As filed with the Securities and Exchange Commission of February 25, 1999
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SHARPER IMAGE CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 94-2493558
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5940
(Primary Standard Industrial
Classification Code Number)
650 Davis Street
San Francisco, California 94111
(415) 445-6000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
RICHARD THALHEIMER
Chief Executive Officer
Sharper Image Corporation
650 Davis Street
San Francisco, California 94111
(415) 445-6000
(Name, address, including zip code, and telephone number, including
area code, of agent for service of process)
Copies to:
Scott D. Lester, Esq.
BROBECK, PHLEGER & HARRISON LLP
One Market Street
Spear Street Tower
San Francisco, California 94105
(415) 442-0900
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
<CAPTION>
Title of Each Class of Amount to Proposed Maximum Proposed Maximum Amount of
Securities to be Registered be Registered Offering Price Aggregate Registration Fee
Per Share(1) Offering Price (1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value.............. 150,000 shares $14.375 $2,156,250 $599
===================================================================================================================================
<FN>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 and based upon the
average of the high and low prices of the Company's Common Stock as
reported on the Nasdaq National Market on February 22, 1999.
</FN>
</TABLE>
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 the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
<PAGE>
The information in this preliminary 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 preliminary
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy there securities in any juisdiction where the offer of sale is not
permitted.
SUBJECT TO COMPLETION DATED FEBRUARY 25, 1999
150,000 Shares
SHARPER IMAGE CORPORATION
Common Stock
This prospectus relates to the public offering, which is not being
underwritten, of 150,000 shares of our common stock which is held by one of our
current stockholders.
The prices at which such stockholder may sell the shares will be determined
by the prevailing market price for the shares or in negotiated transactions. We
will not receive any of the proceeds from the sale of the shares.
Our common stock is quoted on the Nasdaq National Market under the symbol
"SHRP." On February 23, 1999, the closing price for the common stock was
$15.1875.
----------------
Investing in the common stock involves certain risks. See "Risk Factors"
beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
----------------
The date of this prospectus is February ___, 1999
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. 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.
The SEC allows us to "incorporate by reference" the information we file with
them, 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, and later information filed with the SEC will
update and supersede this information. We incorporate by reference the documents
listed below and any future filings made with the SEC under Section 13a, 13(c),
14, or 15(d) of the Securities Exchange Act of 1934 until our offering is
completed.
(a) Annual Report on Form 10-K for the year ended January 31, 1998.
(b) The Company's Quarterly Report on Form 10-Q for the three months
ended April 30, 1998 and 1997, the six months ended July 31, 1998 and 1997,
and the nine months ended October 31, 1998 and 1997; and
(c) The description of Sharper Image common stock contained in its
registration statement on Form 8-A filed May 6, 1987, including any
amendments or reports filed for the purpose of updating such descriptions.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Tracy Y. Wan
Executive Vice President and Chief Financial Officer
Sharper Image Corporation
650 Davis Street
San Francisco, CA 94111
(415) 445-6000
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
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<PAGE>
THE COMPANY
Sharper Image Corporation ("Sharper Image", "Company", "We", "Our")
principal executive offices are located at 650 Davis Street, San Francisco,
California 94111. Sharper Image's telephone number is (415) 445-6000.
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones facing us. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline, and you may lose
all or part of your investment.
This prospectus also contains "forward-looking" statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and in the documents
incorporated by reference to this prospectus.
We May Not Successfully Offer Attractive Merchandise to Our Customers
In order to meet our strategic goals, we must successfully locate and
offer to our customers new, innovative and high quality products to meet our
customers' demands. Our product offerings must be affordable, useful to the
customer, well made, distinctive in design, and not widely available from other
retailers. We can not predict with certainty that we will successfully offer
products that meet these requirements in the future.
If other retailers, especially department stores or discount retailers,
offer our products or similar products or if our products decline in popularity
with customers, our sales of such products may decline or we may decide to offer
such products at lower prices. If customers buy less of our products or if we
have to reduce our prices, our revenues and profits will decline.
In addition, we must offer our merchandise in sufficient quantities to
meet the demands of our customers and deliver this merchandise to customers in a
timely manner. We must be able to maintain sufficient inventory levels,
particularly during peak selling seasons. Our future results may be affected if
we are not successful in achieving these goals.
