As filed with the Securities and Exchange Commission on December 16, 1998
Registration No. 333-62713
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3/A
(Amendment No. 3)
REGISTRATION STATEMENT
Under
The Securities Act of 1933
CALIFORNIA PRO SPORTS, INC.
(Name of registrant as specified in its charter)
Delaware 84-1217733
(State or Jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1221-B South Batesville Road, Greer, South Carolina 29650 (864) 848-5160
(Address, including zip code, and telephone number, including area code of
Registrant's principal executive offices)
Barry Hollander, Acting President
1221-B South Batesville Road, Greer, South Carolina 29650 (864) 848-5160
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPY TO:
Jehu Hand, Esq.
Hand & Hand
24901 Dana Point Harbor Drive, Suite 200
Dana Point, California 92629
(949) 489-2400
Facsimile (949) 489-0034
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this registration
statement.
If 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 plan, please check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box:[]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to Offering Price Aggregate Amount of
Securities to be Registered Be Registered Per Share (1) Offering Price Registration Fee
Common Stock issuable upon
conversion of Series B
<S> <C> <C> <C> <C> <C>
Convertible Preferred Stock(2)....... 1,615,385 $1.00 $1,615,385 $476.54
Common Stock issuable upon
conversion of Series C
Convertible Preferred Stock(3)....... 1,584,615 $1.00 $1,584,615 $474.59
Common Stock held by
Selling Stockholders 1,608,262 $1.00 $1,608,262 $474.44
Common Stock issuable upon
exercise of Options(4) 100,000 $1.00 $100,000 $29.50
Common Stock issuable upon
exercise of options(5) 100,000 $1.25 $125,000 $36.88
200,000 $1.42 $284,000 $83.78
200,000 $1.70 $340,000 $100.30
100,000 $1.98 $198,000 $58.41
100,000 $2.27 $227,000 $66.97
100,000 $2.55 $255,000 $75.23
100,000 $2.83 $283,000 $83.49
100,000 $3.54 $354,000 $104.43
100,000 $4.25 $425,000 $125.38
Total(6)(7)........................... 6,008,262 $7,399,262 $2,189.94
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) Includes 1,615,383 shares estimated to be issuable upon conversion of
1,050 shares ($1,050,000 aggregate principal amount) of Series B 4%
Convertible Preferred Stock convertible at 65% of the closing bid price
of the Common Stock averaged over the five trading days prior to the
date of conversion. The conversion price of $.65 per share is based
upon the closing bid price of the Common Stock on August 14, 1998. The
maximum offering price per share is based upon the closing price of the
Common Stock on September 1, 1998, or $1.00 since it is higher than the
estimated conversion price per share of the Series B 4% Convertible
Preferred Stock (in accordance with Rule 457(g)).
(3) Includes 1,584,615 shares estimated to be issuable upon conversion of
1,030 shares ($1,030,000 aggregate principal amount) of Series C 4%
Convertible Preferred Stock convertible at 65% of the closing bid price
of the Common Stock averaged over the five trading days prior to the
date of conversion. The conversion price of $.65 per share is based
upon the closing bid price of the Common Stock on September 1, 1998.
The maximum offering price per share is based upon the closing price of
the Common Stock on September 1, 1998, or $1.00 since it is higher than
the estimated conversion price per share of the Series C Convertible
Preferred Stock (in accordance with Rule 457(g)).
(4) Includes options to purchase 100,000 shares at a price of $1.00 per
share.
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(5) Includes options to purchase shares of Common Stock at the prices
indicated. The maximum offering price is based upon the exercise price
of the options.
(6) Intentionally omitted.
(7) Paid herewith.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION
PROSPECTUS
CALIFORNIA PRO SPORTS, INC.
