U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
(Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the fiscal year ended January 31, 1997
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period from __________ to ___________
Commission File Number 0-10593
CANDIE'S, INC.
(Name of small business issuer in its charter)
Delaware 11-2481903
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2975 Westchester Avenue, Purchase, New York 10577
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (914) 694-8600
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
- ------------------- -------------------
None Not Applicable
Securities registered under Section 12(g) of the Exchange Act:
<PAGE>
Common Stock, $.001 par value and Common Stock Purchase Warrants
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes _X_ No__
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained in this form, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The issuer's revenues for the fiscal year ended January 31, 1997 were:
$45,005,416.
The aggregate market value of the voting stock held by non-affiliates of
the registrant (based upon the closing sale price of $5.75) on April 18, 1997
was approximately $42,066,914.
As of April 18, 1997, 10,160,031 shares of Common Stock, par value $.001
per share were outstanding.
Transitional Small Business Disclosure Format (check one):
Yes ___ No _X_
DOCUMENTS INCORPORATED BY REFERENCE: None
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Name Age Position
---- --- --------
Neil Cole 40 Chairman of the Board, President and
Chief Executive Officer
Lawrence O'Shaughnessy 48 Executive Vice President, Chief
Operating Officer and Director
Gary Klein 42 Vice President - Finance
Barry Emanuel 56 Director
Mark Tucker 50 Director
Neil Cole has been Chairman of the Board, President and Chief Executive
Officer of the Company since February 23, 1993. From February through April
1992, Mr. Cole served as director and as acting President of the Company. Mr.
Cole has also served as Chairman of the Board, President, Treasurer and a
director of New Retail Concepts, Inc. ("NRC"), a public company, since its
inception in April 1985.
Lawrence O'Shaughnessy has been a director and Chief Operating Officer of
the Company since March 1993 and Executive Vice President of the Company since
April 1995. He also served as a director of the Company from April to June 1992.
Mr. O'Shaughnessy has served as President of O'Shaughnessy & Company, a
management consulting firm, since March 1991.
Gary Klein, age 42, has served as Vice President-Finance of the Company
since October 1994 and has also served in that position from February to
December 1993. He also served as Chief Financial Officer of the Company from
December 1993 to October 1994. Mr. Klein has also served as Vice
President-Finance of NRC since May 1990. He is a graduate of George Washington
University, with a BBA degree in accounting, and is licensed as a certified
public accountant in the State of New York.
Barry Emanuel has been a director of the Company since May 1993. For more
than the past five years, Mr. Emanuel has served as President of Copen
Associates, Inc., a textile manufacturer located in New York, New York. Mr.
Emanuel received a B.A. degree from the University of Rhode Island.
Mark Tucker has been a director of the Company since May 1996. From August
1993 to the present, Mr. Tucker has been a principal of Mark Tucker, Inc., a
family owned business engaged in the design and import of shoes. From December
1992 to August 1993, he was an independent consultant to the shoe industry. From
July 1992
-2-
<PAGE>
to December 1992, Mr. Tucker was employed as Director of Far East Shoe Wholesale
Operations for United States Shoe Far East Limited, a subsidiary of U.S. Shoe
Corp. For more than five years prior to July 1992, Mr. Tucker was a principal of
Mocambo Ltd., a family owned shoe design and import company.
Directors are elected by the stockholders. Officers are elected by the
Board of Directors and serve at the discretion of the Board.
The Company has agreed that until March 3, 1998, if so requested by Whale
Securities Co., L.P., the underwriter of the Company's February 1993 public
offering (the "Underwriter"), it will nominate and use its best efforts to cause
the election as a director of a designee of the Underwriter or, at the
Underwriter's option, the appointment of such designee as a non-voting advisor
to the Board of Directors. The Company's officers, directors and holders of 5%
or more of the outstanding shares of the Company's Common Stock (as of February
1993) have agreed to vote their shares of Common Stock in favor of such
designee. The Underwriter has not yet exercised its right to designate such
person.
The Company has also agreed, if so requested by Redwood Shoe Corp.
("Redwood"), a principal supplier of the Company, to use reasonable efforts to
cause the election and continuation in office as a director of the Company of
Mr. Mark Tucker for a three year period ending April 3, 1999. If Mr. Tucker is
not available to serve, Redwood has the right to designate one of its other
partners as a nominee for election as a director. Each of Messrs. Cole and
O'Shaughnessy and NRC have agreed to vote their shares of Common Stock to elect
and continue Redwood's nominee in office for such three year period.
