<PAGE>
As filed with the Securities and Exchange Commission on October 25, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
RYKA INC.
(Exact name of Registrant as specified in its charter)
Delaware 04-2958132
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
555 South Henderson Road
King of Prussia, Pennsylvania 19406
(610) 337-2200
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Michael G. Rubin
Chairman and Chief Executive Officer
RYKA Inc.
555 South Henderson Road
King of Prussia, Pennsylvania 19406
(610) 337-2200
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Arthur H. Miller, Esquire
Blank Rome Comisky & McCauley
1200 Four Penn Center Plaza
Philadelphia, Pennsylvania 19103
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment, 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 of 1933, 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 of 1933, 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. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of securities offering aggregate Amount of
to be registered Amount to be price offering registration
registered per share price fee
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 18,015,135 $0.415 $7,476,281 $2,266
$0.01 per share shares /(1)/ /(1)/
================================================================================
</TABLE>
(1) Based upon the average of the bid and asked price of the Common Stock as
reported on the NASD Over-the-Counter Bulletin Board on October 18, 1996,
estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended.
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.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement becomes+
+effective. This prospectus shall not constitute an offer to sell or the +
+solicitation of an offer to buy nor shall there be any sale of these +
+securities in and State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED OCTOBER __, 1996
PROSPECTUS
RYKA INC.
18,015,135 Shares of Common Stock
The shares offered hereby (the "Shares") consist of 18,020,135 shares of
common stock, $.01 par value per share (the "Common Stock"), of RYKA Inc., a
Delaware corporation ("RYKA" or the "Company"), which are owned by the selling
stockholders listed herein under "Selling Stockholders" (collectively, the
"Selling Stockholders"). RYKA shall pay all expenses incident to the
registration of the Common Stock, including, without limitation, the filing of
this Registration Statement, including all registration and filing fees, fees
and expenses of compliance with state securities or "blue sky" laws, printing
expenses, messenger and delivery expenses, fees and disbursements of counsel
for the Company and all independent certified public accountants retained by
the Company. Each Selling Stockholder shall pay all expenses relating to the
sale of the Shares including any commissions, discounts or other fees payable
to broker-dealers and any attorney fees or other expenses incurred by such
Selling Stockholder. RYKA will not receive any of the proceeds from the sale
of the Shares by the Selling Stockholders. RYKA will receive the proceeds from
the issuance of Shares to the Selling Stockholders upon exercise of certain
warrants, which will be used for general working capital purposes.
The Selling Stockholders have not advised RYKA of any specific plans for
the distribution of the Shares covered by this Prospectus, but it is
anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) in the over-the-counter
market at the market price then prevailing, although sales may also be made in
negotiated transactions or otherwise. The Selling Stockholders and the brokers
and dealers through whom sale of the Shares may be made may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and their commissions or discounts and other
compensation may be regarded as underwriters' compensation. See "Plan of
Distribution."
The Company's Common Stock is traded in the over-the-counter market and
prices are quoted on the NASD Over-the-Counter Bulletin Board. The average of
the bid and asked price of the Common Stock as reported by the NASD Over-the-
Counter Bulletin Board on October 18, 1996 was $.415 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER __, 1996.
<PAGE>
AVAILABLE INFORMATION
RYKA has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-3 under the Securities Act (the
"Registration Statement") with respect to the registration of RYKA Common Stock
owned by the Selling Stockholders. This Prospectus constitutes a part of the
Registration Statement and, in accordance with the rules of the Commission,
omits certain of the information contained in the Registration Statement. For
such information, reference is made to the Registration Statement and the
exhibits thereto.
RYKA is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Commission. The
Registration Statement, as well as such reports, proxy statements and other
information, 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. 20549, and at the Commission's regional offices at Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621, and at 75
Park Place, 14th Floor, New York, New York 10007. Copies of such material also
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such materials
and other information concerning RYKA are also filed electronically with the
commission and are accessible via the Worldwide Web at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents and portions of documents filed by the Company with
the Commission are hereby incorporated by reference into this Prospectus and
made a part hereof: (i) the Annual Report on Form 10-K for the year ended
December 31, 1995 (except for the Company's financial statements for each of
the years ended December 31, 1994 and 1993 therein); (ii) the Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996; (iii) the
Current Report on Form 8-K/A dated October 16, 1996 (which includes the
Company's financial statements for each of the years ended December 31, 1995,
1994 and 1993); and (iv) the Proxy Statement dated November __, 1996 (relating
to the proposed merger of KPR Sports International, Inc. and certain affiliated
companies with and into RYKA).
