As filed with the Securities and Exchange Commission on September 30, 1996
Registration No. 333-7659
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
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 LLP
405 Lexington Avenue
New York, New York 10174
Telephone: (212) 885-5000
Telecopier: (212) 885-5001
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
2,950,000 shares of Common Stock issuable upon exercise of the Class B and Class
C 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>
PROSPECTUS
4,315,000 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 Warrants), subject to adjustment.
This Prospectus also relates to an offering by certain selling stockholders
(collectively, the "Selling Stockholders") of an aggregate of up to 1,365,0000
shares of Common Stock, of which up to 315,000 shares are issuable upon the
exercise of options held by certain of the Selling Stockholders (the "Selling
Stockholder Options"). The Selling Stockholder Options together with the Public
Warrants are collectively sometimes hereinafter referred to as 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, and a solicitation fee is paid in connection with the exercise of the
Public Warrants, the Company will receive gross proceeds of approximately
$13,100,000. 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 26, 1996, the last sale price of the Common Stock as
reported on the NASDAQ National Market System was $2.3125 per share
<PAGE>
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 , 1996
-2-
<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:
1. Annual Report on Form 10-KSB for the fiscal year ended January 31,
1996;
2. Form 10-KSB/A Amendment No. 1 to Form 10-KSB for the fiscal year ended
January 31, 1996;
3. Form 10-KSB/A, Amendment No. 2 to Form 10-KSB for the fiscal year
ended January 31, 1995;
4. Form 10-KSB/A, Amendment No. 3 to Form 10-KSB for the fiscal year
ended January 31, 1995;
5. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
April 30, 1994;
6. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
July 31, 1994;
7. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
October 31, 1994;
8. Form 10-QSB/A, Amendment No. 2 to Form 10-QSB for the quarter ended
April 30, 1994;
9. Form 10-QSB/A, Amendment No. 2 to Form 10-QSB for the quarter ended
July 31, 1994;
10. Form 10-QSB/A, Amendment No. 2 to Form 10-QSB for the quarter ended
October 31, 1994;
<PAGE>
11. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
April 30, 1995;
12. Form 10-QSB/A, Amendment No. 2 to Form 10-QSB for the quarter ended
April 30, 1995;
13. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
July 31, 1995;
14. Form 10-QSB/A, Amendment No. 2 to Form 10-QSB for the quarter ended
July 31, 1995;
15. Form 10-QSB/A, Amendment No. 3 to Form 10-QSB for the quarter ended
July 31, 1995;
16. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
October 31, 1995;
17. Form 10-QSB/A, Amendment No. 2 to Form 10-QSB for the quarter ended
October 31, 1995;
18. Form 10-QSB for the quarter ended April 30, 1996;
19. Form 10-QSB/A, Amendment No. 1 to Form 10-QSB for the quarter ended
April 30, 1996;
20. Form 10-QSB for the quarter ended July 31, 1996; and
21. 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.
-4-
<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 and fashion footwear under the CANDIE'S(R) trademark for distribution to
better department and specialty stores nationwide. The Company also arranges for
the manufacture of footwear products, similar to those produced under the
CANDIE'S trademark, for mass market and discount retailers, under one of the
Company's other trademarks or under the private label brand of the retailer, and
distributes a variety of men's workboots, hiking boots, winter boots and outdoor
casual shoes designed and marketed by the Company's wholly-owned subsidiary,
Bright Star Footwear, Inc. ("Bright Star") under private labels and a brand name
licensed by the Company from third parties specifically for use by Bright Star
(ASPEN(R)). The Company has entered into an agreement with the owner of the
BONGO(R) trademark to act as exclusive licensee to manufacture and market
footwear in North America under the BONGO(R) trademark for an initial period
expiring July 31, 1998, which may be extended by the Company under certain
circumstances, to July 31, 2001. The Company licenses the CANDIE'S trademark to
third parties for the sale of other products (children's footwear and women's
intimate apparel) pursuant to exclusive license agreements which require the
licensees to pay royalties, including minimum royalties, to the Company.
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.