Compliance with Section 16(a) of Securities Exchange Act of 1934
Section 16(a) of Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who beneficially own more than 10 percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than 10 percent owners are
required by certain Commission regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms received
by it, the Company believes that during Fiscal 1997, filing requirements
applicable to its officers, directors and 10% stockholders of Common Stock were
complied with, except that Messrs. Cole and O'Shaughnessy failed to timely file
Form 4 reports with respect to 2,206 shares of Common Stock acquired by each of
them under the Company's 401(k) plan in April 1996 and Mr. Klein failed to
timely file Form 4 reports with respect to (a) 1,958 shares of Common Stock
acquired by him under the Company's 401(k) plan in
-3-
<PAGE>
April 1996, and (b) the grant to him in November 1996 of options to purchase up
to 50,000 shares of Common Stock.
Item 10. Executive Compensation
The following table discloses for Fiscal 1997 and the fiscal years ended
January 31, 1996 ("Fiscal 1996") and 1995, compensation for the person that
served as Chief Executive Officer during Fiscal 1997 and for those other persons
that served as executive officers of the Company during Fiscal 1997 whose
salaries exceeded $100,000 (collectively, the "Named Executives").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards
-------------------------------- ------------
Securities
Name and Principal Underlying
Position Year Salary($) Bonus($) Options(#)
------------------ ---- --------- -------- ----------
<S> <C> <C> <C> <C>
Neil Cole 1997 346,000 6,800(1) 10,000
President and Chief 1996 300,000 66,500(1) 410,000
Executive Officer 1995 225,000 46,100 410,000
Lawrence O'Shaughnessy 1997 246,000 2,000(2) 10,000
Executive Vice President and 1996 221,500 19,966(2) 210,000
Chief Operating Officer 1995 186,000 -0- 10,000
Gary Klein 1997 102,000 -0- 60,000
Vice President-Finance and 1996 100,000 -0- 18,000
Chief Financial Officer 1995 106,667 -0- 15,000
</TABLE>
- ----------
(1) Represents bonus accrued under Mr. Cole's employment agreement.
(2) Represents bonus accrued under Mr. O'Shaughnessy's employment agreement.
-4-
<PAGE>
The following table provides information with respect to individual stock
options granted during Fiscal 1997 to each of the Named Executives:
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------------------
% of Total
Shares Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted(#)* Fiscal Year ($/sh) Date
---- ----------- ----------- ------ ----
<S> <C> <C> <C> <C>
Neil Cole 10,000 1.2 2.25 12/11/2001
Lawrence 10,000 1.2 2.25 12/11/2001
O'Shaughnessy
Gary Klein 50,000 5.9 1.89 11/11/2001
10,000 1.2 2.25 12/11/2001
</TABLE>
- ----------
* Non-qualified non-plan stock options; each option became exercisable on its
date of grant and expires five years from that date. The exercisability of
certain options granted to Messrs. Cole and O'Shaughnessy is restricted
upon the occurrence of certain events related to termination of employment
or death of the optionee. In addition, certain options granted to Mr. Cole
are subject to termination prior to their expiration upon termination of
employment for cause.
The following table sets forth information at January 31, 1997 respecting
exercised and unexercised stock options held by the Named Executives. None of
the Named Executives exercised any stock options during the Fiscal 1997.
-5-
<PAGE>
Aggregated Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at January 31, 1997 at January 31, 1997*
--------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Neil Cole 1,430,000 -0- $3,790,825 $ -0-
Lawrence
O'Shaughnessy 305,000 -0- 1,071,575 -0-
Gary Klein 109,000 4,000 353,505 10,240
</TABLE>
- ----------
* An option is "in-the-money" if the year-end market value of the Common Stock
exceeds the exercise price of such option. At January 31, 1997, the closing sale
price per share of the Common Stock as reported by NASDAQ was $5.1875.
Employment Contracts and Termination and Change-in-Control Arrangements
The Company has entered into an amended employment agreement with Neil Cole
for a term expiring on February 28, 2000 at an annual base salary of $400,000
for the 12 months ending February 28, 1998, $450,000 for the 12 months ending
February 28, 1999 and $500,000 for the 12 months ending February 28, 2000,
subject to annual increases at the discretion of the Company's Board of
Directors. Pursuant to the amended employment agreement, Mr. Cole serves as
President and Chief Executive Officer of the Company, devoting a majority of his
business time to the Company and the remainder of his business time to other
business activities, including those of NRC. Under the amended agreement, Mr.
Cole (i) is entitled to receive a portion of an annual bonus pool equal to 5% of
the Company's annual pre-tax profits, if any, divided among the Company's
executive officers, as determined by the Board of Directors; and (ii) is
entitled to customary benefits, including participation in management incentive
and benefit plans, reimbursement for automobile, reasonable travel and
entertainment expenses and a life insurance policy in the amount of $1,000,000.