6,008,262 Shares of Common Stock
($.01 par value)
The estimated 6,008,262 shares (the "Shares") of Common Stock, par
value $.01 per share (the "Common Stock") of California Pro Sports, Inc., a
Delaware corporation (the "Company") are being registered by the Company for
resale by the selling stockholders (the "Selling Stockholders") and include an
estimated 1,615,385 shares issuable upon conversion of $1,050,000 in principal
amount of Series B 4% Convertible Preferred Stock (the "Series B Preferred"),
1,584,615 Shares issuable upon conversion of $1,030,000 in principal amount of
Series C 4% Convertible Preferred Stock (the "Series C Stock"), 1,608,262 Shares
of Common Stock already outstanding and 1,200,000 shares issuable upon exercise
of Options. The number of shares of Common Stock estimated to be issuable upon
conversion of each of the 1,050 shares of Series B Preferred and 1,030 Shares of
Series C Preferred, and the consequent number of shares of Common Stock
available for resale under this Prospectus, is based upon a conversion ratio
which is $1,000 divided by 65% of the closing bid price of the Common Stock on
NASDAQ averaged over the five trading days immediately prior to the date of
conversion. The closing bid price of the Common Stock was $1.00 per share on
September 1, 1998, the date immediately prior to the original filing of the
Registration Statement of which this Prospectus is a part, and as of that date
the total number of shares issuable pursuant to the conversion terms of the
Preferred Stock was 3,200,000 shares. The average closing bid price over the
five trading days immediately prior to the date of the prospectus was $1.30 per
share, or a conversion price of $.845 per share, which would result, if all
Preferred Shares were converted, in the issuance of 2,461,538 shares, or 17.7%
of the total outstanding. The holders of Preferred Stock do not have the right
to convert to the extent that such conversion would cause the holder to
"beneficially' hold more than 5% of the outstanding shares of Common Stock, as
such terms defined in Rule 13d-3 of the Securities Exchange Act of 1934.
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders. See "Selling Stockholders." The expenses of the
offering, estimated at $30,000, will be paid by the Company.
The Common Stock currently trades on the NASDAQ Small Cap Market under
the symbol "CALP." On November 27, 1998, the last sale price of the Common Stock
as reported on NASDAQ Small Cap Market was $1.50 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PURCHASE OF THESE SECURITIES INVOLVES RISKS.
See "Risk Factors" on page 4.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
The date of this Prospectus is December __, 1998
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No person has been authorized in connection with this offering to give
any information or to make any representation other than as contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
securities covered by this Prospectus in any state or other jurisdiction to any
person to whom it is unlawful to make such offer or solicitation in such state
or jurisdiction. Neither the delivery of this Prospectus nor any sales made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date hereof.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, as well as proxy
statements and other information filed by the Company with the Commission, can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
its Regional Offices located at 7 World Trade Center, New York, New York 10048,
and at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission, Washington, D.C. 20549, during
regular business hours. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers such as the Company that file electronically with the Commission at
http://www.sec.gov.
This Prospectus incorporates by reference the Company's Annual Report
on Form 10-KSB/A for the year ended December 31, 1997, its Quarterly Reports on
Form 10-QSB/A for the quarterly periods ended March 31, 1998 and June 30, 1998,
and Form 10-QSB for the quarter ended September 30, 1998, and its Current
Reports on Form 8-K dated February 25, 1998, March 25, 1998 and June 25, 1998,
its preliminary proxy statement filed on September 19, 1998, as amended on
October 23, 1998, the description of securities included in the Company's
Registration Statement on Form 8-A, File No. 0-25114, and all other documents
subsequently filed by the Company pursuant to Section 13(a), 13(c) or 14 of the
Exchange Act prior to the termination of the offering made hereby. 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 or document filed as an exhibit to the Registration
Statement, each such statement being qualified in its entirety by such
reference. The Company will provide, without charge upon oral or written request
of any person, a copy of any information incorporated by reference herein. Such
request should be directed to the Company at 1221-B South Batesville Road, Suite
B, Greer, South Carolina 29650, telephone (864) 848-5160.
INDEMNIFICATION
Pursuant to the Company's Certificate of Incorporation, as amended, the
Company may indemnify each of its directors and officers with respect to all
liability and loss suffered and reasonable expense incurred by such person in
any action, suit or proceeding in which such person was or is made or threatened
to be made a party or is otherwise involved by reason of the fact that such
person is or was a director of the Company. In addition, the Company may pay the
reasonable expenses of indemnified directors and officers incurred in defending
such proceedings if the indemnified party agrees to repay all amounts advanced
should it be ultimately determined that such person is not entitled to
indemnification.
In addition, as permitted by the Delaware General Corporation Law, the
Company's Certificate of Incorporation provides that the Company's directors
will not be held personally liable to the Company or its stockholders for
monetary damages for a breach of fiduciary duty as a director except to the
extent such exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Law. This provision does not eliminate
the duty of care, and injunctive or other forms of non-monetary equitable relief
will remain available under Delaware law. In addition, each director continues
to be liable for monetary damages for (i) misappropriation of any corporate
opportunity in violation of the director's duties, (ii) acts or omissions in bad
faith or involving intentional dishonesty, (iii) knowing violations of law, and
(iv) any transaction from which a director derives an improper personal benefit.
