<PAGE>
As filed with the Securities and Exchange Commission on September 15, 1995
Registration No. 33-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
Registration Statement
Under
The Securities Act of 1933
----------------------
Candie's, Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-2481903
------------------- ----------------------
(State or other (I.R.S. employer
jurisdiction of identification
incorporation or number)
organization)
2975 Westchester Avenue
Purchase, New York 10577
(914) 694-8600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Neil Cole
President and Chief Executive Officer
Candie's, Inc.
2975 Westchester Avenue
Purchase, New York 10577
(914) 694-8600
(Name, address, including zip code, and telephone
number, including area code of agent for service)
---------------------
Copies to:
Robert J. Mittman, Esq.
Tenzer, Greenblatt, Fallon & Kaplan
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 573-4353
Telecopier: (212) 573-4313
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 being offered pursuant
to dividend or interest reinvestment plans, please check the following box / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box /X/
---------------------------
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, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
EXPLANATORY NOTE
Pursuant to Rule 429 promulgated under the Securities Act of
1933, the prospectus of which this Registration Statement forms a part also
covers (i) 2,950,000 shares of Common Stock issuable upon exercise of the
Class B and Class C Warrants and (ii) 653,646 shares of Common Stock currently
issuable upon exercise of certain underwriter's warrants, which shares were
previously registered pursuant to the Registration Statement on Form S-3
(file no. 33-53878) of the registrant (then known as Millfeld Trading Co., Inc.)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Proposed
Title of Maximum Maximum
Shares Amount to Offering Aggregate Amount of
to be be Price Offering Registration
Registered Registered(1) Per Unit(2) Price(2) Fee(2)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 2,911,232 $3.97 $11,557,591 $3,985.38
($.001 Par shares(3)
Value)
Common Stock 3,603,646 (4) (4) (4)
($.001 par shares(3)(4) -----------
value) TOTAL DUE ............................. $3,985.38
===========
========================================================================================================================
</TABLE>
(1) Of the shares of Common Stock being registered, (i) 2,950,000 shares are
issuable upon exercise of publicly-traded redeemable Class B and Class C
Common Stock Purchase Warrants of the registrant, and (ii) the remaining
3,564,878 shares are for the account of selling stockholders who acquired
such shares or warrants or options to acquire such shares from the
registrant in private transactions or, in the case of Whale Securities Co.,
L.P. ("Whale") and its designees, in connection with the Company's 1993
public offering. No other shares of the registrant's Common Stock are being
registered pursuant to this offering.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) of the Securities Act of 1933, as amended, (the
"Act") the registration fee has been calculated based upon the
average of the high and low sale prices as reported in the consolidated
reporting system (NASDAQ) for the registrant's Common Stock on September 8,
1995.
(3) Pursuant to Rule 416 of the Act, there are also being registered hereunder
such additional shares as may be issued to the selling stockholders because
of future stock dividends, stock distributions, stock splits or similar
capital readjustments including any adjustments due to anti-dilution
provisions contained in outstanding warrants and/or options.
(4) Represents (i) 2,950,000 shares of Common Stock issuable upon exercise of
registrant's redeemable Class B and Class C Common Stock Purchase Warrants
and (ii) 653,646 shares of Common Stock currently issuable upon exercise of
certain underwriter's warrants of the registrant issued to Whale and its
designees. All of these shares were previously registered pursuant to
amendment no. 2 to the registrant's registration statement on Form S-1 (file
no. 33-53878) for which a filing fee was previously paid. Pursuant to Rule
429 under the Act, no additional fee is being paid with respect to such
shares. See "Explanatory Note".
---------------------
<PAGE>
Candie's, Inc.
FORM S-3
------------------------------------
Cross-Reference Sheet
Pursuant to Item 501(b) of Regulation S-B, showing the location in the
Prospectus of the information required by Part I of Form S-3.
FORM S-3 ITEM
NUMBER AND CAPTION HEADING IN PROSPECTUS
------------------ ---------------------
1. Forepart of Registration Outside Front Cover Page
Statement and Outside of Prospectus
Front Cover Page of
Prospectus
2. Inside Front and Outside Inside Front and Outside
Back Cover Pages of Back Cover Pages of
Prospectus Prospectus
3. Summary Information, Risk Prospectus Summary;
Factors and Ratio of Risk Factors
Earnings to Fixed Charges
4. Use of Proceeds Prospectus Summary;
Use of Proceeds
5. Determination of Offering Front Cover Page of
Price Prospectus; Plan of
Distribution
6. Dilution Not Applicable
7. Selling Security Holders Selling Stockholders
8. Plan of Distribution Front Cover Page of
Prospectus; Plan of
Distribution
9. Description of Securities Not Applicable
to be Registered
10. Interests of Named Experts Legal Matters
and Counsel
11. Material Changes Risk Factors; Information
Incorporated by Reference;
Recent Developments
12. Incorporation of Certain Information Incorporated by
Information by Reference Reference
13. Disclosure of Commission Indemnification
Position on
Indemnification
for Securities Act
Liabilities
<PAGE>
PROSPECTUS
----------
6,514,878 Shares
CANDIE'S, INC.
Common Stock
This Prospectus covers 1,475,000 shares of common stock, $.001
par value (the "Common Stock"), of Candie's, Inc. (the "Company"), issuable upon
exercise of redeemable Class B Common Stock Purchase Warrants (the "Class B
Warrants") and an additional 1,475,000 shares of Common Stock issuable upon
exercise of redeemable Class C Common Stock Purchase Warrants (the "Class C
Warrants," and together with the Class B Warrants, sometimes collectively
referred to herein as the "Public Warrants"). The Public Warrants were included
in the units sold in the Company's 1993 public offering. Each Public Warrant
entitles the registered holder thereof to purchase until February 23, 1998, one
share of Common Stock at an exercise price of $4.00 per share (in the case of
the Class B Warrants) or $5.00 per share (in the case of the Class C Warrant),
subject to adjustment.
This Prospectus also relates to an offering by certain selling
stockholders (collectively, the "Selling Stockholders") of an aggregate of up to
3,564,878 shares of Common Stock, of which up to 2,135,801 shares are issuable
upon the exercise of warrants and options held by certain of the Selling
Stockholders (the "Selling Stockholder Options," and together with the Public
Warrants, sometimes hereinafter, the "Derivative Securities").
The Common Stock may be offered from time to time by the
Selling Stockholders through ordinary brokerage transactions in the
over-the-counter market, in negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at negotiated prices. The Company will
not receive any of the proceeds from the sale of Common Stock by the Selling
Stockholders. See "Selling Stockholders" and "Plan of Distribution."