We May Not Successfully Design and Develop Proprietary Products
We are increasingly dependent on the success of the products that we
have designed and developed for our customers. We must design products that meet
the demands of our customers and manufacture these products cost-effectively. In
addition, we must manufacture such products in sufficient quantities to meet
customer demand and deliver these products in a timely manner to customers. Our
future results may be affected if we are not successful in achieving these
goals.
We Face Certain Risks Associated with Expansion
We plan to continue to increase the number of Sharper Image stores in
the future in order to grow our revenues. Our ability to expand will depend in
part on the following factors:
* availability of attractive store locations
* ability to negotiate favorable lease terms
* identifying customer demand in different geographies
* general economic conditions
* availability of sufficient funds for expansion
As we continue to expand, there have been limited geographic areas
where we have become concentrated. This could increase our exposure to customer
demand, weather, competition, ability to distribute, and poor economic
conditions in these regions. In addition, our catalog sales or existing store
sales in a specific region may decrease as a result of new store openings.
In order to continue our expansion, we will need to hire additional
management and staff for our corporate offices and employees for each new store.
We must also expand our management information systems and distribution systems
to serve these new stores. If we are unable to hire necessary personnel or grow
our existing systems, our expansion efforts may not succeed and our operations
may suffer.
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<PAGE>
Some of our expenses will increase with the opening of new stores. If
store sales are inadequate to support these new costs, our profitability will
decrease. For example, inventory costs will increase as we increase inventory
levels to fulfill additional stores. We may not be able to manage this increased
inventory without decreasing our profitability. We may need additional financing
in excess of our current credit facility to be used for new store openings.
Furthermore, our current credit facility has various loan covenants we must
comply with in order to maintain the credit facility. We can not predict with
certainty that we will be successful in obtaining additional funds or new credit
facilities on reasonable terms or at all.
We Are Dependent on the Success of our Advertising Efforts
Our revenues depend in part in our ability to effectively market and
advertise our products through The Sharper Image catalog and other advertising
vehicles. Increases in advertising costs may limit our ability to advertise
without reducing our profitability, but reduced advertising has a potential
adverse effect on future results.
We Rely on Our Catalog Operations
Our success depends in part on the success of our catalog operations,
which we believe is achieved through the efficient targeting of our mailings, a
high volume of prospect mailing, appropriate shifts in our merchandise mix and
our ability to achieve adequate response rates to our mailings. Catalog mailings
entail substantial paper, postage, merchandise acquisition and human resource
costs, including costs associated with catalog development and increased
inventories, virtually all of which are incurred prior to the mailing of each
catalog. As a result, we are not able to adjust the costs being incurred in
connection with a particular mailing to reflect the actual performance of the
catalog. If, for any reason, we were to experience a significant shortfall in
anticipated revenue from a particular mailing, and thereby not recover the costs
associated with that mailing, our future results would be adversely affected. In
addition, response rates to our mailings and, as a result, revenues generated by
each mailing can be affected by factors such as consumer preferences, economic
conditions, the timing and mix of catalog mailings and changes in the
merchandise mix, several of which may be outside our control. Further, we have
historically experienced fluctuations in the response rates to our catalog
mailings. Our inability to accurately target the appropriate segment of the
consumer catalog market or to achieve adequate response rates could result in
lower sales, significant markdowns or write-offs of inventory, increased
merchandise returns, and lower margins, which would adversely affect our future
results.
Our Catalog Costs are Unpredictable
Historically, a significant portion of our revenues have been from
purchases made by customers from The Sharper Image catalog. Increases in the
costs of producing and distributing the catalog may reduce the profitability of
our catalog sales. Specifically, we may experience increases in postage, paper
or shipping costs due to factors beyond our control. As a result, our future
results may be adversely affected.
We maintain a contract with Federal Express for the delivery of our
merchandise. There can be no assurance that, once this contract expires or is
terminated, the Company will be able to negotiate similar or better terms with
Federal Express or another shipping company or that the resulting contract(s)
will be on terms favorable to the Company. Any inability of the Company to
secure suitable or commercially favorable contracts for the delivery of our
merchandise could have an adverse effect on our future results.
Our New Business Lines and Acquisitions May Not Succeed
In the past we have tested new lines of business that have not always
proven profitable. We continually examine and evaluate all revenue divisions for
profitability. For example, in the end of our 1996 fiscal year we discontinued
our SPA Collections division and discontinued the mailing our Home Collection
Catalog at the end of our 1998 fiscal year due to their lack of profitability.