Mr. Cole is also entitled to receive any additional bonuses as the Board of
Directors may determine. If Mr. Cole terminates his employment with the Company
for "good reason" (as defined in the amended agreement) or the Company
terminates Mr. Cole's employment without "cause" (as defined in the amended
agreement), including by reason of a "change-in-control" of the Company (as
defined in the employment agreement), the Company is obligated to pay Mr. Cole
his full salary (at the annual base salary rate then in effect) through the date
of termination plus full base salary for one year or the balance of the term of
the agreement, whichever is greater.
The Company has entered into an amended employment agreement with Lawrence
O'Shaughnessy for a term expiring on March 31, 2000 at an annual base salary of
$300,000 for the 12 months ending March 31, 1998 and $350,000 thereafter,
subject to annual
-6-
<PAGE>
increases at the discretion of the Company's Board of Directors. Pursuant to the
amended agreement, Mr. O'Shaughnessy serves as Executive Vice-President of the
Company, devoting a majority of his business time to the Company and the
remainder of his business time to other business activities. Under the amended
agreement, Mr. O'Shaughnessy (i) will be entitled to receive an annual bonus
equal to 1.5% of the Company's annual pre-tax profits, if any; and (ii) is
entitled to customary benefits, including participation in management incentive
and benefit plans, reimbursement for automobile, reasonable travel and
entertainment expenses and a life insurance policy in an amount equal to his
annual base salary.
The Company has entered into an employment agreement with Gary Klein which
provides for his employment as the Vice-President of Finance of the Company at
an annual salary of $100,000 for a two year period expiring November 15, 1998,
subject to automatic renewal for successive two year periods, unless earlier
terminated by reason of Mr. Klein's death or by the Company for "cause" (as
defined in the employment agreement). In addition, the Company provides Mr.
Klein with term life insurance in the amount of $110,000.
Compensation of Directors
Each director received cash compensation of $2,500 for serving on the Board
during Fiscal 1997. Under the Company's 1989 Stock Option Plan (the "1989
Plan"), non-employee directors (other than non-employee directors who are
members of any Stock Option Committee that may be appointed by the Board of
Directors to administer the 1989 Plan) are eligible to be granted non-qualified
stock options and limited stock appreciation rights. No stock appreciation
rights have been granted under the 1989 Plan. Under the Company's 1997 Stock
Option Plan (the "1997 Plan"), subject to approval of the 1997 Plan by the
stockholders at the next annual meeting of stockholders, non-employee directors
are eligible to be granted non-qualified stock options.
The Board of Directors or the Stock Option Committee of the 1989 Plan or
the 1997 Plan, if one is appointed, has discretion to determine the number of
shares subject to each nonqualified option (subject to the number of shares
available for grant under the 1989 Plan or the 1997 Plan, as applicable), the
exercise price thereof (provided such price is not less than the par value of
the underlying shares of Common Stock), the term thereof (but not in excess of
10 years from the date of grant, subject to earlier termination in certain
circumstances), and the manner in which the option becomes exercisable (amounts,
intervals and other conditions). No non-qualified options were granted to
non-employee directors under the 1989 Plan during Fiscal 1997.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of May 1, 1997, based
on information obtained from the persons named below, with respect to the
beneficial ownership
-7-
<PAGE>
of shares of Common Stock by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock; (ii)
each of the Named Executives; (iii) each of the Company's directors; and (iv)
all executive officers and directors as a group:
<TABLE>
<CAPTION>
Amount and Nature Percentage
Name and Address of of Beneficial of Beneficial
Beneficial Owner (1) Ownership (2) Ownership
- -------------------- --------------- ----------
<S> <C> <C>
Neil Cole 3,521,976(3)(4)(5) 28.3
New Retail Concepts, Inc. 2,027,696(3)(5) 18.5
Terren Peizer 650,000 6.4
c/o Beechwood Financial
Company, Inc.
4049 S. Via Marina
M-207
Marina Del Ray, California 90202
Redwood Shoe Corp. 1,125,000(6) 11.0
8F, 137 Hua Mei West Street
SEC.1, Taichung, Taiwan, R.O.C.
Mark Tucker 1,125,000(6) 11.0
Lawrence O'Shaughnessy 368,030(7) 3.5
Gary Klein 116,478(8) 1.1
Barry Emanuel 25,000(9) *
All executive officers and 5,156,848(3)(4) 39.8
directors as a group (five (5)(6)(7)(8)(9)
persons)
</TABLE>
- ----------
*Less than 1%.
(1) Unless otherwise indicated, each beneficial owner has an address at 2975
Westchester Avenue, Purchase, New York 10577.