If all of the Derivative Securities are exercised, of which
there can be no assurance, the Company will receive gross proceeds of
approximately $18,500,000. Any proceeds received by the Company will used for
working capital and general corporate purposes. See "Use of Proceeds".
The Common Stock is traded on the NASDAQ National Market
System, under the symbol "CAND." On September 13, 1995, the last sale price of
the Common Stock as reported on the NASDAQ National Market System was $4.25
per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND
SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS
OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE 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 , 1995
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities of the Securities and Exchange Commission located at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade
Center, New York, New York 10048. Copies of such material can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated herein by reference:
(a) Annual Report on Form 10-KSB for the fiscal year ended
January 31, 1995;
(b) Quarterly Report on Form 10-QSB for the quarterly period
ended April 30, 1995;
(c) Quarterly Report on Form 10-QSB for the quarterly
period ended July 31, 1995;
(d) Current Report on Form 8-K for the event dated July 31,
1995; and
(e) The description of the Company's Common Stock contained in
its Registration Statement on Form 8-A declared effective on January
19, 1990.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
Prospectus and prior to the termination of the offering of the Common Stock
offered hereby shall be deemed to be incorporated by reference herein and to be
a part hereof on the date of filing of such documents.
The Company will furnish without charge to each person to whom
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference, except for
the exhibits to such documents. Requests should be directed to Mr. Neil Cole,
Candie's Inc., 2975 Westchester Avenue, Purchase, New York 10577, telephone:
(914) 694-8600.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by
reference to the more detailed information and consolidated financial
statements, including the notes thereto, appearing elsewhere in or incorporated
by reference into this Prospectus. Each prospective investor is urged to read
this Prospectus in its entirety.
The Company
The Company and its subsidiaries are engaged primarily in the
design, marketing and importation of a variety of moderately-priced women's and
girls' casual, outdoor and fashion footwear under the CANDIE'S(R) trademark for
distribution to better department and specialty stores nationwide. The Company
also licenses its CANDIE'S(R) trademark to third parties for the sale of other
products under such licenses generally pursuant to exclusive agreements that
require the licensees to pay royalties, including minimum royalties, to the
Company. Such licenses include licenses for the sale of children's footwear and
ladies intimate apparel under the CANDIE'S(R) trademark. The Company also
arranges for the manufacture of footwear products, similar to those produced
under the CANDIE'S(R) mark, for mass market and discount retailers, under one of
the Company's other trademarks or under the private label brand of a retailer.
In addition, the Company sells a variety of men's workboots, hiking boots,
winter boots and outdoor casual shoes designed, marketed and distributed by the
Company's wholly-owned subsidiary, Bright Star Footwear, Inc. ("Bright Star"),
under Bright Star's private label and a brand name licensed by the Company from
third parties specifically for Bright Star (ASPEN(R)). The Company has recently
entered into an agreement with the owner of the BONGO(R) trademark to act as
exclusive licensee to manufacture and market women's footwear in North America
under the BONGO trademark for an initial period expiring July 31, 1998, which
may be extended by the Company under certain circumstances, to July 31, 2001.
During its fiscal year ended January 31, 1994, the Company
completed a restructuring plan (the "Restructuring Plan") which substantially
reduced its liabilities, restructured the terms of continuing obligations,
reduced operating costs and acquired new sources of revenue and capital funds by
effecting (i) the acquisition of the CANDIE'S(R) and other trademarks and the
related trademark licensing business from El Greco, Inc. ("El Greco"), a former
subsidiary of New Retail Concepts, Inc. ("NRC") that was merged into NRC in
1993, and by granting additional licenses for the distribution of products
bearing the CANDIE'S(R) trademark and entering into license agreements to obtain
additional brand name licenses for Bright Star; (ii) the conversion to equity of
an outstanding $3.5 million debenture and certain other liabilities of the
Company; (iii) the restructuring of the Company's institutional debt and the
establishment of new credit facilities; (iv) a 1-for-4.5 reverse stock split;
(v) sales of its securities; (vi) settlement of outstanding U.S. Customs Service
claims; and (vii) the corporate readjustment of the Company's accounts and
financial statements in the form of a "quasi-reorganization" (the
"Quasi-Reorganization"). In addition, in March 1993, Neil Cole, the President
and Chief Executive Officer and a director and principal shareholder of NRC,
joined the Company as its new Chairman of the Board, President and Chief
Executive Officer.
Although the Restructuring Plan helped improve the Company's
financial condition, the Company determined that it would have to take further
steps during the fiscal year ending January 31, 1995 ("Fiscal 1995") to further
improve its financial condition. During Fiscal 1995, the Company completed a
further series of transactions as part of a comprehensive plan (the "Financial
Program") intended to significantly improve the Company's financial condition
and help to ensure the Company's financial viability by substantially reducing
operating and other expenses and liabilities while improving cash flow. Among
other things, as part of the Financial Program, the Company reduced its rental
expense by relocating its executive offices and showroom to Westchester County,
New York, eliminated certain trade payables through the issuance of shares of
its Common Stock, settled certain litigation and eliminated approximately $3.4
million of institutional indebtedness.
The Company was incorporated in the State of Delaware in 1978.
The Company's principal executive offices are located at 2975 Westchester
Avenue, Purchase, New York 10577 and its telephone number is (914) 694-8600.
<PAGE>
The Offering
<TABLE>
<CAPTION>
<S> <C>
Common Stock offered.............................. 2,950,000 shares issuable by the Company upon exercise of the
Public Warrants and 3,564,878 shares to be offered by the
Selling Stockholders
Common Stock outstanding(1)....................... 8,265,995 shares
Common Stock to be outstanding
after the offering(2)............................. 13,351,796 shares
Proceeds.......................................... The Company will not receive any of the proceeds from the sale
of Common Stock by the Selling Stockholders. The Company will
receive gross proceeds of approximately $18,500,000 if all the
Derivative Securities are exercised, of which there can be no
assurance. Any proceeds received by the Company will be used for
working capital and general corporate purposes. See "Use of Proceeds."
Risk Factors...................................... The securities offered hereby involve a high degree of risk.
See "Risk Factors."