All documents filed by RYKA pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of
filing thereof. Any statement contained herein or in any document incorporated
or deemed to be in corporated 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 that
also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part of this Prospectus, except as so modified or
superseded.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the information that has been incorporated by reference in this Prospectus (not
including exhibits to such information unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates). Written or oral requests for such copies should be directed to
RYKA Inc., 555 South Henderson Road, Suite B, King of Prussia, Pennsylvania
19406, Attention: Investor Relations, telephone (610) 337-2200.
-2-
<PAGE>
THE COMPANY
RYKA designs, develops and markets high performance athletic footwear
specifically for women. RYKA's product line currently consists of four
categories: Aerobic Fitness; Cross-Training; Walking and Aqua Conditioning.
RYKA was organized in Delaware in 1986. RYKA commenced operations and
introduced its first two styles of high performance athletic footwear in 1987
and began shipping its first products in 1988.
In June 1995, RYKA entered into a series of transactions that significantly
changed the capital structure of RYKA and the manner in which RYKA operates its
business. These transactions were a result of the termination of RYKA's
proposed merger with L.A. Gear, Inc. ("L.A. Gear") and the termination of
RYKA's production financing agreement with Pro-Specs America Corporation ("Pro-
Specs").
Transactions with MR Acquisitions. On July 31, 1995, RYKA consummated a
financing arrangement with MR Acquisitions, L.L.C. ("MR Acquisitions"), a
company that is wholly-owned, indirectly by Michael Rubin, the current Chairman
and Chief Executive Officer of RYKA, pursuant to which MR Acquisitions provided
or arranged to provide RYKA with up to $8,000,000 of new financing in the form
of (i) an aggregate of $1,000,000 equity and subordinated debt investment by MR
Acquisitions and KPR Sports International, Inc. ("KPR"), an affiliate of MR
Acquisitions, (ii) a $2,000,000 letter of credit facility from KPR, (iii) a
$4,000,000 revolving credit facility with a bank, and (iv) a $1,000,000 equity
investment through the private placement with certain investors of Common Stock
and a subordinated note which will be converted into Common Stock.
Settlement with Creditors. In connection with the transactions with MR
Acquisitions, RYKA negotiated settlement arrangements with secured and
unsecured creditors, resulting in the settlement of approximately $3,050,000 of
indebtedness and recognizing a gain of approximately $1,650,000. RYKA entered
into an agreement with Pro-Specs, a secured lender who provided inventory
financing to RYKA, pursuant to which $1,804,734 of secured indebtedness was
settled for $1,100,000 in cash and 500,000 shares of Common Stock and Pro-Specs
was released from its obligations to certain vendors under letters of credit
opened on behalf of RYKA for the purchase of approximately $1,000,000 in
merchandise to be received in the future. In addition, RYKA entered into
arrangements with other creditors, pursuant to which RYKA settled an aggregate
of approximately $1,250,000 of indebtedness for approximately $180,000 in cash
and warrants to purchase 53,192 shares of Common Stock at $1.50 per share.
Relocation of RYKA's Offices. In August 1995, RYKA terminated the lease for
its principal facility in Norwood, Massachusetts and moved its executive
offices and warehouse to a facility in King of Prussia, Pennsylvania, that it
subleases from the KPR Companies.
New Management Personnel. On July 31, 1995, Michael G. Rubin became
Chairman of the Board and Chief Executive Officer. Since that time, he has
taken an active role in the management of RYKA. Mr. Rubin does not receive any
compensation for his services. In addition, since August 1995, RYKA has hired
Dennis DiDominicis as its President, Steven Wolf as the Vice President of
Finance and Chief Financial Officer, Donna Jordan as the Manager of Marketing
Services, and James Donohue, Vice President of Sourcing and Product
Development. All of these members of the new management have substantial
experience in the athletic footwear industry.
New Sales, Marketing and Manufacturing Arrangements. Since August 1995,
RYKA has engaged independent design groups to create new designs for the
Company's footwear. In addition, the Company has entered into arrangements for
the sourcing and manufacture of RYKA's footwear in the Far East. RYKA has also
entered into arrangements with eleven independent sales representative
organizations covering 45 states for the sale of the Company's footwear.
-3-
<PAGE>
More recently, the Company has entered into three significant transactions:
(i) a $2,500,000 equity private placement, (ii) a financing arrangement with a
new lender, and (iii) a reorganization agreement with certain companies wholly
owned by Michael G. Rubin.
Private Placement. Between May and August 1996, the Company sold 10,000,000
shares of Common Stock at a price of $.25 per share in a private placement for
an aggregate amount of $2,500,000 (the "1996 Private Placement").