We may decide to develop new business lines or to acquire additional businesses
in the future, and we cannot predict with certainty that such efforts will be
successful. The failure of new business lines or acquisitions could hurt future
results.
We are pursuing opportunities to sell our products over the Internet.
This is a new business and marketing strategy for us and involves certain risks
and uncertainties. We may not succeed in achieving profitable orperations in
marketing our products over the Internet.
Our Business is Seasonal in Nature
Our business is highly seasonal, which reflects the general pattern of
peak sales and earnings for the retail industry during the Christmas season. A
substantial portion of our total revenues and all or most of our net earnings
occur during our fourth quarter ending January 31. Our earnings during the other
quarters of the year are generally lower and we have experienced losses in such
periods. It is possible that we may experience similar losses in the future in
such periods. If for any reason our sales were to be substantially below those
normally expected during the winter quarter of our fiscal year, our annual
results would be adversely affected. Due to this seasonality, the results for
any one period may not be indicative of the results for the full fiscal year.
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<PAGE>
In addition, like other retailers we typically make merchandising and
purchasing decisions for the Christmas season well in advance of the holiday
selling season. As a result, poor economic conditions and/or differences from
projected customer demand for our products during the fourth quarter could
result in lower revenues. During our 1996 and 1997 fiscal years, our total
revenues for the fourth quarter ending January 31 accounted for more than 40% of
total revenues for the full fiscal year.
We Depend on Our Vendors
Our performance depends on our ability to purchase our products in
sufficient quantities at competitive prices and on our vendors' ability to make
and deliver high quality products in a cost effective, timely manner. Some of
our smaller vendors have limited resources, production capacities and limited
operating histories. We have no long-term purchase contracts or other contracts
that provide continued supply, pricing or access to new products and any vendor
or distributor could discontinue selling to us at any time. We can not assure
you that we will be able to acquire the products we desire in sufficient
quantities or on terms that are acceptable to us in the future. In addition, we
cannot assure you that our vendors will make and deliver high quality products
in a cost effective, timely manner. We may also be unable to develop
relationships with new vendors. Our inability to acquire suitable products in a
cost effective, timely manner or the loss of one or more key vendors could have
a negative impact on our business.
We Face Certain Risks Relating to Customer Service and the Distribution of Our
Products
Our ability to provide customer service depends, to a large degree, on
the efficient and uninterrupted operation of our two call centers. Any material
disruption or slowdown in our order processing systems resulting from labor
disputes, telephone down times, electrical outages, mechanical problems, human
error or accidents, fire, natural disasters, or comparable events could cause
delays in our ability to receive and distribute orders and may cause orders to
be lost or to be shipped or delivered late. As a result, customers may cancel
orders or refuse to receive goods on account of late shipments which would
result in a reduction of net sales and could mean increased administrative and
shipping costs. There can be no assurances that telephone call volumes will not
exceed our present telephone system capacity and that, as a result, telephone
answer delays and delays in placing orders will not occur. As our strategies
depend in part on maintaining our reputation for levels of customer service
substantially superior to that in the catalog industry, any impairment of our
customer service reputation could have an adverse effect on our business.
We conduct all of our distribution operations and all of our mail order
processing fulfillment functions from a single facility in Little Rock,
Arkansas. Any disruption in the operations at the distribution center could have
a negative impact on our business. In addition, we rely upon third party
carriers for our product shipments, including shipments to and from all of our
stores. As a result, we are subject to certain risks, including employee strikes
and inclement weather, associated with such carriers' ability to provide
delivery services to meet our shipping needs. We are also dependent on temporary
employees to adequately staff our distribution facility, particularly during
busy period such as the Christmas season and while new stores are opening. We
cannot assure you that we will continue to receive adequate assistance from our
temporary employees, or that we will continue to have access to sufficient
sources of temporary employees.