NASDAQ National Market
System Symbol Common Stock....................... CAND
</TABLE>
-----------------------
(1) Based on shares outstanding on September 12, 1995, not including (i)
54,397 shares issuable upon exercise of outstanding Class A redeemable
warrants; (ii) 2,950,000 shares issuable upon exercise of the Public
Warrants; (iii) an aggregate of 653,646 shares issuable upon exercise
of the unit warrants issued to the underwriter of the Company's March
3, 1993 secondary public offering of its securities and its designees
and the warrants underlying such unit warrants ("Underwriter's
Warrants"); (iv) 194,300 shares issuable upon exercise of outstanding
stock options under the Company's 1989 Stock Option Plan (the "Plan");
(v) 27,922 shares reserved for issuance upon exercise of options
available for future grant under the Plan; and (vi) 3,749,377 shares
issuable upon exercise of outstanding non-Plan options and warrants.
(2) Assumes exercise of all of the Derivative Securities.
<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk.
Each prospective investor should carefully consider the following risk factors
before making an investment decision.
1. History of Significant Losses; Working Capital Deficit;
Limited Relevant Operating History; Explanatory Paragraph in Independent
Accountants' Report. The Company sustained a net loss of $6,321,092 for its
fiscal year ended January 31, 1994. In addition, although as a result of an
extraordinary gain from the extinguishment of debt, the Company achieved net
income of $767,259 for its fiscal year ended January 31, 1995, it sustained an
operating loss of $1,390,524 for such period. The Company sustained a net loss
of $629,719 for the three months ended April 30, 1995 and achieved net income of
$1,105,645 for the three months ended July 31, 1995. In addition, at July 31,
1995, the Company had a working capital deficit of $898,914 and, upon
consummation of this offering, the Company will continue to have a substantial
working capital deficit. In addition, although the Company commenced both the
shift in its business emphasis and the reorganization of its business operations
prior to the Quasi-Reorganization, the Company did not commence full operations
in connection with its CANDIE'S(R) footwear until it acquired the CANDIE'S(R)
trademark and the third-party licenses relating thereto in March 1993.
Consequently, the Company has a limited operating history upon which an
evaluation of its prospects in connection with its CANDIE'S(R) operations may be
made and such prospects must be considered in light of the risks, expenses and
difficulties frequently encountered in connection with the establishment of a
new business or product and the competitive environment in which the Company
operates.
The Company anticipates that it will continue to incur
substantial operating expenses, including product development and promotional
costs relating to the CANDIE'S(R) trademark, costs relating to its Unbranded and
Bright Star Divisions (in connection with the ASPEN(R) trademark licenses) and
costs related to its use of the BONGO license. These expenses could result in
continuing and significant operating losses for the foreseeable future, until
such time, if ever, as the Company is able to attain adequate sales levels.
There can also be no assurance that the Company will be able to successfully
implement its marketing strategy or achieve and maintain profitable operations
over any extended period of time. The Company's independent accountants have
included an explanatory paragraph in their report on the Company's financial
statements included in its Form 10-KSB for the fiscal year ended January 31,
1995, stating that the Company's working capital deficit and recurring losses
raise doubt about its ability to continue as a going concern.
2. Uncertainty of Market Acceptance. Prior to March 3, 1993,
the Company's activities with respect to the sale of footwear bearing the
CANDIE'S(R) trademark were primarily directed toward design, development and
preliminary marketing activities. Although the Company has instituted an
extensive advertising campaign and has been marketing and shipping its
CANDIE'S(R) footwear products for more than the past two years, achieving
continued market acceptance of the Company's existing products or market
acceptance of any future products which may be offered by the Company and
therefore, the Company's ability to maintain or increase market share is subject
to a high degree of uncertainty. Achieving market acceptance by new customers or
continued market acceptance by existing or past customers will require
substantial additional marketing efforts and the expenditure of significant
funds to create a demand for such products. Moreover, there can be no assurance
that such additional efforts and expenditures will result in either increased
market acceptance of the Company's products or increased sales by the Company.
Inasmuch as the Company is materially dependent on the sale of products bearing
the CANDIE'S(R) trademark for a significant portion of its revenues, the failure
of the CANDIE'S(R) trademark or products to achieve market acceptance would have
a material adverse effect on the Company.
<PAGE>
3. Significant Capital Requirements; Possible Need for
Additional Financing. The capital requirements associated with the manufacture
and sale of the Company's products have been and will continue to be
significant. The Company has been substantially dependent on financing from the
arrangement with its factor and sales of its securities in order to finance its
working capital requirements. Although the Company had a significant working
capital deficit at July 31, 1995, it currently believes that it has sufficient
cash and borrowing capacity to fund its operations as presently conducted for at
least the balance of its current fiscal year. Nevertheless, the Company will
require financing should it seek to expand its business operations. Moreover, in
the event that projected cash flow prove to be insufficient to satisfy the
Company's cash requirements, the Company may be required to seek additional
funds through public or private equity or debt financing, which may result in
dilution to the then existing shareholders of the Company. Failure of the
Company to obtain any required additional financing on terms acceptable to it,
or at all, could have a material adverse effect upon the Company's business and
could require it to curtail its activities.
4. Effect of Recession on the Fashion Industry; Rapidly
Changing Fashion Trends. The fashion industry is cyclical, with purchases of
apparel and related goods tending to decline during recessionary periods when
disposable income is low. Although the Company believes that its
moderately-priced products are more appealing to consumers in a recessionary
environment, there can be no assurance that a poor general economic climate will
not have a negative impact on the Company's ability to compete for limited
consumer resources. Moreover, the Company believes that its future success
depends in substantial part on its ability to anticipate and respond to changing
consumer demands and fashion trends in a timely manner. The footwear and wearing
apparel industries are generally subject to constantly changing fashion trends.
If the Company misjudges the market for a particular product or product line, it
may result in an increased inventory of unsold and outdated finished goods,
which may have an adverse effect on the Company's business. In addition, the
Company operates under substantial time constraints which require it to have
production orders in place at specified times in advance of its customers'
retail selling seasons. If the Company's suppliers fail to meet their delivery
date requirements pursuant to their purchase orders with the Company, the
Company will be unable to meet its delivery date requirements pursuant to its
purchase orders with its customers. This could result in the cancellation of
purchase orders both by the Company and its customers, reducing the sales of the
Company and having an adverse effect on revenues and earnings. There can be no
assurance that the Company will be able to adequately meet these demands, or
that it will not be required to expend substantial sums in order to adequately
respond to such demands.