-5-
<PAGE>
The Offering
Common Stock offered................. 2,950,000 shares issuable by the Company
upon exercise of the Public Warrants and
1,365,000 shares to be offered by the
Selling Stockholders
Common Stock outstanding(1).......... 9,639,677 shares
Common Stock to be outstanding
after the offering(2)................ 12,904,677 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 $13,100,000 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..................... CAND
- -----------------------
(1) Based on shares outstanding on September 26, 1996, 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; (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) 3,965,877 shares
issuable upon exercise of outstanding non-Plan options and warrants.
(2) Assumes exercise of all of the Derivative Securities but no other
outstanding options or warrants.
-6-
<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; Accumulated
Deficit; Limited Relevant Operating History. Although the Company achieved net
income of $1,053,956 and $27,259, respectively, for its fiscal years ended
January 31, 1996 and 1995, and net income of $439,539 for the quarter ended July
31, 1996 the Company sustained an operating loss of $1,390,524 for its fiscal
year ended January 31, 1995 and sustained a net loss of $6,321,092 for its
fiscal year ended January 31, 1994. In addition, at July 31, 1996, the Company
had a working capital deficit of $111,510 and an accumulated deficit of
$4,449,492. Upon consummation of this offering, the Company may continue to have
a working capital deficit. In addition, 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 in effect had only a three-year 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 private label sales, Bright
Star Division (in connection with the ASPEN(R) trademark license) and costs
related to its use of the BONGO license. These expenses could result in
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 maintain profitable operations
over any extended period of time in the future.
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 three years, achieving continued market
acceptance of the Company's existing products or market acceptance of any future
products which may be
-7-
<PAGE>
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.
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 working capital deficit of $111,510 at
July 31, 1996 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 proves 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 stockholders 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
-8-
<PAGE>
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. The Company has no manufacturing or supply
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.
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
-9-
<PAGE>
such materials will be available on a timely or cost-effective basis.
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, 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 certain 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 if suppliers
raise prices to compensate for the weakening of the dollar. 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 Eastland(R). There can be no
assurance that the Company will be able to compete successfully.
8. Trademark Ownership and Use. The Company owns federal trademark
registrations for CANDIE'S(R), among others, and believes that the CANDIE'S(R)
trademark, has significant value and is important to the marketing of the
Company's products and those
-10-
<PAGE>
of its licensees. There can be no assurance that the Company's CANDIE'S(R) or
other 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.
The Company also sells footwear under the BONGO(R) and ASPEN(R) trademarks,
which the Company licenses from third parties. The BONGO(R) license expires on
July 31, 1998, subject to the Company's right to extend the license through July
31, 2001, and grants the Company the exclusive right to market and distribute
footwear under the BONGO(R) trademark in North America. The BONGO(R) license
requires the Company to pay royalties based on a percentage of the sales
exceeding certain minimum royalty payments. The ASPEN(R) license expires on
September 30, 1996, subject to the Company's right to extend the license through
September 30, 1997. The inability of the Company to utilize the BONGO(R) or
ASPEN(R) trademarks could have a material adverse effect on its business.
9. 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.
10. 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.
11. 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
-11-
<PAGE>
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.
12. 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 National Market
System, a company must have 200,000 shares publicly held, a market value of the
publicly held shares of at least $1,000,000, net tangible assets of at least
$1,000,000 ($2,000,000 if the Company has sustained losses from continuing
operations and/or net losses in two of its three most recent fiscal years and
$4,000,000 if it has sustained losses in three of its four most recent fiscal
years), have 400 shareholders or 300 shareholders of round lots and a minimum
bid price of $1.00 per share.
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
-12-
<PAGE>
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.
13. 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 4,315,000 shares of Common
Stock beneficially owned by the Selling Stockholders, which shares are being
offered for sale pursuant to this Prospectus. In addition, there are
approximately 4,000,000 additional shares subject to options and warrants for
which a registration statement has been filed but not yet declared effective. 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.
-13-
<PAGE>
RECENT DEVELOPMENTS
In December 1995 the United States District Court for the Southern District
of New York approved the settlement of an action instituted in July 1992 against
the Company and its former directors by the Food and Allied Service Trades
Department, AFL-CIO, and on behalf of the class of all other similarly situated
stockholders. Pursuant to settlement the Company made a $100,000 cash payment to
the plaintiffs and is required to issue to the plaintiffs that number of shares
of its Common stock (up to a maximum of 600,000 shares) which would allow the
plaintiffs to realize an additional $550,000 upon their sale over a two-year
period. If the plaintiffs do not realize $550,000 from the sale of such shares,
the Company will be required to pay to the plaintiffs the amount of the
shortfall.