Results for Our Comparable Store Sales May Fluctuate
A variety of factors affect our comparable store sales, including,
among others:
* customer demand in different geographies
* our ability to efficiently source and distribute products
* changes in our product mix
* impact of competition
* general economic conditions
Our comparable store sales have fluctuated significantly in the past
and we believe that such fluctuations may continue. Our historic comparable
store net sales changes were as follows:
Percentage
Fiscal Year Increase (Decrease)
----------- -------------------
1995 3.3
1996 (2.1)
1997 1.1
Nine months ended 3.1
October 31, 1998
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These historic results are not necessarily indicative of future
results, and we cannot assure you that our comparable store sales results will
not decrease in the future. Any changes in our comparable store sales results
could impact our future operating performance and cause the price of the common
stock to fluctuate.
We Experience Intense Competition in Our Markets
We operate in a highly competitive environment. We principally compete
with a variety of department stores, sporting goods stores, discount stores,
specialty retailers and other catalogs that offer products similar to or the
same as our products. Many of our competitors are larger companies with greater
financial resources, a wider selection of merchandise and a greater inventory
availability. Increased competition could have a negative impact on our
business.
We May Fail to Anticipate and Adapt to Changing Consumer Trends
Our success depends on our ability to anticipate and respond to
changing product trends and consumer demands in a timely manner. Our products
must appeal to a broad range of consumers whose preferences cannot always be
predicted with certainty and may change between sales seasons. If we misjudge
either the market for our products or our customers' purchasing habits, our
sales may decline or we may be required to sell our products at lower prices.
This would result in a negative impact on our business.
Poor Economic Conditions May Hurt Our Business
Certain economic conditions affect the level of consumer spending on
our products, including, among others, the following:
* general business conditions
* interest rates
* taxation
* consumer confidence in future economic conditions
Poor economic conditions and any related decline in consumer demand for
discretionary items such as our products could result in a negative impact on
our business.
We do purchase merchandise from foreign entities and use foreign manufacturers
on a contract basis for Sharper Image Design proprietary products and other
private label products. Therefore there are potential international risk factors
relating to vendors and manufacturers. The large majority of these foreign
entities are in the Far East, where political, social, legal, and economic risks
could negatively impact our business. Additionally, foreign weather and product
transportation problems could affect our ability to maintain adequate inventory
levels and adversely affect our future results.
We are Dependent on Certain Key Personnel
Our success depends to a significant extent upon the abilities of our
senior management, including without limitation, Richard Thalheimer, our
founder, President and Chief Executive Officer. The loss of the services of any
of these members of senior management or of certain other key employees could
have a significant adverse effect on our business. We maintain key man insurance
on Mr. Thalheimer in the amount of $15 million. In addition, our performance
will depend upon our ability to attract and retain qualified management,
merchandising and sales personnel. There can be no assurance that Mr. Thalheimer
and the other members of our existing management team will be able to manage our
company or our growth or that we will be ability to attract and hire additional
qualified personnel as needed in the future.
We are Controlled by a Single Stockholder
Upon completion of this offering, Richard Thalheimer will beneficially
own approximately 54% of all of the outstanding shares of the common stock of
our company. As a result, Mr. Thalheimer will continue to be able to elect the
entire Board of Directors and control the corporate actions of our company.
Our Common Stock Prices are Volatile
Our common stock is quoted on the Nasdaq National Market, which has
experienced and is likely to experience in the future significant price and
volume fluctuations which could reduce the market price of the common stock
without regard to our operating performance. In addition, we believe that any of
the factors could cause the price of the common stock to fluctuate
substantially:
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* quarterly fluctuations in our comparable store sales
* announcements by other accessory and gift item retailers
* the trading volume of our common stock in the public market
* general economic conditions
* financial market conditions
Risks Associated with the Year 2000 Problem
We recognize that the arrival of the year 2000 poses a unique worldwide
challenge to the ability of all systems to recognize the date change from
December 31, 1999 to January 1, 2000. The year 2000 issue could result, at our
company and elsewhere, in system failures or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to process
transactions or to engage in other normal business activities. We have assessed
our computer and business processes and we are reprogramming our computer
applications to provide for their continued functionality. We are currently
assessing the readiness of the external entities with which we interface.
We are presently unable to assess the likelihood that we will
experience operational problems due to unresolved year 2000 problems of third
parties that we do business with. We cannot assure you that other entities will
achieve timely year 2000 compliance; and if they do not, year 2000 problems
could have an adverse impact on our operations. Where commercially reasonable to
do so, we intend to assess our risks with respect to failure by third parties to
be year 2000 compliant and to seek to mitigate those risks. If we cannot achieve
such mitigation, year 2000 problems could have an adverse impact on our
operations.