5. Dependence upon Unaffiliated Manufacturers and Suppliers.
The Company does not own or operate any manufacturing facilities. All of the
Company's footwear products are manufactured to its specifications by the
Company's suppliers (either directly or through third party manufacturers on a
subcontract basis). Although the Company may from time to time enter into
contracts with certain of its suppliers, it does not intend to enter into
contractual relationships with all of them. Moreover, there can be no assurance
that the Company will be able to enter into contracts with any of its suppliers
on terms favorable to the Company, or at all. Except for an agreement in
principle with certain trade creditors to provide a line of credit to the
Company for the manufacturing and purchasing of footwear, the Company has no
contracts with any of the manufacturers or suppliers of its footwear products;
therefore, any or all of these companies could terminate their relationship with
the Company at any time. In addition, the manufacturers of the Company's
products have limited production capacity and may not, in all instances, have
the capability to satisfy the Company's manufacturing requirements. The Company
believes that alternative manufacturing sources could be located should the
manufacturing capacity required be in excess of that of its current
manufacturers. Nevertheless, there can be no assurance that, in the future, the
capacity of such manufacturers will be sufficient or that alternative
manufacturing sources will be available on a cost effective basis. Accordingly,
the Company's dependence upon third parties for the manufacture of its products
could have an adverse effect on the Company's ability to deliver its products on
a timely and competitive basis and could have an adverse effect on the Company's
operations. See "Recent Developments."
In addition, most raw materials necessary for the manufacture
of the Company's footwear are purchased by the manufacturers from suppliers
located in the country of manufacture. The Company does not intend to maintain
contractual relationships with any of these suppliers. Although the Company
believes that the raw materials required will be available from various
alternative sources, there can be no assurance that any such materials will be
available on a timely or cost-effective basis.
<PAGE>
6. Risks Relating to Foreign Manufacturing. The Company is
subject to various risks associated with the manufacture of products in foreign
countries, including political and economic instability, shipping delays,
fluctuations in foreign currency exchange rates, restrictions on transfer of
funds, and customs duties, tariffs and import quotas, any of which could
adversely affect the Company's ability to obtain products on a timely and
competitive basis. In addition, the Company sells products on a "landed" basis
and, therefore, assumes all risk of loss, damage or destruction until such
products are delivered to and accepted by the customer.
Since most of the Company's suppliers are foreign, any
weakening of the United States dollar in relation to relevant foreign
currencies, as has occurred in recent years, could result in increased costs to
the Company and could result in the refusal of the Company's suppliers, whose
transactions are denominated in United States dollars, to honor their supply
arrangements with the Company. In addition, all products manufactured overseas
are subject to United States tariffs, duties and quotas. Other restrictions on
the importation of footwear and apparel are periodically considered by the
United States Congress and no assurances can be given that tariffs or duties on
the Company's goods may not be raised, resulting in higher costs to the Company,
or that import quotas respecting such goods may not be lowered. Deliveries of
products from the Company's existing foreign suppliers could be restricted or
delayed by the imposition of lower quotas and there can be no assurance that the
Company would, in such event, be able to obtain similar quality products, at
equally favorable prices, from domestic suppliers or from other foreign
suppliers whose quotas have not been exceeded by the supply of goods to existing
customers.
7. Competition. The footwear and apparel industries are
extremely competitive in the United States and the Company faces intense and
substantial competition in each of its product lines. In general, competitive
factors include quality, price, style, name recognition and service. Although
the Company believes that it can compete favorably in these areas, there can be
no assurance thereof. In addition, the presence in the marketplace of various
fads and the limited availability of shelf space can affect competition. Many of
the Company's competitors have greater financial, distribution, marketing and
other resources than the Company and have achieved significant name recognition
for their brand names, such as Esprit(R), Bass(R) and White Mountain(R). There
can be no assurance that the Company will be able to compete successfully.
8. Trademark Ownership. The Company owns federal trademark
registrations for CANDIE'S(R), BRIGHT STAR(R) and ASPEN(R), among others, and
believes that such trademarks, especially the CANDIE'S(R) trademark, have
significant value and are important to the marketing of the Company's products
and those of its licensees. There can be no assurance that the Company's
trademarks do not or will not violate the proprietary rights of others, that
they would be upheld if challenged or that the Company would not, in such an
event, be prevented from using the trademarks, any of which events could have an
adverse effect on the Company. In addition, there can be no assurance that the
Company will have the financial resources necessary to enforce or defend its
trademarks.
9. Litigation. The Company is involved in a pending lawsuit in
which the plaintiffs seek substantial damages from the Company. In such suit,
which has been settled, subject to court approval of the settlement, the
plaintiffs seek damages for alleged securities fraud and related claims
principally arising out of the Company's transactions with the U.S. Customs
Service concerning the Company's alleged underpayment prior to 1992 of certain
customs duties. There can be no assurance that if the court does not approve the
pending settlement and such suit is brought to trial, that it would be decided
in favor of the Company.
<PAGE>
10. Dependence upon Key Personnel. The success of the Company
is largely dependent upon the efforts of Neil Cole, its President, Chief
Executive Officer and Chairman. Although the Company has entered into an
employment agreement with Mr. Cole, expiring on February 23, 1997, which
requires him to commit a majority of his business time to the affairs of the
Company, the loss of his services would have a material adverse effect on the
Company's business and prospects. The Company has purchased "key man" life
insurance on the life of Mr. Cole in the amount of $2,000,000. The success of
the Company is also dependent upon its ability to hire and retain additional
qualified sales and marketing personnel in connection with the Company's design,
marketing and distribution of its products. There can be no assurance that the
Company will be able to hire or retain such necessary personnel.
11. No Dividends. The Company has not paid any cash
dividends on its Common Stock to date, and does not expect to declare or pay
any dividends in the foreseeable future.
12. Authorization and Discretionary Issuance of Preferred
Stock. The Company's Certificate of Incorporation authorizes the issuance 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
additional shares of preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. In the event of issuance,
the preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company,
which could have the effect of discouraging bids for the Company and thereby,
prevent shareholders from receiving the maximum value for their shares. There
can be no assurance that additional preferred stock of the Company will not be
issued at some time in the future.