The provision does not affect a director's responsibilities under any other law,
such as the federal securities laws of state or federal environmental laws.
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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.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the information
appearing elsewhere in this Prospectus. Each prospective investor is urged to
read this Prospectus in its entirety.
The Company
In 1997, due to continuing operating losses, management decided to
restructure and deleverage the Company. In connection with these plans, the
Company:
(a) Ceased distribution of products covered under the
California Pro and Kemper licenses, thereby eliminated most of the
operating and overhead expenses associated with its sporting goods
business and began to concentrate on sub-licensing the Company's
trademark rights. In the second quarter of 1997, the Company began
liquidating remaining in-line skate, snowboard and accessories
inventories.
(b) Completed the sale of substantially all of the operating
assets of USA Skate Corporation ("USA Skate") and Davtec. The proceeds
of the sale of the Company's hockey business were substantially
utilized to pay secured revolving lines of credit, purchase the
remainder of the trademarks from the previous owner, and partially
reduce notes payable of Skate Corporation ("Skate Corp.").
(c) Entered into two sub-license agreements regarding the use
of the Kemper name. The Company will rely on the expertise of their
sub-licenses to develop, import or manufacture, and market and
distribute within their licensed product categories and territories.
Effective May 1, 1997 the Company entered into an agreement through
April 30, 2000 with United Merchandising Corp., a California
corporation ("UMC"). The Company granted UMC a non-exclusive,
non-transferable license to manufacture and/or purchase and sell
various snowboarding apparel bearing the name and/or logo of "Kemper",
in its retail stores in the United States. The royalty rate is the
greater 7.5% of the cost to UMC or $30,000 per annum. UMC has an option
to renew for one or two additional years. During the first contract
year (May 1, 1997 through April 30, 1998) the Company received
royalties of approximately $34,300. Effective in February 1998 the
Company entered into a two year exclusive Licensing Agreement with
Jaysport International, Inc., a California corporation ("Jaysport").
Subject to the prior sub-license granted to UMC, the Company
sub-licensed to Jaysport the exclusive worldwide right to use the
Kemper name and trademark on snowboards, related equipment, clothing
and accessories (the "Products"). Jaysport has the option to renew the
agreement for additional two year periods thereafter. The agreement
includes a royalty payment of 3% net sales on all Products with a
minimum royalty of $25,000 per annum. Each of the Kemper sub-licensees
offer a full line of products at various price points within their
respective product categories. The Company is seeking sub-licensees for
the California Pro brand, not only for in-line skates but for other
sporting goods categories such as snowboards and water skis.
(d) Commenced a search for a merger candidate. As a result of
its search, on October 2, 1997, the Company signed a letter of intent
to merge with ImaginOn, Inc. ("ImaginOn"), a privately held company,
and on January 30, 1998, the company signed an agreement and plan of
merger with ImaginOn, whereby there would be an exchange of 100% of the
outstanding shares of ImaginOn for an amount equal to 60% of the
outstanding post merger common stock of California Pro.
ImaginOn, formed in March 1996, designs, manufactures and sells: (i)
consumer software products for the CD/DVD-ROM market; and (ii) a navigational
tool for sophisticated Internet users. ImaginOn's proprietary technology,
called "Transformation Database Processing and Playback" ("TDPP"), enables the
creation of new business and consumer products that provide user-friendly and
entertaining access to multimedia databases. TDPP
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is comprised of twelve software tools, which enable seamless real time access to
video, audio, graphics, text html and three-dimensional objects from multiple
remote or local databases. The transaction, which is expected to be completed by
the fall of 1998, is contingent upon certain customary conditions including, but
not limited to, approval by the boards of directors of both companies, a vote by
the Company's stockholders (to approve the merger and increase the authorized
shares the Company may issue), and the completion of a fairness opinion by an
independent valuation company.
ImaginOn has developed and manufactured a general purpose software
application, named "WebZinger" for internet browsers. WebZinger(TM) mediates Web
searches for both naive and sophisticated users, increasing efficiency and
saving time. ImaginOn's core technology, TDPP, has enabled the creation of a new
class of business and consumer products; a hybrid of local and remote database
content with seamless real-time access to video, audio, graphics and text.
ImaginOn has designed eleven software tools based on TDPP. The first software
title "World Cities 2000 San Francisco," an interactive travelogue, is complete.