New Financing Arrangement. In connection with production of the Company's
fall 1996 line, RYKA required additional financing and letters of credit during
the second and third quarters of 1996. In order to fund its operating plans,
the Company negotiated a credit facility with a new lender. Under the terms of
its new credit facility, the Company was required to raise $2,000,000 in equity
as a condition to obtaining such facility, which it satisfied through the 1996
Private Placement. On August 15, 1996, the Company closed on the credit
facility with its new lender. The new credit facility has an initial term of
one year and increases the amount the Company can borrow from $2,500,000 to
$4,500,000, based on certain advance ratios, with interest at prime plus 0.25%.
Reorganization. On September 26, 1996, the Company entered into an Amended
and Restated Agreement and Plan of Reorganization (the "Reorganization") with
KPR and certain affiliated companies (collectively, the "KPR Companies") and
Michael G. Rubin, Chairman and Chief Executive Officer of RYKA and sole
stockholder of the KPR Companies, pursuant to which, subject to the approval by
the stockholders of RYKA, (i) the Company's Certificate of Incorporation will
be amended and restated to effect, among other things, a 1-for-20 reverse stock
split, (ii) RYKA will become a holding company by transferring all of its
assets and liabilities to a wholly-owned subsidiary and will acquire the KPR
Companies in exchange for 163,250,000 shares of RYKA (before giving effect to
the 1-for-20 reverse stock split) and (iii) the number of shares issuable
pursuant to RYKA's 1996 Equity Incentive Plan will be increased. To obtain
stockholder approval of these proposals, all as more fully described in the
Proxy Statement incorporated herein by reference, RYKA has called for a Special
Meeting of Stockholders to be held on Monday, December 16, 1996. Assuming
stockholder approval at the Special Meeting, the Company anticipates that the
Reorganization will become effective as of December 31, 1996. The KPR
Companies design, develop and market the Apex One and Yukon brands as well as
distribute off-price athletic footwear and sporting goods worldwide.
RYKA maintains its principal executive offices and warehouse at 555 South
Henderson Road, Suite B, King of Prussia, PA 19406 and its telephone number is
(610) 337-2200.
-4-
<PAGE>
RISK FACTORS
The following factors should be considered carefully in evaluating the
Company and its business.
Operating Losses; Ability to Continue as Going Concern
RYKA commenced operations in February 1987 and has incurred substantial
losses in each year of its operations. Net losses amounted to $734,963,
$3,629,477, $511,415 and $3,428,491 for the six months ended 1996 and for the
years ended 1995, 1994 and 1993, respectively. At June 30, 1996 and December
31, 1995, the Company had an accumulated deficit of $18,583,477 and
$17,848,484, respectively. The report of RYKA's independent auditors with
regard to the financial statements for each of the fiscal years ended 1987
through 1995 stated that there is substantial doubt about RYKA's ability to
continue as a going concern. Management believes the Company's ability to
continue as a going concern is dependent upon securing adequate financing to
fund operations until the Company achieves consistent profitability. In order
for RYKA to achieve consistent profitability, management believes it must
increase sales, improve gross profit margins and reduce expenses as a
percentage of total sales. There can be no assurance that RYKA will be
successful in achieving these goals.
Future Capital Needs
The Company expects to incur significant costs in continuing its operations
and in establishing its position in the athletic footwear industry. Even with
its new credit facility and the additional equity raised in the 1996 Private
Placement, the Company may be required to raise additional equity and/or
subordinated debt within the next year to support its operations. The Company
must obtain additional resources or consider modifications to its operating
plans, including reductions in operating costs, to enable it to continue
operations. However, no assurance can be given that the Company will be
successful in raising additional capital to support future operations.
Further, there can be no assurance, assuming the Company successfully raises
additional funds and is able to use its new credit facility, that the Company
will achieve profitability or a positive cash flow.
Competition
The athletic footwear industry in which RYKA markets and sells its products
is highly competitive. RYKA's competitors include specialized athletic shoe
companies as well as companies with diversified product lines. The Company
believes that its unique niche, combined with effective advertising and
marketing, fashionable styling, high quality and technological advances are the
most important competitive factors. However, due to substantial growth and
interest in the women's segment of the high performance athletic footwear
market, there has been increased competition from established companies,
especially Nike and Reebok, which have developed advertising and promotional
programs directed to this segment of the market. RYKA's competitors include
Adidas, Avia, Asics, Converse, K-Swiss, New Balance, Nike, Reebok and Saucony.
The Company's competitors have significantly greater financial and other
resources and more extensive marketing staffs than the Company. Accordingly,
there is no assurance that the Company will be able to compete successfully
with any of these companies or achieve any meaningful market share without
significant additional resources.