13. Possible Delisting of Securities from NASDAQ System; Risk
of Low-Priced Stocks. The Company's Common Stock is currently listed on the
NASDAQ National Market System. It is necessary for continuing inclusion of its
Common Stock on the NASDAQ National Market System that the Company will continue
to meet NASDAQ's maintenance requirements. In the event that the Common Stock is
no longer eligible for listing on the NASDAQ National Market System but is
eligible for listing on the NASDAQ Small-Cap Market, the Common Stock would be
subject to the maintenance requirements associated with listing on the NASDAQ
Small-Cap Market. In order to continue to be included on the NASDAQ Small-Cap
Market, a company must maintain $2,000,000 in total assets, a $200,000 market
value of the public float and $1,000,000 in total capital and surplus. In
addition, continued inclusion requires two market makers and a minimum bid price
of $1.00 per share; provided, however, that if a company falls below such
minimum bid price, it will remain eligible for continued inclusion in NASDAQ if
the market value of the public float is at least $1,000,000 and the Company has
$2,000,000 in capital and surplus. Failure to meet these maintenance criteria in
the future could result in the delisting of the Company's securities from NASDAQ
and trading, if any, in the Company's securities would thereafter be conducted
in the non-NASDAQ over-the-counter market. As a result, an investor may find it
more difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities. In addition, if the Common Stock were
delisted from trading on NASDAQ and the trading price of the Common Stock was
less than $5.00 per share, trading in the Common Stock would also be subject to
certain rules promulgated under the Securities Exchange Act of 1934, which
require additional disclosure by broker-dealers in connection with any trades
involving a stock defined as a penny stock (generally, any non-NASDAQ equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stock to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transactions prior to sale. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions
in the Common Stock, which could severely limit the market liquidity of the
Common Stock and the ability of purchasers in this offering to sell the
Conversion Shares in the secondary market. Moreover, the Common Stock could be
delisted from the NASDAQ National Market System and not be included in the
NASDAQ Small-Cap Market, immediately subjecting the Common Stock to the risks of
the non-NASDAQ over-the-counter market and penny stock rules described above.
<PAGE>
14. Possible Volatility of Stock Market and Stock Price;
Shares Eligible for Future Sale. In recent years, the stock market has
experienced extreme price and volume fluctuations and market prices for
securities of many companies have experienced wide fluctuation, not necessarily
related to the operating performance of such companies. There can be no
assurance that the market price of the Company's Common Stock will not be
volatile. Furthermore, there are a significant number of shares of Common Stock
which are currently eligible for sale under Rule 144 of the Securities Act of
1933 and 3,564,878 shares of Common Stock beneficially owned by the Selling
Stockholders, which shares are being offered for sale pursuant to this
Prospectus. No prediction can be made as to the effect, if any, that sales of
shares of Common Stock or the availability of such shares for sale will have on
the market prices prevailing from time to time. Nevertheless, the possibility
that substantial amounts of Common Stock may be sold in the public market may
adversely affect prevailing market prices for the Common Stock and could impair
the Company's ability to raise capital through the sale of its equity
securities.
<PAGE>
RECENT DEVELOPMENTS
The Company and New Retail Concept, Inc. ("NRC") have entered into a
settlement agreement with the plaintiff, a former officer of NRC whose
employment by NRC was terminated in October 1994, with respect to an action
commenced in October 1994 by the plaintiff against NRC and the Company in the
United States District Court for the Southern District of New York. The
plaintiff had alleged that, pursuant to the Company's Services Allocation
Agreement with NRC, the Company undertook to perform NRC's obligations under its
employment agreement with the plaintiff. Under the settlement agreement, the
Company and NRC are jointly and severally obligated to pay the plaintiff an
aggregate of $226,000 in 36 bi-weekly payments of $6,277.78, which commenced on
July 1, 1995, and the Company is also required to provide certain health benefit
coverage for the plaintiff and his wife through December 31, 1996.
In July 1995, Congress Talcott Corp. ("Congress"), a factor,
informed the Company it was increasing, until March 31, 1996, the credit limits
under the Company's accounts receivable factoring agreement with Congress from
$7.5 to $10 million for borrowings secured by accounts receivable and for
documentary letters of credit procured by Congress for the Company's account
(the sub-limit for letters of credit is $2.5 million) and from $5 to $6 million
for borrowings secured by finished good inventory.
The Company has been advised by the Staff of the Securities
and Exchange Commission (the "Commission") that the Commission has authorized
the Staff to commence an administrative proceeding against the Company with
respect to alleged violations of Section 5 of the Securities Act of 1933 in
connection with the Company's 1993 Regulation S offering (the "Offering") of
shares of Common Stock in the aggregate amount of $2,000,000. Although there can
be no assurance, the Company believes that the outcome of any proceeding which
the Commission may bring against it in connection with the Offering will not
have a material adverse effect on the Company or its financial condition.
In June 1995, the Company and certain trade creditors (the
"Creditors") entered into a memorandum of intent (the "Memorandum"), pending the
execution of definitive agreements, whereby the Company indicated its intent to
pay existing indebtedness to the Creditors (currently approximately $2 million),
together with interest thereon at the annual rate of 12%, in agreed
installments, and to secure the payment of existing and future indebtedness of
the Company to the Creditors by a security interest in all of its assets
subordinate to the security interest in such assets in favor of Congress, but
senior to a security interest in such assets created in favor of NRC. The
Memorandum states that the Creditors intend to continue to extend purchase money
credit to the Company, provided that the Company makes payment for goods shipped
within 30 days of the date of shipment. The definitive agreements will be
subject to approval by the boards of directors of the Company and the Creditors
and the consents of Congress and NRC to the creation of the security interest in
favor of the Creditors and the relative priority thereof in relation to the
security interests of Congress and NRC in such assets. There can be no assurance
that definitive agreements will be authorized and executed by the Company and
the Creditors or that Congress and NRC will give the required consents.
The Company recently announced that for its fiscal quarter
ended July 31, 1995 it achieved net income of $1,105,645 ($.12 per share) on
revenues of $13,838,530. There were 9,456,112 weighted average common and common
equivalent shares outstanding during the fiscal quarter.
USE OF PROCEEDS
The Company will pay all of the costs associated with this
offering. The Company will not receive any proceeds from the sale of Common
Stock offered by the Selling Stockholders.
The Company will receive gross proceeds of approximately
$18,500,000 if all of the Derivative Securities are exercised, of which there
can be no assurance. The Company intends to use the proceeds, if any, from
exercises, if any, of the Derivative Securities for working capital and general
corporate purposes.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth information concerning the
beneficial ownership of Common Stock by the Selling Stockholders as of the date
of this Prospectus and the number of shares included for sale in this
Prospectus. Such information was furnished to the Company by the Selling
Stockholders.