In February 1996 the Company settled an administrative proceeding brought
against it by the Securities and Exchange Commission (the "Commission") 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. In the proceeding,
the Commission found that the sales of Common Stock in the Offering did not
qualify for an exemption from the registration requirements of Section 5 of the
Securities Act of 1933. In accepting the settlement with the Commission, the
Company neither admitted nor denied the Commission's allegations and findings,
and it consented to the entry of an order in which it agreed to permanently
cease and desist from committing or causing any violation, and any future
violation, of Section 5 of the Securities Act of 1933.
In April 1996 the Company entered into an agreement (the "Redwood
Agreement") with a trade creditor, Redwood Shoe Corp., (the "Creditor") pursuant
to which it issued to the Creditor 1,050,000 shares of its common stock, an
option to purchase 75,000 shares of common stock at $1.75 per share and agreed
to make a $50,000 payment in lieu of payment by the Company of indebtedness in
the principal amount of approximately $1,680,000 and accrued interest, if any,
through March 1, 1996. No interest was accrued or payable to the Creditor
through March 1, 1996. The Company has included in the Registration Statement of
which this Prospectus forms a part, the 1,050,000 shares and 75,000 option
shares for resale by the Creditor. The Company also agreed to appoint a partner
of the Creditor to the Board of Directors of the Company and to use its best
efforts to continue the nominee as a director of the Company for a three year
period expiring in April 1999. Mr. Mark Tucker, a partner of the Creditor, was
appointed to the Company's Board of Directors in May 1996. During the fiscal
years ended January 31, 1996 and 1995, the Company purchased approximately 90%
and 50%, respectively, of its total goods purchased through the Creditor.
-14-
<PAGE>
At July 31, 1996 the Company had approximately $4,900,000 of open purchase
orders with the Creditor.
In June 1996, the Company sold its entire interest in its joint venture
with Urethane Technologies, Inc. ("UTI") to UTI in exchange for 175,000 shares
of unregistered UTI common stock.
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 $13,100,000 if all
of the Derivative Securities are exercised (assuming a 5% warrant solicitation
fee is paid in connection with exercises of Public Warrants), 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.
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(3)
---- -------- -------- ---------------
<S> <C> <C> <C>
Redwood Shoe Corp 1,125,000(1) 1,125,000 0
Mendel Balk 27,000(2) 10,000 17,000
Gerald Bonomi 60,000(2) 60,000 0
David Conn 5,000(2) 5,000 0
Michael Daudier 10,000(2) 10,000 0
Eugene Duffy 5,000(2) 5,000 0
Greg Goff 55,000(2) 10,000 45,000
Gary Klein 50,000(2) 10,000 40,000
William Lucas 60,000(2) 60,000 0
Lynn Miller 310,000(2) 10,000 300,000
Lawrence O'Shaughnessy 355,000(2) 10,000 345,000
Ron Owens 10,000(2) 10,000 0
Ron Parsons 27,500(2) 10,000 17,500
Robert Sloop 44,000(2) 10,000 34,500
Arthur Wagner 16,500(2) 5,000 11,500
Mitchell Watt 5,000(2) 5,000 0
Michael White 55,000(2) 10,000 45,000
</TABLE>
- --------------------
-15-
<PAGE>
(1) Includes 75,000 shares of Common Stock issuable upon exercise of
immediately exercisable warrants and options. See "Recent Developments" for
a description of the relationship between the Company and Redwood Shoe
Corp.
(2) 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.
(3) After the Offering none of the holders will beneficially own more than 1%
of the Company's outstanding Common stock other than Lawrence O'Shaughnessy
and Lynn Miller, who, based upon the number of shares of Common Stock
outstanding as of the date of this Prospectus, will beneficially own
approximately 3.5% and 3.0% respectively of the outstanding Common Stock.
-16-
<PAGE>
Of the shares of Common Stock offered for sale by the Selling Stockholders,
(1) 75,000 shares are issuable upon the exercise of options (the "Redwood
Option") issued to Redwood Shoe Corp. in connection with the execution of the
Redwood Agreement; (2) 1,050,000 shares being offered by Redwood Shoe Corp. were
issued to it in connection with the execution of the Redwood Agreement and (3)
240,000 shares are issuable upon exercise of non-Plan options granted to
employees, and certain officers of the Company as incentives for continuing
employment or for providing other services to the Company. The exercise price of
warrants and options referred to above range from $1.75 to $2.47 per share and
have expiration dates ranging from November 26, 2000 to May 6, 2001.