Substantially All Assets Pledged
In connection with its financing arrangements with its bank, the Company has
pledged substantially all of its assets as security for the performance of its
obligations. In addition, the Company has also pledged substantially all of
its assets (after satisfying any obligations to its bank) to KPR in connection
with its secured subordinated debt. In the event that the Company were to
default on the payment of any amounts owed under the agreements, the Company's
lenders would have the ability to satisfy the Company's obligations to them by
selling or causing the sale of some or all of the assets of the Company.
-5-
<PAGE>
Dependence Upon Key Personnel
The Company's ability to market its products and to achieve profitability
will depend, in large part, on its ability to attract and retain qualified
personnel. Competition for such personnel is intense and there can be no
assurance that the Company will be able to attract and retain such personnel.
In particular, RYKA is dependent upon the services of Michael G. Rubin, its
Chairman and Chief Executive Officer, Dennis F. DiDominicis, its President, and
Steven A. Wolf, its Vice President and Chief Financial Officer. RYKA maintains
key person life insurance policies on Mr. Rubin with coverage in the amount of
$4,000,000. The loss of Mr. Rubin, Mr. DiDominicis or Mr. Wolf could have a
material adverse effect on the Company.
Reliance on Foreign Manufacturers
As is customary in the footwear industry, all of the footwear marketed by the
Company is manufactured to its specifications by independent factories in the
Far East. The Company's importing of footwear may be adversely affected by
fluctuations in currency exchange rates, the adoption of bilateral trade
agreements between the United States and countries in which the Company's
suppliers are located, work stoppages or the imposition of unilateral
restrictions on trade, including quotas or additional duties, by either the
United States or any supplier country. In addition, the current political
climate in the Far East is not always stable and may cause delays in the
Company's ability to deliver products to its customers in a timely manner or,
depending upon the severity of the situation, may limit or restrict the
Company's ability to have its products manufactured at all. Although the
Company does not believe that these factors have had a material impact on
operations to date, such factors could ultimately increase the Company's cost
of goods, resulting in higher product prices and lower gross profits unless
alternative manufacturing arrangements could be implemented.
Customer Preferences
The Company's current product lines are subject to customer preferences and
trends. There can be no assurance that consumers will remain loyal to its
products or that the Company will be able to adapt quickly to changing market
trends.
No Dividends
The Company has paid no dividends to its stockholders since its inception and
does not plan to pay dividends in the foreseeable future. The Company
currently intends to retain any earnings to finance the growth of the Company.
In addition, the Company's credit facility with its bank restricts the amount
of dividends which may be paid on the Common Stock.
Limitation on Directors' Liabilities under Delaware Law
Pursuant to the Company's Certificate of Incorporation and under Delaware
law, directors of the Company are not liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty, except for liability in
connection with a breach of duty of loyalty for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
for dividend payments or stock repurchasing illegal under Delaware law or any
transaction in which a director has derived an improper personal benefit.
Securities Market Factors
There have been periods of extreme volatility in the stock markets, which in
many cases were unrelated to the operating performance of, or announcements
concerning, the issuers of the affected stock. During such periods, the price
of the affected stock, including the Company's Common Stock, has fluctuated
substantially.
-6-
<PAGE>
General market price declines or market volatility in the future could
adversely affect the price of the Company's Common Stock.
NASDAQ Delisting
The Company did not meet the listing standards for inclusion on the NASDAQ
Small Cap Market and was delisted on September 15, 1995. The Company's Common
Stock are currently listed on the NASD Over-the-Counter Bulletin Board.
Possible Adverse Effect of Penny Stock Rules
As a result of the delisting of the Company's Common Stock from the NASDAQ
SmallCap Market, the Company's Common Stock is subject to Rule 15g-9 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which imposes
additional sales practice requirements for broker-dealers which sell such
securities to persons other than established customers and accredited investors
as defined in Regulation D under the Securities Act . For transactions covered
by this rule, a broker-dealer must make a special suitability determination for
the purchaser and have received the purchaser's written consent to the
transaction prior to sale. Consequently, such rule may adversely affect the
ability of broker-dealers to sell the Company's Common Stock and may adversely
affect the ability of persons acquiring shares in this offering to sell any of
the shares acquired in the secondary market.
The Commission's regulations define a "penny stock" as any equity security
not registered on a national securities exchange or for which quotation
information is not disseminated on NASDAQ and has a market price (as therein
defined) of less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require delivery, prior to a transaction
in a penny stock, of a disclosure schedule prepared by the Commission relating
to the penny stock market. Disclosure is also required to be made about
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements are
required to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
The foregoing required penny stock restrictions will not apply to the
Company's Common Stock if such securities are included for quotation on NASDAQ
and have certain price and volume information provided on a current and
continuing basis or meet certain minimum net tangible assets or average revenue
criteria. There can be no assurance that the Company's Common Stock will
qualify for exemption from these restrictions. In any event, even if the
Company's Common Stock were exempt from such restrictions, it would remain
subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the
authority to prohibit any person that is engaged in unlawful conduct while
participating in a distribution of a penny stock from associating with a
broker-dealer or participating in a distribution of a penny stock, if the
Commission finds that such a restriction would be in the public interest. The
market liquidity for the Company's Common Stock could be severely adversely
affected by these rules.