<TABLE>
<CAPTION>
Shares Owned Shares to be Shares to be
Prior to the Sold in the Owned After
Name Offering Offering the Offering
---- ------------ ------------ ------------
<S> <C> <C> <C>
Anil and Sudha Agarwal 86,956 86,956 0
Vijay Agarwal 21,739 21,739 0
Eliana Alos 1,500 1,500(1) 0
Seena Amsel 1,500 1,500(1) 0
Nicolas Anari 7,564 7,564 0
Terry Anderson 5,000 5,000(1) 0
Mendel Balk 17,000 17,000(1) 0
Nicholas J. Brown 86,956 86,956 0
Cynthia Buckwalter 1,103 1,103 0
Michael Callahan 113,889 113,889(1) 0
Chapul Limited 32,609 32,609 0
Tony Chiarello 2,500 2,500(1) 0
Jennifer Cipriano 1,000 1,000(1) 0
Michelle Colabatistto 1,500 1,500(1) 0
John Daniel 24,783 24,783 0
Staci Delaney 6,500 6,500(1) 0
Jennifer Dickson-Boyle 1,500 1,500(1) 0
Eugene Duffy 7,500 7,500(1) 0
Barry Emanuel 25,000 25,000(1) 0
Equity Securities, Inc. 4,752 4,752 0
Estate of Howard Harlow 37,123 37,123 0
Fieldcrest Cannon, Inc. 200,000 200,000 0
Ernesto Figueroa 2,500 2,500(1) 0
Troy Ford 2,500 2,500(1) 0
Greg Goff 45,000 45,000(1) 0
Richard Gothelf 100,000 100,000 0
Gary L. Griffis 21,739 21,739 0
C. John Guenzel 21,739 21,739 0
Peter Hauser 11,088 11,088 0
Invest L'Inc. 33,386 33,386 0
Investplus, Inc. 21,739 21,739 0
Mary Jochim 43,478 43,478 0
Morton J. Kaplan Trust,
Morton J. Kaplan, Trustee 48,651 43,478 0
Michael J. Keady 24,326 21,739 2,587
Kerry Kesar 1,500 1,500(1) 0
Willis G. Kettelhut and
Marilyn Kettelhut, Ten Com 21,739 21,739 0
Kirkpatrick, Pettis, Smith,
Polian Inc., Cust.
Rod Cerny IRA 21,739 21,739 0
Kirkpatrick, Pettis, Smith,
Polian Inc. Cust. for
Karen C. Chubick IRA 2,000 2,000 0
Kirpet Co. 143,993 143,993 0
Gary Klein 48,000 17,000(1) 31,000
Eileen Lacina 1,500 1,500(1) 0
Alan Lichtenstein 2,500 2,500(1) 0
Linden Group Profit Sharing Plan 37,037 37,037 0
Stephen and Laura Lococo 17,564 17,564 0
Sally O. Lundell 21,739 21,739 0
Man & Co. FBO Peter Hauser, IRA 88,000 88,000 0
Man & Co. FBO John Steinbergs, IRA 44,000 44,000 0
Steven and Donna Manstedt 21,739 21,739 0
JTWROS
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Shares Owned Shares to be Shares to be
Prior to the Sold in the Owned After
Name Offering Offering the Offering
---- ------------- ------------ ------------
<S> <C> <C> <C>
Angel Martinez 1,000 1,000(1) 0
Kathy Mathan 1,000 1,000(1) 0
Lynn Miller 300,000 300,000(1) 0
One World Capital
Partners Limited 100,000 100,000 0
Lawrence O'Shaughnessy 345,000 311,700(1) 33,300
Tami Otis 1,000 1,000(1) 0
Ronald Owens 45,000 45,000(1) 0
Ronald Parsons 17,500 17,500(1) 0
Chanel Penelton 1,500 1,500(1) 0
Piper Trust Co., Trustee, PHSK
Money Purchase Pension &
401K Profit Sharing Plans
and Trust Roger Schronbrich
Self Directed Account 22,000 22,000 0
Madeline Quail 1,500 1,500(1) 0
Raymond D. Rossini 22,000 22,000 0
Saintday International Co. Ltd. 460,000 50,000 410,000
Ronald Schardt 21,739 21,739 0
Steven Schwab 7,500 7,500(1) 0
Harley and Marion Shoemaker 21,739 21,739 0
Robert Sloop 34,000 34,000(1) 0
Elliot J. Smith 93,041 93,041 0
Starter Corporation 100,000 100,000 0
Sterling Trust, Trustee for
Delmar R. Joyce IRA 48,651 43,478 5,173
John A. Sturgeon 24,326 21,739 2,587
Tenzer Greenblatt LLP 55,000 55,000 0
E.M. Thompson Revocable
Trust, E.M. Thompson, Trustee 21,739 21,739 0
Doy Unzicker and
Sheila Unzicker, JTWROS 21,739 21,739 0
Arthur Wagner 11,500 11,500(1) 0
Larry Wagner 65,000 65,000(1) 0
William G. Walters 93,041 93,041 0
John W. Weekly 24,326 21,739 2,587
Adam Weith 1,000 1,000(1) 0
Wayne Weyrauch 88,000 88,000 0
Whale Securities Co., L.P. 418,021 418,021(2) 0
Michael White 45,000 45,000(1) 0
James Whitten 3,753 3,753 0
Irving Zambrano 2,000 2,000(1) 0
Alfredo Zelaya 1,500 1,500(1) 0
</TABLE>
<PAGE>
-----------------
(1) The holder is an employee of the Company and the shares of Common
Stock being offered hereunder by such holder are issuable upon
exercise of non-Plan options granted to such holder by the Company,
except in the case of Lawrence O'Shaughnessy, Executive Vice President
and Chief Operating Officer of the Company. The total number of shares
being offered by Mr. O'Shaughnessy includes 60,000 shares originally
issued to a supplier of the Company, of which Mr. O'Shaughnessy is the
sole stockholder.
(2) Does not include shares held in the trading account of Whale Securities
Co., L.P. ("Whale"). All of the warrants to purchase such shares are
held in Whale's name for the account of its equity owners and/or
certain of its employees. Whale was the underwriter of the Company's
initial public offering and its secondary public offering completed in
March 1993 and in consideration therefor was paid certain underwriting
commissions and a nonaccountable expense allowance and was issued the
Underwriter's Warrants (defined below).