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. Mitchell Watt is controller of the Company.
Lynn Miller is president of a subsidiary of the Company.
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, in connection with the
exercise of Public Warrants pursuant to solicitation, to pay to Whale Securities
Co., L.P. ("Whale"), a fee of five percent (5%) of the exercise price for each
Public Warrant exercised, provided however, that Whale will not be entitled to
receive such compensation in Public Warrant exercise transactions in which (i)
the market price of Common Stock at the time of the exercise is lower than the
exercise price of the Public Warrant; (ii) the Public Warrants are held in any
discretionary account; (iii) disclosure of compensation arrangements is not made
in documents provided to holders of
-17-
<PAGE>
Public Warrants at the time of exercise; (iv) the exercise of the Public
Warrants is unsolicited; or (v) the transaction was in violation of Rule 10b-6
promulgated under the Exchange Act.
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
-18-
<PAGE>
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.
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
-19-
<PAGE>
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 agreements with Neil Cole and Lawrence
O'Shaughnessy provide that the Company shall indemnify them and hold them
harmless for the consequences of all acts and decisions made by them while
performing services for the Company. These agreements also require the Company
to use its best efforts to obtain directors' and officers' liability insurance
for such persons.
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.
EXPERTS
The consolidated financial statements incorporated by reference in the
Company's Annual Reports (Form 10-KSB) for the fiscal years ended January 31,
1996, and 1995, have been audited by Ernst & Young LLP independent auditors, as
set forth in their reports thereon (which report for the 1995 Form 10-KSB
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 for such Form 10-KSB) incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such reports 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
-20-
<PAGE>
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.
-21-
<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 any 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.....................................
================================================================================
================================================================================
4,315,000 Shares of
Common Stock
--------------
CANDIE'S, INC.
--------------
PROSPECTUS
--------------
__________, 1996
================================================================================
<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................... $ 1,002.56
Printing and engraving expenses........ 6,000.00
Legal fees and expenses................ 38,000.00
Accounting fees and expenses........... 12,000.00
Blue Sky fees and expenses............. 1,000.00
Miscellaneous.......................... 6,997.44
----------
TOTAL........................... $65,000.00
==========
------------------------
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.
II-1
<PAGE>
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 State 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 agreements with Neil Cole and Lawrence
O'Shaughnessy provide that the Company shall indemnify them for the consequences
of all acts and decisions made by them while performing services for the
Company. These agreements also require the Company to use its best efforts to
obtain directors' and officers' liability insurance for such persons.
(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).
II-2
<PAGE>
Item 17. Undertakings.
A. Rule 415 Undertakings.
The undersigned small business issuer hereby undertakes that it will:
(a)(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act.
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) of this chapter if, in the aggregate, the changes
in the volume and price represent no more than a 20% change in the maximum
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) Include any additional or changed material information on the
plan of distribution.
However, the statements in paragraphs (a)(1)(i) and (a)(1)(ii) of this item
do not apply if the information required in a post-effective amendment is
incorporated by reference from periodic reports filed by the undersigned small
business issuer under the Exchange Act.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
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 agreements of Mr. Neil Cole and Mr. Lawrence
II-3
<PAGE>
O'Shaughnessy (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 (the "Act") may be permitted to directors, officers and controlling
persons of the undersigned small business issuer pursuant to the foregoing
provisions, or otherwise, the undersigned small business issuer has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by such small business issuer of
expenses incurred or paid by a director, officer or controlling person of such
small business issuer 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, such small business issuer
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
C. Filings Incorporated by Subsequent Exchange Act Documents by Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
<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 26, 1996.
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.