USE OF PROCEEDS
RYKA will not receive any proceeds from the sale of the Shares by the Selling
Stockholders. RYKA will receive the proceeds from the issuance of Shares to the
Selling Stockholders upon exercise of certain warrants, which will be used for
general working capital purposes.
-7-
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information as of the date of this
Prospectus regarding the ownership of shares of RYKA Common Stock of each
Selling Stockholder and as adjusted to give effect to the sale of the Shares
offered hereby. A description of the transactions under which the Selling
Shareholders received the Common Stock being registered herein is set forth in
the footnotes to the table below. The Shares are being registered to permit
public secondary trading in the Shares and the Selling Stockholders may offer
the Shares for resale from time to time. See "Plan of Distribution."
<TABLE>
<CAPTION>
# of Shares # of Shares # of Shares
Name of Owned Before the Being Offered Owned After
Selling Stockholder Offering/(1)/ for Sale the Offering/(1)/
- ---------------------------------------------- ------------------ --------------- -------------------
<S> <C> <C> <C>
Kenneth Adelberg /(2)(4)(5)(15)/........... 860,000 860,000 0
Astor Weiss Kaplan & Rosenblum /(7)/....... 36,000 36,000 0
Advanced Photographics /(3)/............... 1,200 1,200 0
B & B Trading Corp. Retirement
Plan /(4)/............................... 200,000 200,000 0
Stephen P. Barsamian /(4)/................. 100,000 100,000 0
David Becker /(4)/......................... 200,000 200,000 0
Jacob Ben-Ari /(4)/........................ 100,000 100,000 0
Daniel Berger and Carolyn Berger /(4)/..... 200,000 200,000 0
Howard Bongiorno /(5)/..................... 200,000 200,000 0
David Wm. Boone /(4)/...................... 100,000 100,000 0
Borris Image /(3)/......................... 321 321 0
Alfred F. Bracher III /(4)/................ 400,000 400,000 0
Larry Brahim /(4)/......................... 100,000 100,000 0
Branded Apparel & Incentives /(3)/......... 166 166 0
Charles Cocotas /(4)/...................... 200,000 200,000 0
William J. Curtis /(4)/.................... 400,000 400,000 0
Milton Dienes /(4)/........................ 160,000 160,000 0
Michael Foglia /(5)/....................... 80,000 80,000 0
Thomas M. Forman /(4)/..................... 200,000 200,000 0
Richard S. Frary /(13)/.................... 6,000 6,000 0
Galan Corporation /(4)/.................... 200,000 200,000 0
Ira Goldfarb /(5)/......................... 100,000 100,000 0
Oliver D. Goldman /(4)/.................... 100,000 100,000 0
Robert D. Greene and
Ana Kopejka Greene /(4)/................. 100,000 100,000 0
Irwin Haas /(5)/........................... 40,000 40,000 0
Allan Hackel Organization, Inc. /(3)/...... 3,277 3,277 0
Susan Hacohen /(4)/........................ 100,000 100,000 0
Albert Halegoua and Alan M. Kaplan,
Tenants in Common /(4)/.................. 100,000 100,000 0
Albert Halegoua /(4)(16)/.................. 220,000 220,000 0
Mark Hamblett /(12)/....................... 20,000 20,000 0
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
# of Shares # of Shares # of Shares
Name of Owned Before Being Offered Owned After
Selling Stockholder the Offering/(1)/ for Sale the Offering/(1)/
- -------------------------------------------- --------------------- --------------- ---------------------
<S> <C> <C> <C>
David Helman /(5)/......................... 100,000 100,000 0
Donald J. Horowitz /(4)/................... 100,000 100,000 0
Hygrade Business Group, Inc. /(3)/......... 1,777 1,777 0
Eugene Jaffe /(4)/......................... 100,000 100,000 0
Jane Resnick Ltd /(3)/..................... 276 276 0
Jay Joffe /(2)(5)(6)/...................... 1,200,000 1,200,000 0
Jeffrey Kaplan /(4)/....................... 100,000 100,000 0
C. Daniel Karnes /(4)/..................... 100,000 100,000 0
John E. Karpac and
Lorraine Karpac /(4)/................... 100,000 100,000 0
Michael Kopejka and
Helena Kopejka /(4)/.................... 100,000 100,000 0
Norman Kravetz /(2)(5)(6)/................. 1,200,000 1,200,000 0
Marc Kwestal /(13)/........................ 500 500 0
Alex Lauchlan /(4)/........................ 100,000 100,000 0
Loading Dock Equipment, Inc. /(3)/......... 402 402 0
Joel Mael /(13)/........................... 6,000 6,000 0