The estimated cost for this project is between $500,000 and $1,000,000,
and is being funded through operating cash flows. We will incur operating costs
related to year 2000 compliance projects over several quarters and we will
expense such costs as incurred. Through October 31, 1998, we have incurred
approximately $250,000 on work related to year 2000 compliance.
Our estimates of the costs of achieving year 2000 compliance and the
date by which year 2000 compliance will be achieved are based on management's
best estimates, which were derived using numerous assumptions about future
events including the continued availability of certain resources, third party
modification plans and other factors. However, we cannot assure you that these
estimates will be achieved, and actual results could differ materially from
these estimates. Specific factors that might cause such material differences
include, but are not limited to the following:
* the availability and cost of personnel trained in year 2000
remediation work
* the ability to locate and correct all computer codes
* our vendors and suppliers success in reaching year 2000 readiness
* he timely availability of necessary replacement items
We presently believe that the most reasonably likely worst-case
scenarios that we might confront with respect to year 2000 issues have to do
with third parties not being year 2000 compliant. We are presently evaluating
vendor and customer compliance and will develop contingency plans, such as
alternate vendor opportunities, after obtaining compliance evaluations. We
intend to develop contingency plans by September 1999.
Merchandise Returns
As part of our customer service commitment, we maintain a liberal
merchandise return policy which allows customers to return any merchandise. As
with industry practice, we make allowances for catalog sales in our financial
statements for anticipated merchandise returns based on historical return rates.
We cannot assure you that actual merchandise returns will not exceed our
allowances. In addition, because our allowances are based on historical return
rates, there can be no assurance that the introduction of new merchandise in our
stores or catalogs or the opening of new stores, the introduction of new
catalogs, changes in the merchandise mix or other factors will not cause actual
returns to exceed return allowances. Any significant increase in merchandise
returns or merchandise returns that exceed our allowances could adversely affect
our future results.
Anti-Takeover Provisions
We are a Delaware corporation. The Delaware General Corporation Law
contains certain provisions that may discourage, delay or make a change in
control of our company more difficult or prevent the removal of incumbent
directors. In addition, our Certificate of Incorporation and Bylaws contain
certain provisions that have the same effect. These provisions may have a
negative impact on the price of our common stock and may discourage third-party
bidders from making a bid for our company or may reduce any premiums paid to
shareholders for their common stock.
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PLAN OF DISTRIBUTION
Sharper Image is registering all 150,000 shares on behalf of a selling
stockholder, The CIT Group/Business Credit Inc. All of the shares will be issued
upon exercise of warrants to acquire shares of our common stock issued in
connection with our financing agreement with The CIT Group/Business Credit Inc.
Sharper Image will receive no proceeds from this offering. The CIT
Group/Business Credit Inc. or pledgees, donees, transferees or other
successors-in-interest selling shares received from such selling stockholder as
a gift, partnership distribution or other non-sale related transfer after the
date of this prospectus (collectively, the "Selling Stockholder") may sell the
shares from time to time. The Selling Stockholder will act independently of
Sharper Image in making decisions with respect to the timing, manner and size of
each sale. The sales may be made on one or more exchanges or in the
over-the-counter market or otherwise, at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The Selling Stockholder may effect such transactions by selling
the shares to or through broker-dealers. The shares may be sold by one or more
of, or a combination of, the following:
o a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction,
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus,
o an exchange distribution in accordance with the rules of such exchange,
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
o in privately negotiated transactions.
To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. In effecting sales,
broker-dealers engaged by the Selling Stockholder may arrange for other
broker-dealers to participate in the resales.
The Selling Stockholder may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
such transactions, broker-dealers may engage in short sales of the shares in the
course of hedging the positions they assume with the Selling Stockholder. Some
or all of the shares covered by this registration statement may be sold to cover
short positions in the open market. The Selling Stockholder may enter into
option or other transactions with broker-dealers which require the delivery to
the broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The Selling Stockholder also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon a default the broker-dealer may sell the pledged
shares pursuant to this prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholder.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation as to a particular broker-dealer might be in excess of
customary commissions and will be in amounts to be negotiated in connection with
the sale. Broker-dealers or agents and any other participating broker-dealers or
the Selling Stockholder may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act in connection with sales of the shares.
