Filed pursuant to Rule 424(b)(3)
Registration No. 333-36624
PROSPECTUS
ALLOU HEALTH & BEAUTY CARE, INC.
SALE OF 110,243 SHARES OF COMMON STOCK
Tri-State Pharmaceuticals Consultants Corp., the selling stockholder,
is selling up to 110,243 shares of our common stock
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AMEX Stock Exchange Symbol: "ALU"
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On July 10 2000, the closing sale price of one share of our Class A
Common Stock on the AMEX Stock Exchange was $7.25.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" ON
PAGE 5 OF THIS PROSPECTUS. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August 10, 2000
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TABLE OF CONTENTS
Risk Factors..................................................................3
Where You Can Find More Information About Us..................................5
Use of Proceeds...............................................................6
Dividend Policy...............................................................6
Selling Stockholders .........................................................7
Description of Securities.....................................................8
Plan of Distribution .........................................................9
Indemnification for Securities Act Liabilities...............................10
Legal Matters................................................................10
Experts .....................................................................10
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RISK FACTORS
BEFORE YOU BUY SHARES OF OUR CLASS A COMMON STOCK, YOU SHOULD BE AWARE
THAT THERE ARE VARIOUS RISKS ASSOCIATED WITH SUCH PURCHASE, INCLUDING THOSE
DESCRIBED BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS, TOGETHER WITH
ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE YOU DECIDE TO PURCHASE
SHARES OF OUR CLASS A COMMON STOCK.
BECAUSE WE HAVE LARGE DEBT REQUIREMENTS, WE ARE LIMITED IN HOW WE SPEND OUR
FUNDS AND ARE LIMITED IN OUR ABILITY TO RAISE ADDITIONAL FUNDS IN FUTURE
FINANCINGS
In order to finance our operations, we have a working capital line of
credit with a consortium of banks led by the Fleet Capital, Corp. Of our total
indebtedness of $183,798,607 outstanding at March 31, 2000, $148,470,692 was
outstanding under this line of credit. This line of credit is secured by
substantially all of our assets and our subsidiaries, which are co-borrowers
under the line of credit. The line of credit is revolving, and interest on the
loan balance is payable monthly at 3/8% above the prime rate or 2% above the
Eurodollar rate at our option. We utilize cash generated from operations to
reduce short-term borrowings, which in turn acts to increase loan availability
consistent with our financing agreement. The line of credit restricts our
ability to incur additional indebtedness, pledge assets, declare dividends or
make distributions to stockholders without the consent of the banks. If we
violate any loan covenants or we default on our obligations, the banks could
elect to declare our indebtedness immediately due and payable and foreclose on
our assets. As of the date of this prospectus, we are in compliance with all of
the terms of our financing agreements.
Based on our net income for the fiscal year ended March 31, 2000 of
$14,959,000 and our long term debt as of March 31, 2000 of $1,640,222, our
earnings to fixed charges ratio is 1 to .1.
IF WE LOSE ANY MEMBERS OF OUR KEY MANAGEMENT THEN OUR BUSINESS WILL SUFFER
Our business is greatly dependent upon the efforts of Mr. Victor
Jacobs, our Chairman of the Board, Mr. Herman Jacobs, our Chief Executive
Officer, Mr. David Shamilzadeh, our President and Chief Financial Officer and
Mr. Jack Jacobs, our Executive Vice President. If we lose the services of any of
these individuals or other key personnel it could adversely affect the conduct
of our business. We have obtained "key man" life insurance on each of the Jacobs
in the amount of $1,000,000.
IF WE CAN'T ATTRACT TALENTED WORKERS, THEN WE WILL HAVE TROUBLE COMPETING
Our success is dependent upon our ability to attract and retain
experienced management, marketing and industry personnel, particularly those
with knowledge of the internet and on-line commerce. We face considerable
competition from other companies in our industries, as well as other companies
that market products via the internet or on-line commerce. If we cannot attract
and retain personnel, we will have a difficult time succeeding.
BECAUSE KEY MEMBERS OF OUR MANAGEMENT OWN ALL OF THE CLASS B COMMON STOCK, THEY
CAN CONTROL OUR AFFAIRS
Messrs. Victor Jacobs, Herman Jacobs and Jack Jacobs collectively own
1,175,000 shares of our class B common stock, which has five votes per share and
which, in the aggregate, represents approximately 17.2% of our outstanding
capital stock and approximately 51% of the total voting power. The Class B
owners are able to control us and direct our affairs, including:
o electing a majority of our directors;
o causing an increase in our authorized capital; or
o causing our dissolution, merger or the sale of substantially
all of our assets.
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The disproportionate vote afforded the class B common stock might also
impede or prevent a change of control. As a result of the Class B voting power,
potential acquirers may be discouraged from seeking to acquire control of us
through the purchase of common stock, which could have a depressive effect on
the price of our securities.
IF PREFERRED STOCK IS ISSUED, IT MIGHT PREVENT OR DELAY A CHANGE OF CONTROL
Our certificate of incorporation authorizes the issuance of 1,000,000
shares of "blank check" preferred stock with such designations, rights and
preferences as may be determined from time to time by the board of directors.