David Mandel /(8)/......................... 14,000 14,000 0
John A. Medico /(10)/...................... 60,000 60,000 0
John A. Minutella and
M. Deidre Minutella /(4)/............... 200,000 200,000 0
Michael Modell /(4)(5)/.................... 350,000 350,000 0
Mitchell Modell /(4)(5)/................... 350,000 350,000 0
William Modell /(4)/....................... 100,000 100,000 0
Mullen Advertising, Inc. /(3)/............. 19,445 19,445 0
Eli Nachmani /(4)/......................... 400,000 400,000 0
Rafael Nachmani and
Jill Nachmani /(4)/..................... 400,000 400,000 0
National Telecom /(3)/..................... 9,210 9,210 0
Abraham Nechemia and Ehud Nahu, Joint
Tenants/(4)/............................. 150,000 150,000 0
Marc B. Nelson /(4)/....................... 104,000 104,000 0
Joseph O'Brien /(5)/....................... 200,000 200,000 0
Packard Press New England, Inc. /(3)/...... 388 388 0
Pro-Specs America Corp. /(11)/............. 500,000 500,000 0
Quaker City Hide Distributing Co. /(4)/.... 100,000 100,000 0
The Recovery Group, Inc /(3)/.............. 2,083 2,083 0
Recycled Office Products /(3)/............. 2,180 2,180 0
Saul Robbins IRA /(4)/..................... 160,000 160,000 0
Sheila Satz /(4)/.......................... 100,000 100,000 0
Luca Sena /(4)/............................ 100,000 100,000 0
Zeev Shenkman /(2)(4)(5)(14)/.............. 3,526,000 3,526,000 0
Morris Sidewater /(4)/..................... 200,000 200,000 0
Silkscreen Printing /(3)/.................. 1,151 1,151 0
Rudy Slucker /(4)/......................... 400,000 400,000 0
Soller Shayne & Horn /(3)/................. 759 759 0
Jean Pierre St. Louis /(4)/................ 140,000 140,000 0
Charles M. Stentiford /(4)/................ 100,000 100,000 0
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
# of Shares # of Shares # of Shares
Name of Owned Before Being Offered Owned After
Selling Stockholder the Offering/(1)/ for Sale the Offering/(1)/
- -------------------------------------------- ------------------ --------------- -------------------
<S> <C> <C> <C>
Paul Stevens /(4)/......................... 100,000 100,000 0
S. J. Talucci /(4)/........................ 100,000 100,000 0
Sharon Teres-Schneider
Rev. Living Trust & U/A/D /(4)/......... 200,000 200,000 0
Trans European Trading /(4)/............... 100,000 100,000 0
Marie E. Valdes, M.D. /(4)/................ 200,000 200,000 0
Peter Vosgerichian /(4)/................... 100,000 100,000 0
Michael Wachs /(4)/........................ 200,000 200,000 0
Rachael A. Wachs /(4)/..................... 150,000 150,000 0
David Wachs /(4)/.......................... 500,000 500,000 0
Robert A. Ward, Jr. /(4)/.................. 100,000 100,000 0
Warner & Stackpole /(9)/................... 100,000 100,000 0
Forrest S. Williams /(4)/.................. 100,000 100,000 0
A. Charles Winkleman /(4)/................. 240,000 240,000 0
Richard Zahalka /(5)/...................... 200,000 200,000 0
Leonard B. Zelin /(4)/..................... 200,000 200,000 0
</TABLE>
- --------------------------
/(1)/ With the exception of Messrs. Adelberg, Joffe, Kravetz and Shenkman, the
percentage of shares owned by each Selling Stockholder before and after
the Offering is less than 1%.
/(2)/ The number of shares owned by Messrs. Adelberg, Joffe, Kravetz and
Shenkman before the Offering represents 1.50%, 2.11%, 2.11% and 5.94% of
the Company's Common Stock, respectively, and the number of shares owned
by each of these individuals after the Offering represents 0% of the
Company's Common Stock .
/(3)/ Each of these entities, as creditors of RYKA, received warrants to
purchase shares of the Company's Common Stock pursuant to a plan of
settlement at an exercise price of $1.50 per share. The warrants are
exercisable at any time or from time to time until July 2000, and all such
warrants remain outstanding.
/(4)/ Each of these individuals purchased shares of the Company's Common Stock
in a private placement offering which took place in May through August,
1996. All of the shares were issued at a price of $.25 per share.
/(5)/ Each of these individuals purchased shares of the Company's Common Stock
in a private placement offering which took place in July 1995. All of the
shares were issued at a price of $.25 per share.