Accordingly, any such commission, discount or concession received by them and
any profit on the resale of the shares purchased by them may be deemed to be
underwriting discounts or commissions under the Securities Act. Because the
Selling Stockholder may be deemed to be an "underwriter" within the meaning of
Section 2(11) of the Securities Act, the Selling Stockholder will be subject to
the prospectus delivery requirements of the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, the
Selling Stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the Selling Stockholder. Sharper Image will make
copies of this prospectus available to the Selling Stockholder and has informed
it of the need for delivery of copies of this prospectus to purchasers at or
prior to the time of any sale of the shares.
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The Selling Stockholder will bear all commissions and discounts, if any,
attributable to the sales of the shares. The Selling Stockholder may agree to
indemnify any broker-dealer or agent that participates in transactions involving
sales of the shares against certain liabilities, including liabilities arising
under the Securities Act. The Selling Stockholder has agreed to indemnify
certain persons, including broker-dealers and agents, against certain
liabilities in connection with the offering of the shares, including liabilities
arising under the Securities Act.
9
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholder has had a relationship as a lender providing
financing through a credit facility to Sharper Image. The CIT Group/Business
Credit Inc. currently beneficially owns 150,000 shares, which represents less
than 1% of the outstanding shares of our company. The shares offered by this
prospectus may be offered from time to time by the Selling Stockholder. The
Selling Stockholder currently intends to sell all of these shares.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
Sharper Image by Brobeck, Phleger & Harrison LLP, San Francisco, California.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended January 31, 1998 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
With respect to the unaudited interim financial information for the
three-month periods ended April 30, 1998 and 1997, the six-month periods ended
July 31, 1998 and 1997 and the nine-month periods ended October 31, 1998 and
1997, which is incorporated herein by reference, Deloitte & Touche LLP have
applied limited procedures in accordance with professional standards for a
review of such information. However, as stated in their reports included in the
Company's Quarterly Reports on Form 10-Q for the periods stated above and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial information because
those reports are not "reports" or a "part" of the registration statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Act.
10
<PAGE>
======================================= =======================================
We have not authorized any person to
make a statement that differs from what
is in this prospectus. If any person
does make a statement that differs from
what is in this prospectus, you should
not rely on it. This prospectus is not SHARPER IMAGE CORPORATION
an offer to sell, nor is it seeking an
offer to buy, these securities in any
state in which the offer or sale is not
permitted. The information in this
prospectus is complete and accurate as
of its date, but the information may
change after that date.
150,000 Shares
---------------- of Common Stock
----------------
PROSPECTUS
TABLE OF CONTENTS ----------------
Page
----
Where You can Find More
Information....................... 2
The Company ........................ 3
Risk Factors........................ 3-7 February __, 1999
Plan of Distribution................ 8-9
Selling Shareholders ............... 10
Legal Matters ...................... 10
Experts .............................10
======================================= =======================================
11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an itemized statement of all
estimated expenses in connection with the issuance and distribution of the
securities being registered:
SEC Registration fee.................................................. $599
Printing and engraving expenses....................................... 1,500
Legal expenses........................................................ *
Accounting fees and expenses.......................................... 14,000
Miscellaneous......................................................... 300
* To be provided by amendment.
Item 15. Indemnification of Officers and Directors.
Section 145 of the General Corporation Law of the state of
Delaware (the "Delaware Law") empowers a Delaware corporation to indemnify any
persons who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the certificate of
incorporation of the Company contains a provision to limit the personal
liability of the directors of the Registrant for violations of their fiduciary
duty. This provision eliminates each director's liability to the Registrant or
its stockholders for monetary damages except (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware Law providing
for liability of directors for unlawful payment of dividends or unlawful stock
purchases or redemptions, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
The Company's Bylaws permit it to indemnify its officers and
directors to the fullest extent permitted by law. In addition, the Company has
entered into separate indemnification agreements with each of its directors and
its executive officers. These agreements require the Company to indemnify its
officer and directors to the fullest extent permitted by law, including
circumstances in which indemnification would otherwise be
II-1
<PAGE>
the fullest extent permitted by law, including circumstances in which
indemnification would otherwise be discretionary. Among other things the
agreements require the Company to indemnify directors and officers against
certain liabilities that may arise by reason of their status or service as
directors and officers and to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified.
