier document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is incorporated or deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded to
constitute a part of this Prospectus.
INDEMNIFICATION
The Company's Certificate of Incorporation includes a provision that
eliminates or limits the personal financial liability of the Company's
directors, except in situations where there has been a breach of the
director's duty of loyalty to the Company or its stockholders, acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, liability under Section 174 of the Delaware General
Corporation Law relative to unlawful payment of dividends stock purchases or
redemptions, or any transaction from which the director derived an improper
personal benefit. In addition, under its Certificate of Incorporation and
By-laws as well as under separate agreements, the Company is required to
indemnify its officers and directors to the fullest extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
ADDITIONAL INFORMATION
This Prospectus contains certain information concerning the Company and
its securities, but does not contain all the information set forth in the
Registration Statement and the Exhibits thereto filed with the Commission
under the Securities Act of 1933, as amended, to which reference is made. Any
summary from the Exhibits contained in this Prospectus is necessarily
incomplete and must not be considered as a full statement of the provisions of
such instruments.
12
BABYSTAR, INC.
2,591,600 Shares of Common Stock
366,400 Warrants
______________________
PROSPECTUS
______________________
October ___, 1995
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy any
securities in any jurisdiction in which such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof.
13
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered under this Registration Statement are estimated as
follows:
Securities and Exchange Commission fee.... $ 2,959
Blue sky qualification fees and expenses.. 2,000
Photocopying.............................. 500
Legal Fees and expenses................... 10,000
Accountant's fees and expenses............ 1,000
Miscellaneous............................. 1,171
-------
Total........................... $17,000
Item 15. Indemnification of Directors and Officers.
The Company's by-laws provides that the Company will indemnify its
directors and officers to the fullest extent permitted by law. They also
provide that the Company will pay such director or officer's expenses provided
that such expenses shall be reimbursed to the Company if it is ultimately
determined that the director or officer is not entitled to indemnification.
The Certificate of Incorporation also provides as follows:
A director or former director shall not be liable to the corporation or
any of its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that this provision shall not eliminate or limit the
liability of a director: (1) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (2) acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(3) under Section 174 of the Delaware General Corporation Law pertaining to
the liability of directors for unlawful payment of dividends or unlawful
payment of dividends or unlawful stock purchase or redemption; or (4) a
transaction from which the director derived an improper personal benefit.
Section 145 of the Delaware General Corporation Law concerning
indemnification of officers, directors, employees and agents is set forth
below.
Section 145. Indemnification of officers, directors, employees and
agents; insurance.
(a) A 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 him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he 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 reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed
14
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
(b) A 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 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) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer, to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the corporation as authorized in this section. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who 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 any liability asserted
against him and 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 liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
15
merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
The By-Laws contain provisions for directors, officers and employees of
the Corporation to be indemnified against reasonable expenses, including
attorney's fees incurred in connection with the defense of an action, suit or
proceeding, except in the case of negligence or misconduct.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to the 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.
Item 16. Exhibits.
Exhibit No. Description
3.1 Certificate of Incorporation
(incorporated by reference to the exhibit of the same number
filed with the Company's Registration Statement on Form SB-2,
No. 33-58196)
3.2 By-Laws (incorporated by reference to the exhibit of the same
number filed with the Company's Registration Statement on Form
SB-2, No. 33-58196)
10.2 Copy of 1986 Employees' Stock Option Plan of the Company
(filed as Exhibit 28.1 to Company's Form S-18 and incorporated
herein by reference)
10.3 Copy of 1989 Non-Qualified Stock Option Plan (filed as Exhibit
10.6 to Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989 and incorporated herein by
reference)
10.4 1993 Stock Option Plan (incorporated by reference to the
exhibit of the same number filed with the Company's
Registration Statement on Form SB-2, No.
16
33-58196)
10.5 Form of indemnity agreements with directors (incorporated by
reference to the exhibit of the same number filed with the
Company's Registration Statement on Form SB-2, No. 33-58196)
10.6 Stock Purchase Agreement dated as of November 17, 1994, by and
among the Company, Travel Safety Children's Products, Inc.
("Travel") and Travel Safety Corp. ("Purchaser") (incorporated
by reference from the Company's Current Report on Form 8-K
filed December 1, 1994.)
10.7 License Agreement, dated as of November 17, 1994, by and among
the Company and Travel. (incorporated by reference from the
Company's Current Report on Form 8-K filed December 1, 1994.)
10.8 Promissory Note, dated as of November 17, 1994 (incorporated
by reference from the Company's Current Report on Form 8-K
filed December 1, 1994.)
10.9 Agreement and Plan of Merger dated January 31, 1995, by and
among the Company, DTI, BSI Acquisition Corporation and Mark
Hanson. (incorporated by reference from the Company's Current
Report on Form 8-K filed February 14, 1995.)
10.10 Employment Agreement, dated as of January 31, 1995, by and
among the Company and Mark Hanson (incorporated by reference
from the Company's Current Report on Form 8-K filed February
14, 1995.)
10.11 Consulting Agreement between the Company and Target Capital
Corp. (incorporated by reference from the Company's Current
Report on Form 8-K filed February 14, 1995.)
22 Subsidiaries of the Company (filed as Exhibit 22 to the
Company's Report on Form 10-K for 1991 and incorporated herein
by reference).
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the Prospectus any fact 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;
(iii) To include any material information with respect to the
plan of
17
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That for purposes of determining any liability under the Securities
Act of 1933, each filing of Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, or otherwise,
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. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses paid or incurred by a director, officer or controlling person of
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, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to the
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.
18
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Westwood,
Massachusetts on the 25th day of October 1995.
Babystar, Inc.
By: /s/ Mark Hanson
--------------------------
Mark Hanson, President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Mark Hanson as his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead
in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3 and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission under the Securities
Act of 1933.
--------------------
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Mark Hanson President, Director, October 25, 1995
Mark Hanson Chief Executive Officer and
Chief Financial and Accounting
Officer
/s/ Yitz Grossman Director October 25, 1995
Yitz Grossman
/s/ John Bulman Director October 25, 1995
John Bulman
/s/ Werner Haase Director October 25, 1995
Werner Haase
19
CONSENT OF COUNSEL
The undersigned hereby consents to the use of his name in the Prospectus
constituting a part of this Registration Statement under the caption "Legal
Matters" as counsel to the Registrant.
/s/ Oscar Folger
------------------------
Oscar D. Folger
New York, New York
October 27, 1995
20
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement of Babystar, Inc. on Form S-3 of our report dated February 2, 1995
which is included in the Annual Report on Form 10-KSB for the year ended
December 31, 1994, and to the use of our name, and the statements with respect
to us appearing under the heading "Experts" in the Prospectus.
/s/
Richard A. Eisner & Company, LLP
New York, New York
October 26, 1995
21