/(6)/ Includes a warrant to purchase 200,000 shares of the Company's Common
Stock at an exercise price of $.25 per share. The warrant is exercisable
at any time or from time to time until November 30, 2005 and remains fully
outstanding.
/(7)/ Astor Weiss Kaplan & Rosenblum, legal counsel to the Company, received
36,000 shares of the Company's Common Stock in connection with legal
services rendered to the Company.
/(8)/ David Mandel, a partner at Astor Weiss Kaplan & Rosenblum, legal counsel
to the Company, received 14,000 shares of the Company's Common Stock in
connection with legal services rendered to the Company.
/(9)/ Warner & Stackpole, former legal counsel to the Company, received a
warrant to purchase 100,000 shares of the Company's Common Stock at an
exercise price of $.42 per share in connection with legal services
rendered to the Company. The warrant is exercisable at any time or from
time to time until July 2000 and remains fully outstanding.
-10-
<PAGE>
/(10)/ John A. Medico received 60,000 shares of the Company's Common Stock in
connection with the termination of a Key Employee Agreement dated
January 1, 1995, by and between John A. Medico and the Company.
/(11)/ Pro-Specs America Corp. received 500,000 shares of Common Stock in
connection with a Settlement Agreement dated July 31, 1995, by and
between Pro-Specs America Corp. and the Company.
/(12)/ Mark Hamblett received 20,000 shares of Common Stock in connection with
consulting services rendered to the Company pursuant to a Consulting
Agreement dated January 9, 1996, by and between Mark Hamblett and the
Company.
/(13)/ The Company issued to Messrs. Frary, Mael and Kwestal warrants to
purchase an aggregate of 12,500 shares of the Company's Common Stock at
an exercise price of $.60 per share in connection with financial
consulting services rendered to the Company. The warrants are
exercisable at any time or from time to time until January 3, 2004, and
all such warrants remain outstanding.
/(14)/ Includes 2,730,000 shares attributable to the vesting of an option
granted on August 5, 1996, to purchase up to 3.9% of the capital stock
of the KPR Companies from Michael G. Rubin, personally. Mr. Shenkman
currently serves as Executive Vice President of Finance and Operations
of the KPR Companies. Upon consummation of the Reorganization with the
KPR Companies, Mr. Shenkman's option will become an option to purchase
shares of RYKA Common Stock held by Mr. Rubin.
/(15)/ Mr. Adelberg has served as a director of the Company since July 31,
1995.
/(16)/ Includes 100,000 shares transferred from MR Acquisitions on September
17, 1996 in a privately negotiated transaction.
-11-
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby by the Selling Stockholders may be sold from time
to time by the Selling Stockholders, or by pledgees, donees, transferees or
other successors in interest. Such sales may be made 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 Shares
may be sold by one or more of the following methods, without limitation: (a) 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; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (d) face-to-face transactions between the
Selling Stockholders and purchasers without a broker-dealer. In effecting
sales, brokers or dealers engaged by the Selling Stockholders may arrange for
other brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from the Selling Stockholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters"
within the meaning of the Securities Act, in connection with such sales. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 might be sold under Rule 144 rather than pursuant to this
Prospectus.
Upon RYKA being notified by a Selling Stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of
Shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemented
Prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, disclosing (a) the name of each such broker-dealer, (b) the
number of Shares involved, (c) the price at which such Shares were sold, (d)
the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable, (e) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this Prospectus, as supplemented, and (f) other facts material to the
transaction.
RYKA shall pay all expenses incident to the registration of the Common Stock,
including, without limitation, the filing of this Registration Statement,
including all registration and filing fees, fees and expenses of compliance
with state securities or "blue sky" laws, printing expenses, messenger and
delivery expenses, fees and disbursements of counsel for the Company and all
independent certified public accountants retained by the Company. Each selling
stockholder shall pay all expenses relating to the sale of the shares including
any commissions, discounts or other fees payable to broker-dealers and any
attorney fees or other expenses incurred by such selling stockholder.
Each Selling Stockholder has agreed to indemnify and hold harmless RYKA, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses resulting from any untrue or
alleged untrue statement of material fact contained in this Registration
Statement and Prospectus or any amendment hereof or supplement hereto or any
omission or alleged omission of a material fact required to be stated herein or
necessary to make the statements herein not misleading, but only to the extent
that such untrue statement or omission is based upon any information so
furnished in writing by such Seller Shareholder expressly for use in this
Registration Statement.
LEGAL MATTERS
An opinion has been rendered by the law firm of Blank Rome Comisky &
McCauley, Philadelphia, Pennsylvania, to the effect that the shares of Common
Stock offered by the Selling Stockholders hereby are legally issued, fully paid
and non-assessable.