Of the shares of Common Stock offered for sale by the Selling
Stockholders, (1) 37,037 shares were issued to an investor pursuant to a private
offering by the Company consummated in May 1994; (2) 894,431 shares of Common
Stock were issued to investors in November 1994 upon the conversion of shares of
Series A Convertible Preferred Stock of the Company acquired by such investors
pursuant to a private offering by the Company consummated in October 1994; (3)
55,000 shares were issued in payment of certain legal services rendered to the
Company in 1994; (4) 337,566 shares are issuable upon the exercise of warrants
which were issued to Kirkpatrick, Pettis, Smith, Polian Inc. ("KPSP") and its
designees in connection with the KPSP acting as placement agent for private
offerings of securities by the Company that were consummated in October 1994 and
32,609 shares have been issued upon exercise of such warrants; (5) 653,646
shares are issuable upon the exercise of warrants (the "Underwriter's Warrants")
issued to Whale and its designees in connection with Whale acting as underwriter
of the Company's 1993 secondary public offering of securities and the warrants
underlying such warrants; (6) 1,144,589 shares are issuable upon exercise of
non-Plan options granted to employees, officers, a director and a former officer
of the Company as incentives for continuing employment or for providing other
services to the Company, and (7) 410,000 shares were issued in connection with
the settlement of certain claims and litigation asserted against the Company.
The exercise price of warrants and options referred to above range from $1.00 to
$5.00 per share and have expiration dates ranging from February 3, 1998 to
December 31, 1999.
<PAGE>
Except as set forth below and in the footnotes to the above
table, none of the Selling Stockholders has held any offices or maintained any
material relationships with the Company or any of its predecessors during the
past three years, other than providing services to the Company in the ordinary
course of the Company's business. Lawrence O'Shaughnessy is Chief Operating
Officer, Executive Vice President and a director of the Company. Gary Klein is
Vice President of Finance of the Company. Barry Emanuel is a director of the
Company. Whale was the Company's underwriter for the Company's 1989 and 1993
public offerings of securities. William G. Walters, Nicholas Anari, Cynthia
Buckwalter and James Whitten are, and Messrs. Smith and Harlow were, officers or
employees of Whale. Tenzer Greenblatt LLP has acted as counsel to the Company
with respect to certain matters. KPSP acted as placement agent with respect to
certain sales of the Company's securities during 1994.
Each Class B Warrant entitles the registered holder thereof to
purchase one share of Common Stock at a price, initially, of $4.00, and each
Class C Warrant entitles the registered holder thereof to purchase one share of
Common Stock at a price, initially, of $5.00, in each case until February 23,
1998. The Public Warrants are redeemable by the Company, with the consent of
Whale upon 30 days' notice, at a price of $.25 per Public Warrant, provided that
the closing sale price of the Common Stock on all of the 20 trading days ending
on the third day prior to the day on which the Company gives notice has been at
least 125% (currently $5.00, subject to adjustment, for the Class B Warrants and
$6.25, subject to adjustment, of the Class C Warrants) of the then effective
exercise price of the Warrants called for redemption. The holders of Public
Warrants called for redemption have exercise rights until the close of business
on the date fixed for redemption. The Company has agreed, under certain
circumstances, to pay to Whale a fee of 5% upon exercise of the Public
Warrants.
The Public Warrants were issued pursuant to a Warrant
Agreement between the Company and Continental Stock Transfer & Trust company, as
Warrant Agent. Reference is made to said Warrant Agreement for a complete
description of the terms and conditions therein the description herein contained
being qualified in its entirety by reference thereto).
The exercise price and number of shares of Common Stock or
other securities issuable on exercise of the Public Warrants are subject to
adjustment in certain circumstances, including in the event of a stock dividend,
recapitalization, reorganization, merger or consolidation of the Company.
However, no Public Warrant is subject to adjustment for issuance of Common Stock
at a price below the exercise price of that Public Warrant, including the
issuance of shares of Common Stock pursuant to the Company's stock option plan.
The Public Warrants may be exercised upon surrender of the
relevant Public Warrant certificate on or prior to the expiration date at the
offices of the Warrant Agent, with the exercise form on the reverse side of the
certificate completed and executed as indicated, accompanied by full payment of
the exercise price (by certified check payable to the Company) to the Warrant
Agent for the number of Public Warrants being exercised. The holders of Public
Warrants do not have the rights or privileges of holders of Common Stock.
PLAN OF DISTRIBUTION
The Common Stock may be offered and sold from time to time by
the Selling Stockholders as market conditions permit in the over-the-counter
market, or otherwise, at prices and terms then prevailing or at prices related
to the then-current market price, or in negotiated transactions. The shares
offered hereby may be sold by one or more of the following methods, without
limitation: (a) a block trade in which a broker or 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
sellers and purchasers without a broker-dealer. In effecting sales, brokers or
dealers engaged by the Selling Stockholder 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 and dealers and any other participating brokers
or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, in connection with such sales.
<PAGE>
INDEMNIFICATION
Section 145 of the General Corporation Law of the State of
Delaware provides for the indemnification of officers and directors under
certain circumstances against expenses incurred in successfully defending
against a claim and authorizes Delaware corporations to indemnify their officers
and directors under certain circumstances against expenses and liabilities
incurred in legal proceedings involving such persons because of their being or
having been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits
a corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its shareholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its shareholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct of
knowing violations of law; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any limitation on the ability of
the corporation or its shareholders to obtain injunction relief, specific
performance or other equitable relief against directors.
Article Nine of the Company's Certificate of Incorporation and
the Company's By-laws provide that all persons who the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
Law of the Stat of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The forgoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
shareholders or disinterested directors, or otherwise.
Article Ten of the Company's Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or its shareholders for any monetary damages for breaches of fiduciary
duty of loyalty to the Company or its shareholders; (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 General Corporation Law of the State of
Delaware; or (iv) for any transaction from which the director derived an
improper personal benefit.
The Company's employment agreement with Neil Cole provide that
the Company shall indemnify him and hold him harmless for the consequences of
all acts and decisions made by him in good faith while performing services for
the Company. This agreement also require the Company to use its best efforts to
obtain directors' and officers' liability insurance.
Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the act and is,
therefore, unenforceable.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed
upon for the Company by Tenzer Greenblatt LLP, New York, New York, which has
acted as special securities counsel for the Company. Such firm is the beneficial
owner of 55,000 shares of Common Stock. Tenzer Greenblatt LLP acts as counsel
for the Company in connection with certain legal matters unrelated to this
offering.