(2) A person is deemed to have beneficial ownership of securities that can be
acquired by such person within 60 days of May 1, 1997 upon exercise of
warrants or options. Consequently, each beneficial owner's percentage
ownership is determined by assuming that warrants or options held by such
person (but not those held by any other person) and which are exercisable
within 60 days from May 1, 1997 have been exercised. Unless otherwise
noted, the Company believes that all persons referred to in the table have
sole voting and investment power with respect to all shares of Common Stock
reflected as beneficially owned by them.
-8-
<PAGE>
(3) Includes 2,027,696 shares of Common Stock beneficially owned by NRC; Neil
Cole, the President and Chief Executive Officer of NRC, owns, beneficially
and of record, approximately 30% of NRC's outstanding common stock. In
addition, as President of NRC, Mr. Cole has or will have the right to vote
the 2,027,696 shares of the Company's Common Stock beneficially owned by
NRC. Mr. Cole disclaims beneficial ownership of these shares.
(4) Includes 1,460,000 shares of Common Stock issuable upon exercise of
immediately exercisable warrants and options owned by Neil Cole. Also
includes 10,000 shares held by a charitable foundation, of which Mr. Cole
and his wife are co-trustees. Mr. Cole disclaims beneficial ownership of
the shares held by such charitable foundation.
(5) Includes 800,000 shares of Common Stock issuable upon exercise of
immediately exercisable options and warrants issued to NRC.
(6) Includes 75,000 shares of Common Stock issuable upon exercise of an
immediately exercisable option and 1,050,000 shares of Common Stock, which
option and shares were issued pursuant to an agreement between the Company
and Redwood pertaining to the settlement of certain indebtedness of the
Company to Redwood. Mr. Tucker is an affiliate of Redwood.
(7) Includes 305,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
(8) Includes 109,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
(9) Represents 25,000 shares of Common Stock issuable upon exercise of
immediately exercisable options.
Item 12. Certain Relationships and Related Transactions
In March 1993, the Company entered into a Services Allocation Agreement
with NRC pursuant to which the Company provides NRC with certain services for
which NRC pays the Company an amount equal to the allocable portion of the
Company's expenses, including employees' salaries, associated with such
services. Pursuant to such agreement, NRC paid the Company $50,000 in each of
Fiscal 1996, Fiscal 1997 and the current fiscal year (ending January 31, 1998).
On February 1, 1995, the Company and NRC entered into a securities purchase
agreement (the "Purchase Agreement") pursuant to which NRC loaned to the Company
an aggregate of $600,000, which loans were repaid to NRC, together with interest
in the amount of approximately $33,500 in Fiscal 1996. In consideration for such
loans, the Company issued warrants to purchase up to 700,000 shares of Common
Stock ("Warrant Shares") to NRC, which warrants are currently exercisable at
$1.2375 per
-9-
<PAGE>
share of Common Stock (110% of the closing bid price of the Common Stock on the
NASDAQ National Market System on January 31, 1995). The shares of Common Stock
underlying such Warrants were entitled to the benefit of "piggy-back"
registration rights granted by the Company to NRC. In consideration for NRC's
forbearance from exercising its "piggy-back" registration rights in respect of a
registration statement of the Company that became effective in October 1996, the
Company has agreed that, under certain circumstances, when requested to do so by
NRC, the Company will prepare, file and cause to become effective under Section
5 of the Securities Act of 1933 (the "Act"), a registration statement covering
the Warrant Shares.
In April 1996, the Company entered into an agreement with Redwood (the
"Redwood Agreement") under which, in consideration for the satisfaction in full
of certain accounts payable to Redwood aggregating $1,680,000, the Company (i)
issued to Redwood 1,050,000 shares of Common Stock (the "Redwood Shares") and an
option to purchase the 75,000 shares of Common Stock (the "Option Shares") at an
exercise price of $1.75 per share; (ii) paid $50,000 to Redwood; and (iii)
agreed, for the three year period ending April 3, 1999, to cause Mark Tucker (or
if he is not available, another partner of Redwood designated by it) to be
elected as director of the Company; and (iv) agreed to register the Redwood
Shares and the Option Shares for sale under the Act. Pursuant to the Redwood
Agreement, in May 1996, Mr. Tucker was elected as a director of the Company and
in October 1996, a registration statement covering the Redwood Shares and the
Option Shares was declared effective under the Act.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this amendment to this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CANDIE'S, INC.
By: /s/ Neil Cole
---------------------------
Neil Cole
Chief Executive Officer
By: /s/ Gary Klein
---------------------------
Gary Klein
Vice President-Finance
Dated: May 30, 1997
-10-