-12-
<PAGE>
EXPERTS
The financial statements of RYKA for each of the years ended December 31,
1995, 1994 and 1993 have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of Margolis & Company P.C.,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing.
-13-
<PAGE>
================================================================================
No dealer, salesman or 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 RYKA or the Selling Stockholders.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy to any person in any jurisdiction in which such offer or
solicitation would be unlawful or to any person to whom it is unlawful. Neither
the delivery of this Prospectus nor any offer or sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of RYKA or that information contained herein is correct as of any
time subsequent to the date hereof.
---------------
TABLE OF CONTENTS
Page
----
Available Information..................................................... 2
Incorporation of Documents by Reference................................... 2
The Company............................................................... 3
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 7
Selling Stockholders...................................................... 8
Plan of Distribution...................................................... 12
Legal Matters............................................................. 12
Experts................................................................... 13
18,015,135 Shares
RYKA INC.
Common Stock
----------
PROSPECTUS
----------
October __, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table shows the estimated expenses of the issuance and
distribution of the securities offered hereby.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee.. $ 2,266
Legal Fees and Expenses.............................. 10,000
Accounting Fees and Expenses......................... 10,000
Miscellaneous........................................ 2,734
---------
Total.......................................... $25,000
=========
</TABLE>
Item 15. Indemnification of Directors and Officers
Section 102(b)(7) of the Delaware Corporation Law provides that Delaware
corporations may include in their certificates of incorporation a provision
eliminating or limiting the personal liability of directors to the corporation
or its stockholders for monetary damages for breach of their fiduciary duty
including acts constituting gross negligence, except under certain
circumstances, including breach of the director's duty of loyalty, acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law or any transaction from which the director derived improper
personal benefit. The Company's Certificate of Incorporation provides that the
Company's directors are not liable to the Company or its stockholders to the
fullest extent permitted by Delaware's law.
Item 16. Exhibits.
Number Document
- ------ --------
5.1* Opinion of Blank Rome Comisky & McCauley as to the validity of the
issuance of the shares of RYKA Common Stock to be registered.
23.1 Consent of Margolis & Company P.C.
23.2* Consent of Blank Rome Comisky & McCauley (included in Exhibit 5.1).
24.1 Power of attorney of certain signatories (included on the Signature
Page).
------------------
*To be filed by amendment.
II-1
<PAGE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes that:
(1) It will include any material information with respect to the
plan of distribution by means of a post-effective amendment not previously
disclosed in this registration statement or any material change to such
information in this registration statement.
(2) 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) It will 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) 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 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) 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 of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of RYKA
pursuant to the foregoing provisions, or otherwise, RYKA has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by RYKA of expenses incurred or paid by a
director, officer or controlling person of RYKA 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, RYKA
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-2
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements 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 King of Prussia, Pennsylvania, on the date indicated.
RYKA INC.
Date: October 25, 1996 By: /s/ Michael G. Rubin,
----------------------------------------
Michael G. Rubin,
Chairman, Chief Executive
Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Michael G. Rubin and Steven A. Wolf, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution or resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other
documentation in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents 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 said attorneys-in-fact and agents, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Capacity Date
- ------------------------ -------------------------- ------------------
/s/ Michael G. Rubin Chairman, Director and October 25, 1996
- ------------------------ Chief Executive Officer
Michael G. Rubin
/s/ Steven A. Wolf Chief Financial Officer October 25, 1996
- ------------------------
Steven A. Wolf
/s/ Kenneth J. Adelberg Director October 25, 1996
- ------------------------
Kenneth J. Adelberg
II-3
<PAGE>
EXHIBIT INDEX
Number Document
------ --------
5.1* Opinion of Blank Rome Comisky & McCauley.
23.1 Consent of Margolis & Company P.C.
23.2* Consent of Blank Rome Comisky & McCauley (included in Exhibit
5.1).
24.1 Power of attorney of certain signatories (included on the
Signature Page).
-------------------------
*To be filed by amendment.
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 dated October 25, 1996, and related
Prospectus of RYKA Inc., for the registration of 18,015,135 shares of its
common stock and to the incorporation by reference therein of our report dated
June 21, 1996, except for Note P as to which the date is August 15, 1996, with
respect to the financial statements for each of the years ended December 31,
1995, 1994 and 1993 of RYKA Inc. included in RYKA Inc.'s Current Report on Form
8-K/A, dated October 16, 1996, filed with the Securities and Exchange
Commission.
/s/ Margolis & Company P.C.
------------------------------------
Margolis & Company P.C.
Bala Cynwyd, Pennsylvania
October 25, 1996