<PAGE>
EXPERTS
The consolidated financial statements incorporated by
reference in the Company's Annual Report (Form 10-KSB) for the fiscal year ended
January 31, 1995, have been audited by Ernst & Young LLP independent auditors,
as set forth in their report thereon (which contains an explanatory paragraph
with respect to the Company's ability to continue as a going concern mentioned
in Note 2 to the consolidated financial statements) incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement under the Securities Act
with respect to the securities offered by this Prospectus. This prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto, certain portions of the Registration
Statement having been omitted pursuant to the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete, and in
each instance reference is made to the copy of such contract filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference. Copies of the Registration Statement may be
inspected without charge at the principal office of the Commission in
Washington, D.C., and copies of all or any part thereof may be obtained from the
Commission at prescribed rates.
<PAGE>
===============================================================================
No dealer, salesperson 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 the Company, any Underwriter or any
Selling Stockholder. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy and security other than the Securities offered
by this Prospectus, or an offer to sell or a solicitation of an offer to buy any
security by any person in any jurisdiction in which such offer or solicitation
would be unlawful. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, imply that the information in this
Prospectus is correct as of any time subsequent to the date of this Prospectus.
-----------------
TABLE OF CONTENTS
Page
----
Available Information......................................
Information Incorporated by Reference......................
Prospectus Summary.........................................
Risk Factors...............................................
Use of Proceeds............................................
Selling Stockholders.......................................
Plan of Distribution.......................................
Indemnification............................................
Legal Matters..............................................
Experts....................................................
Additional Information.....................................
===============================================================================
<PAGE>
================================================================================
----------------------------
6,514,878 Shares of
Common Stock
----------------------
CANDIE'S, INC.
-------------------------
PROSPECTUS
-------------------------
__________, 1995
==============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth various estimated expenses in
connection with the sale and distribution of the securities being registered,
all of which will be paid for by the Company.
SEC registration fee................... $ 3,985.38
Printing and engraving expenses........
Legal fees and expenses................ *
Accounting fees and expenses........... *
Blue Sky fees and expenses............. *
Miscellaneous.......................... *
---------
TOTAL........................... $ *
=========
------------------------
* to be provided by amendment.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware provides for the indemnification of officers and directors under
certain circumstances against expenses incurred in successfully defending
against a claim and authorizes Delaware corporations to indemnify their officers
and directors under certain circumstances against expenses and liabilities
incurred in legal proceedings involving such persons because of their being or
having been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits
a corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its shareholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its shareholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct of
knowing violations of law; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any limitation on the ability of
the corporation or its shareholders to obtain injunction relief, specific
performance or other equitable relief against directors.
Article Nine of the Company's Certificate of Incorporation and
the Company's By-laws provide that all persons who the Company is empowered to
indemnify pursuant to the provisions of Section 145 of the General Corporation
Law of the Stat of Delaware (or any similar provision or provisions of
applicable law at the time in effect), shall be indemnified by the Company to
the full extent permitted thereby. The forgoing right of indemnification shall
not be deemed to be exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
shareholders or disinterested directors, or otherwise.
II-1
<PAGE>
Article Ten of the Company's Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or its shareholders for any monetary damages for breaches of fiduciary
duty of loyalty to the Company or its shareholders; (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 General Corporation Law of the State of
Delaware; or (iv) for any transaction from which the director derived an
improper personal benefit.
The Company's employment agreement with Neil Cole provide that
the Company shall indemnify him and hold him harmless for the consequences of
all acts and decisions made by him in good faith while performing services for
the Company. This agreement also require the Company to use its best efforts to
obtain directors' and officers' liability insurance.
(a) Exhibits.
Exhibit Number
--------------
5 Opinion of Tenzer Greenblatt LLP.*
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Tenzer Greenblatt LLP (included in Exhibit 5).*
-----------
*To be filed by amendment
Item 17. Undertakings.
A. Rule 415 Undertakings.
The undersigned Registrant hereby undertakes:
(a)(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 additional or changed information with
respect to the plan of distribution.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8, and the
information required in a post-effective amendment by those paragraphs is
incorporated by reference from periodic reports filed by the registrant under
the Securities Exchange Act of 1934.
(2) That, for the purpose of determining liability under the
Securities Act of 1933, that each post-effective amendment shall be deemed as a
new Registration Statement of the securities offered, and the offering of the
securities at that time shall be deemed to be the initial bona fide offering.
(3) To remove from registration by filing a post-effective amendment
to any of the securities being registered which remain unsold at the end of the
offering.
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<PAGE>
B. Indemnification Undertakings.
Reference is made to the items of (i) the Delaware General Corporation
Law, (ii) the Company's Certificate of Incorporation, (iii) the Company's
By-Laws and (iv) the employment agreement of Mr. Neil Cole (described in Item 15
hereof), which provide for certain rights of indemnification for officers and
directors of the Company.
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 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
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<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 of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Purchase, State of New
York on September 13, 1995.
CANDIE'S, INC.
By: /s/ Neil Cole
----------------------------------
Neil Cole, President and
Chief Executive Officer
Each person whose signature appears below on this Registration
Statement hereby constitutes and appoints Neil Cole and Lawrence O'Shaughnessy
or either of them his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and his name, place and stead,
in any and all capacities (until revoked in writing) to sign any and all
amendments (including post-effective amendments and amendments thereto) to this
Registration Statement of Candie's, Inc. and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact, 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, each acting alone or his substitute, 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Neil Cole President and September 13, 1995
-------------------------- Chief Executive
Neil Cole Officer (Principal
Executive Officer)
/s/ Lawrence O'Shaughnessy Chief Operating September 13, 1995
-------------------------- Officer and
Lawrence O'Shaughnessy Director
/s/ Barry Emanuel Director September 13, 1995
--------------------------
Barry Emanuel
/s/ Gary Klein Vice President- September 13, 1995
-------------------------- Finance (Principal
Gary Klein Accounting and Financial
Officer)
</TABLE>
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<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description Page No.
----------- ----------- --------
5 Opinion of Tenzer Greenblatt LLP*
23.1 Consent of Ernst & Young LLP
23.2 Consent of Tenzer Greenblatt LLP*
(included in Exhibit 5)
----------------
* To be filed by amendment
<PAGE>
September 13, 1995
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement (Form S-3 No. 33-xxxxx) and related Prospectus of
Candie's, Inc. for the registration of 6,514,878 shares of its common stock
and to the incorporation by reference therein of our report dated April 26,
1995 with respect to the consolidated financial statements of Candie's, Inc.
included in its Annual Report (Form 10-KSB) for the year ended January 31, 1995,
filed with the Securities and Exchange Commission.
New York, New York
/s/ Ernst & Young LLP