Item 16. Exhibits.
4.1 Warrant to Purchase Common Stock Agreement dated May 15, 1996 between
the Company and The CIT Group/Business Credit Inc. (1)
4.2 Warrant to Purchase Common Stock Agreement dated February 13, 1997
between the Company and The CIT Group/Business Credit Inc. (2)
4.3 Warrant to Purchase Common Stock Agreement dated April 6, 1998 between
the Company and The CIT Group/Business Credit Inc. (2)
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1
hereto).
24.1 Power of Attorney (included on page II-4 hereto).
- --------------
(1) Incorporated by reference from the Company's Quarterly Report on Form 10-Q,
filed with the Commission on June 14, 1996.
(2) Incorporated by reference from the Company's Annual Report on Form 10-K,
filed with the Commission on April 30, 1998.
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 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;
and (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; provided,
however, that (i) and (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 (i) and (ii) is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15 of the Securities Exchange Act
of 1934 that are incorporated by reference in the Registration Statement.
II-2
<PAGE>
(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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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. In the event that 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.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 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.
For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California on this 25th day
of February, 1999.
Sharper Image Corporation
By /s/ Tracy Y. Wan
----------------------------
Tracy Y. Wan
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature appears
below constitutes and appoints jointly and severally, Richard J. Thalheimer and
Tracy Y. Wan, and each one of them, as such person's attorneys-in-fact, each
with the power of substitution and resubstitution, for such person in any and
all capacities, to sign any and all amendments to this Registration Statement
and any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, as amended, and all
post-effective amendments thereto, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard J. Thalheimer Chief Executive Officer, Chairman February 25, 1999
- ---------------------------------- (Principal Executive Officer)
Richard J. Thalheimer
/s/ Tracy Y. Wan
- ---------------------------------- Executive Vice President, Chief Financial February 25, 1999
Tracy Y. Wan Officer, Corporate Secretary
(Principal Financial and Accounting Officer)
II-4
<PAGE>
/s/ Alan Thalheimer
- ---------------------------------- Director February 25, 1999
Alan Thalheimer
/s/ Maurice Gregg
- ---------------------------------- Director February 25, 1999
Maurice Gregg
- ----------------------------------
Gerald Napier
- ----------------------------------
Morton David
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TITLE
- ------ -------------
4.1 Warrant to Purchase Common Stock Agreement dated May 15, 1996 between the
Company and The CIT Group/Business Credit Inc. (1)
4.2 Warrant to Purchase Common Stock Agreement dated February 13, 1997 between
the Company and The CIT Group/Business Credit Inc. (2)
4.3 Warrant to Purchase Common Stock Agreement dated April 6, 1998 between the
Company and The CIT Group/Business Credit Inc. (2)
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1
hereto).
24.1 Power of Attorney (included on page II-4 hereto).
- ---------------
(1) Incorporated by reference from the Company's Quarterly Report on Form 10-Q,
filed with the Commission on June 14, 1996.
(2) Incorporated by reference from the Company's Annual Report on Form 10-K,
filed with the Commission on April 30, 1998.
II-6
EXHIBIT 5.1
February 25, 1999
Sharper Image Corporation
650 Davis Street
San Francisco, California 94111
Ladies and Gentlemen:
We have acted as counsel to Sharper Image Corporation, a
Delaware corporation (the "Company"), in connection with its registration of an
aggregate of 150,000 shares of its common stock (the "Shares"), which may be
offered for resale by certain stockholders of the Company (the "Selling
Stockholders"), as described in the Company's Registration Statement on Form
S-3, filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Registration Statement").
This opinion is being furnished in accordance with the
requirements of Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the issuance and
sale of the Shares. Based on such review, we are of the opinion that the Shares
have been duly authorized, and if, as and when issued in accordance with the
Registration Statement and the related prospectus (as amended and supplemented
through the date of issuance) will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus which is part of the Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act,
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or item 509 of Regulation S-K.
This opinion is rendered as of the date first written above
and we disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company or the
Shares.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
------------------------------------
BROBECK, PHLEGER & HARRISON LLP
II-7
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Sharper Image Corporation on Form S-3 of our reports dated March 25, 1998,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
Sharper Image Corporation for the year ended January 31, 1998 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
San Francisco, California
February 24, 1999
II-8