Accordingly, the board of directors is empowered, without shareholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting or other
rights which could adversely affect the voting power or other rights of the
holders of our class A common stock. In the event of an issuance, the preferred
stock could be utilized as a method of discouraging, delaying or preventing a
change in control. Although we have no present intention of issuing any shares
of preferred stock, we cannot assure you that we will not do so in the future.
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WHERE YOU CAN FIND MORE INFORMATION ABOUT US
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 Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 to
register shares of our class A common stock. This prospectus is part of that
registration statement and, as permitted by the SEC's rules, does not contain
all the information included in the registration statement. For further
information with respect to us and our class A common stock, you may refer to
the registration statement and to the exhibits and schedules filed as part of
that registration statement. You can review and copy the registration statement
and its exhibits and schedules at the public reference facilities maintained by
the SEC as described above. The registration statement, including its exhibits
and schedules, is also available on the SEC's web site.
This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement.
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 a part of this prospectus, and information that we file later
with the SEC will automatically update or supersede this information. We
incorporate by reference the documents listed below and any future filing we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
1. Annual Report on Form 10-K for the fiscal year ended March 31,
2000; and
2. Quarterly Reports on Form 10-Q for the period ended June 30,
1999, September 30, 1999 and December 31, 1999.
You may request a copy of these filings, at no cost, by writing to us
at our executive offices at 50 Emjay Boulevard, Brentwood, New York 11717,
Attention: David Shamilzadeh. Our telephone number is (516) 273-4000.
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This prospectus contains forward-looking statements which involve substantial
risks and uncertainties. These forward-looking statements can generally be
identified because the context of the statement includes words such as "may,"
"will," "except," "anticipate," "intend," "estimate," "continue," "believe," or
other similar words. Similarly, statements that describe our future plans,
objectives and goals are also forward-looking statements. Our factual results,
performance or achievements could differ materially from those expressed or
implied in these forward-looking statements as a result of certain factors,
including those listed in "Risk Factors" and elsewhere in this prospectus.
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USE OF PROCEEDS
The selling stockholder is selling all of the shares covered by this
prospectus for its own account. Accordingly, we will not receive any proceeds
from the resale of the shares. We will bear all expenses relating to this
registration except for brokerage commissions and expenses, if any, which the
selling stockholder will pay.
DIVIDEND POLICY
We have never declared or paid cash dividends on our class A common
stock and we currently anticipate that we will retain all available funds for
use in the operation of our business. Therefore, we do not anticipate paying any
cash dividends on our class A common stock in the foreseeable future.
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SELLING STOCKHOLDER
We issued the shares of class A common stock covered by this prospectus
to the selling stockholder under the terms of an asset purchase agreement dated
as of December 9, 1999 by and among the selling stockholder, Norman Miller and
us. Norman Miller is the sole shareholder of the selling stockholder. Under the
terms of the asset purchase agreement, we have to date issued 110,243 shares of
our class A common stock to the selling stockholder as part of the purchase
price.
The following table lists information regarding the selling
stockholder's ownership of shares of our class A common stock as of July 17
2000, and as adjusted to reflect the sale of the shares. Information concerning
the selling stockholder may change from time to time.
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<CAPTION>
Shares of Class A Common Stock
Owned
after Offering (1)
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Shares of
Class A Common
Stock Owned Shares
Prior to Registered
Offering (2) Hereby (2) Number Percent
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Tri-State Pharmaceutical 110,243 110,243 -0- -0-
Consultants Corp.
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(1) Assumes that all of the shares of class A common stock offered hereby
are sold.
(2) Does not include shares issuable to the selling stockholder as part of
the remaining installments payable on account of the purchase price
pursuant to the terms of the asset purchase agreement.
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DESCRIPTION OF SECURITIES
GENERAL
We are authorized to issue: 15,000,000 shares of class A common stock,
of which 5,602,403 were issued and outstanding on July 17 2000 and 2,200,000
shares of class B common stock, of which 1,200,000 were issued and outstanding
on July 17 2000. We are also authorized to issue 1,000,000 shares of preferred
stock, $.001 par value. No shares of preferred stock are currently outstanding.
COMMON STOCK
The holders of shares of class A common stock and class B common stock
have no preemptive rights and the shares are not subject to redemption. The
outstanding shares of class A common stock and class B common stock are duly and
validly issued and fully paid and non-assessable.
Holders of class A common stock and class B common stock are not
entitled to cumulative voting. Holders of class A common stock are entitled to
one vote per share on every matter on which common stockholders are entitled to
vote. Holders of class B common stock are entitled to five votes per share on
every matter on which common stockholders are entitled to vote.
Holders of class B common stock may, at any time, convert their shares
into class A common stock on a share for share basis.
Except for the aforementioned voting and conversion rights, the class A
common stock and class B common stock are identical in all respects.
PREFERRED STOCK
We are authorized to issue 1,000,000 million shares of preferred stock,
in one or more classes or series as determined from time to time by the board of
directors.