Signature Title Date
- --------- ----- ----
/s/ Neil Cole September 26, 1996
- ------------------ President
Neil Cole Chief Executive
Officer and Director (Principal
Executive and Accounting
Officer)
II-5
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Lawrence O' Shaughnessy Chief Operating September 26, 1996
- ---------------------------
Lawrence O'Shaughnessy Officer and
Director
/s/ * Director September 26, 1996
- ---------------------------
Barry Emanuel
Director September 26, 1996
- ---------------------------
Mark Tucker
/s/ Gary Klein Vice President- September 26, 1996
- --------------------------- Finance (Principal
Gary Klein Financial Officer)
* By: /s/ Neil Cole
-----------------------
Neil Cole, Attorney-in-fact September 26, 1996
II-6
<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)
TENZER GREENBLATT LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
(212) 885-5000
Cable "TENGRAN NEW YORK"
Facsimile: (212) 885-5001
September 26, 1996
Candie's, Inc.
2975 Westchester Avenue
Purchase, New York, 10577
Gentlemen:
You have requested our opinion with respect to (A) the public offering and
sale by the selling stockholders described below pursuant to a Registration
Statement (the "Registration Statement") on Form S-3 (No. 333-7659) of Candie's,
Inc., a Delaware corporation (the "Company"), under the Securities Act of 1933,
as amended (the "Act"), of the following shares of common stock, $.001 par
value, of the Company (1) 1,050,000 shares (the "Issued Shares") which were
issued to a creditor of the Company (the "Creditor") in satisfaction of certain
indebtedness (the "Indebtedness") (2) 75,000 shares (the "Creditor Option
Shares") issuable upon exercise of certain options (the "Creditor Options")
granted by the Company to the Creditor in satisfaction of the Indebtedness and
(3) 240,000 shares (the "Option Shares") which are issuable upon exercise of
non-Plan options (the "Options") granted to employees and officers of the
Company as incentives for continuing employment or for providing other services
to the Company (B) the public offering and sale by the Company of an aggregate
of up to 2,950,000 shares (the "Warrant Shares") issuable upon exercise of
outstanding Class B and Class C warrants of the Company issued in connection
with the Company's 1993 secondary public offering (the "Warrants").
We have examined originals, or copies certified or otherwise identified to
our satisfaction, of such documents and corporate and public records as we deem
necessary as a basis for the opinion hereinafter expressed. With respect to such
examination, we have assumed the genuineness of all signatures appearing on all
documents presented to us as originals, and the conformity to the originals of
all documents presented to us as conformed or reproduced copies. Where factual
matters relevant to such opinion were not independently established, we have
relied upon certificates of appropriate state and local
<PAGE>
Candie's, Inc.
September 26, 1996
Page 2
officials, and upon certificates of executive officers and responsible employees
and agents of the Company.
Based upon and subject to the foregoing, it is our opinion that:
1. The Issued Shares have been duly and validly issued and are fully paid
and nonassessable.
2. The Creditor Option Shares have been duly and validly authorized and
when sold, paid for and issued upon exercise of the Creditor Options in
accordance with the terms of the Creditor Options, will be duly and validly
issued and fully paid and nonassessable.
3. The Option Shares have been duly and validly authorized and when sold,
paid for and issued upon exercise of the Options in accordance with the terms of
the Options, will be duly and validly issued and fully paid and nonassessable.
4. The Warrant Shares have been duly and validly authorized and when sold,
paid for, and issued upon exercise of the Warrants in accordance with the terms
of the Warrants, will be duly and validly issued and fully paid and
nonassessable.
Please be advised that this firm owns 55,000 shares of Common Stock.
We hereby consent to the use of this opinion as Exhibit 5 to the
Registration Statement, and to the use of our name as your counsel in connection
with the Registration Statement and in the Prospectus forming a part thereof. In
giving this consent, we do not thereby concede that we come within the
categories of persons whose consent is required by the Act or the General Rules
and Regulations promulgated thereunder.
Very truly yours,
/s/Tenzer Greenblatt LLP
TENZER GREENBLATT LLP
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-7659) and related
Prospectus of Candies, Inc. for the registration of 4,315,000 shares of its
common stock and to the incorporation by reference therein of our report dated
April 12, 1996 with respect to the consolidated financial statements of
Candies, Inc. and Subsidiaries included in its Annual Report (Form 10-KSB/A)
for the year ended January 31, 1996, and our report dated April 26, 1995, except
for Note 2(b), as to which the date is March 14, 1996, with respect to the
consolidated financial statements of Candies, Inc. and subsidiaries included in
its Annual Report (Form 10-KSB/A) for the year ended January 31, 1995, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
September 26, 1996