The board of directors has the authority to issue shares of preferred
stock and to fix the number of shares and the relative rights, conversion
rights, voting rights and the terms of redemption, liquidation preferences and
any other preferences, special rights and qualifications of these preferred
shares, subject only to the limitations and restrictions contained in our
certificate of incorporation. No stockholder approval is needed. The board of
directors is empowered to issue preferred stock with rights which could
adversely affect the voting power or other rights of the holders of the common
stock. In the event of an issuance, the preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control.
DELAWARE LAW ANTI-TAKEOVER PROVISIOn
We are subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware. In general, the DGCL prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person becomes an interested stockholder, unless
the business combination is approved in a prescribed manner. An "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within the prior three years did own, 15% or more of the corporation's voting
stock. This provision could make it more difficult for an "interested
stockholder" to obtain control of us without the approval of the board of
directors.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the class A common stock is
Continental Stock Transfer and Trust Company.
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PLAN OF DISTRIBUTION
The selling stockholder and any of its pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of class A common stock in private transactions or on any stock exchange, market
or trading facility on which the shares are traded. These sales may be at fixed
or negotiated prices. The selling stockholder may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer 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 the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholder to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholder may also sell shares under rule 144 of the
securities act, if available, rather than under this prospectus.
The selling stockholder may also engage in short sales against the box,
puts and calls, derivatives and other transactions in our securities and may
sell or deliver shares in connection with these trades. The selling stockholder
may pledge its shares to its brokers under the margin provisions of customer
agreements. If the selling stockholder defaults on a margin loan, the broker
may, from time to time, offer and sell the pledged shares.
Broker-dealers engaged by the selling stockholder may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholder in amounts to be negotiated. The
selling stockholder does not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
The selling stockholder and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with any sales. If a sale occurs,
any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
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INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the DGCL provides, in general, that a corporation
incorporated under the laws of the State of Delaware may:
o indemnify any director, officer, employee or agent who worked
directly for it or who worked at its request for another
enterprise and was or is a party, or is threatened to be made
a party to any threatened, pending or completed action, suit
or proceeding, other than a derivative action by or in the
right of the corporation.
o indemnify against expenses, judgments, fines and amounts paid
in settlement actually and reasonably incurred by any of the
aforementioned people in connection with the action, suit or
proceeding if this person acted in good faith and in a manner
this person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any
criminal action or proceeding, the corporation had no
reasonable cause to believe that this person's conduct was
unlawful.
o in the case of a derivative action, indemnify any person
against expenses actually and reasonably incurred by this
person in connection with the defense or settlement of the
action or suit, if this person acted in good faith and in a
manner this person reasonably believed to be in or not opposed
to the best interests of the corporation. However, no
indemnification shall be made in respect of any claim, issue
or matter as to which this person shall have been adjudged to
be liable to the corporation, unless and only to the extent
that the Court of Chancery of the State of Delaware or any
other court in which the action was brought determines that
this person is fairly and reasonably entitled to indemnity for
his/her expenses.
Our certificate of incorporation also provides that our directors shall
not be personally liable for monetary damages to us or our stockholders for
breach of fiduciary duty as a director, except for:
o liability resulting from a breach of the director's duty of
loyalty to our stockholders
o intentional misconduct or willful violation of law
o actions or inactions not in good faith
o unlawful stock purchases or payments of a dividend under
Delaware law
o transactions from which the director derives improper personal
benefit.
This limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission. Our certificate of
incorporation also authorizes us to indemnify our officers, directors and other
agents, by bylaws, agreements or otherwise, to the fullest extent permitted
under Delaware law.
Insofar as indemnification for liabilities arising under the securities
act may be permitted to directors, officers and controlling persons of small
business issues pursuant to the foregoing provisions, or otherwise, we have 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.
LEGAL MATTERS
Parker Chapin LLP, New York, New York will pass upon the validity of
the securities offered hereby.
EXPERTS
The consolidated financial statements as of March 31, 2000 and 1999 for
the years ended March 31, 2000 and 1999 incorporated by reference in this
prospectus have been so incorporated in reliance on the report of Mayer Rispler
& Company, P.C., independent certified public accountants, given on the
authority of said firm as experts in auditing and accounting.
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WE HAVE NOT AUTHORIZED ANY DEALER,
SALESPERSON OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN
THIS PROSPECTUS. YOU MUST NOT RELY ON ANY
UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT
OFFER TO SELL OR BUY ANY SHARES IN ANY JURISDICTION
WHERE IT IS UNLAWFUL. THE INFORMATION IN THIS
PROSPECTUS IS CURRENT AS OF JULY 17, 2000. 110,243 SHARES OF
CLASS A COMMON STOCK
TABLE OF CONTENTS
Page
Risk Factors .......................................3
Where You Can Find More
Information About Us................................5
Use of Proceeds.....................................6
Dividend Policy.....................................6
Selling Stockholders ...............................7
Description of Securities...........................8
Plan of Distribution ...............................9
Indemnification for Securities
Act Liabilities....................................10
Legal Matters......................................10 PROSPECTUS
Experts ...........................................10
August 10, 2000
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