The Company's principal executive offices are located at 1221-B South
Batesville Road, Suite B, Greer, South Carolina 29650. Its telephone number is
(864) 848-5160.
The Offering
Securities Offered: An estimated 6,008,262 shares of Common Stock, $.01 par
value per share, including an estimated 1,615,385 shares issuable upon
conversion of 1,050 shares of Series B 4% Preferred Stock, 1,584,615 shares
issuable upon conversion of 1,030 Shares of Series C 4% Preferred Stock
(collectively, the "Preferred Stock"). 1,608,262 Shares already
outstanding and 1,200,000 Shares issuable upon exercise of options and
warrants. All of the shares of Common Stock offered hereby are offered by the
Selling Stockholders for resale. See "Selling Stockholders". The conversion
price per share of Preferred Stock is equal to 65% of the average closing price
of the Common Stock on the five trading days prior to conversion (or an
estimated $.65 per share.)
NASDAQ Small Cap symbol CALP
Risk Factors
Investment in the Shares offered hereby involves a high degree of risk,
including the limited operating history of the Company and competition.
Investors should carefully consider the various risk factors before investing in
the Shares. This Prospectus contains forward looking statements which may
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors." See "Risk Factors."
RISK FACTORS
The shares of Common Stock offered hereby are highly speculative and
involve a high degree of risk. The following risk factors should be considered
carefully in addition to the other information in this Prospectus before
purchasing the shares of Common Stock offered hereby. The discussion in this
Prospectus contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed below, as well as those
discussed elsewhere herein.
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Limited Operations. The Company and ImaginOn have limited business operations.
The Company is currently receiving income from sub-licenses it has entered into
regarding the use of the Kemper name and trademark for which it has a license.
The Company also licenses the California Pro name and trademark and is pursuing
entering into sub-licenses. The Company has received no commitment from any
party for such sub-license and there can be no assurance that a sub-license will
be entered into.
ImaginOn, organized in March, 1996, is engaged in the business of
designing, selling and manufacturing: (i) consumer software products for the
rapidly growing "infotainment" and "edutainment" CD/DVD-ROM markets; and (ii)
Internet software. Since inception, ImaginOn has been engaged primarily in
product development activities. Through June 30, 1998 ImaginOn has had no
significant revenues and had a loss from operation of $946,512 and $930,754 for
the year ended December 31, 1997 and six months ended June 30, 1998,
respectively.
No Inventories. The Company has liquidated its remaining inventory and,
therefore, it does not maintain, nor does it intend to accumulate, an inventory
of in-line skate, snowboard or hockey products.
Working Capital Shortages and Operating Losses. Recently, the Company has
generated significant operating losses and has failed to generate positive cash
flow. As a result, the Company has, and continue to experience, shortages of
working capital to fund day to day operations. ImaginOn also has generated
significant operating losses and has failed to generate positive cash flow.
The shortages of working capital and insufficient cash flow have, from time
to time, prevented the Company from making prompt payment of current
obligations. As a result, the Company is subject to numerous claims for
collection of past due amounts and are past due on certain of its debt
obligations.
Limited Capitalization. The Company and ImaginOn have only limited financing
available to it and is dependent on significant additional financing being
available to continue as a going concern.
On March 13, 1998, the Company began a private placement for the sale of
1,842,000 shares of Skate Corp. common stock it owns, which includes an option
to acquire 2,763,000 shares of the Company's common stock in exchange for the
Skate Corp. shares. In April and May 1998, the Company received $255,000 from
investors acquiring 335,507 shares of Skate Corp. Each of the investors
exercised their options to exchange those shares for 167,754 shares of the
Company's Series A preferred stock, which automatically converted to 503,262
shares of the Company's common stock on July 15, 1998 upon the shareholders
approving an increase in the authorized common shares of the Company from
10,000,000 to 20,000,000. From June 30, 1998 through August 1998 the Company
sold 1,050 Shares of Series B and 1,030 Shares of Series C Convertible Preferred
Stock at a price of $1,000 per Share, for gross proceeds of $2,080,000.
In addition to selling the Preferred Stock, the Company may also seek
additional equity or debt financing to further fund day to day operations. There
can be no assurance that such financing will be available when needed, or that,
if available, it will be on satisfactory terms.
Merger with ImaginOn; Change of Business. The Company has signed a
definitive Agreement and Plan of Merger with ImaginOn, Inc. ("ImaginOn"). The
closing of this transaction is subject to certain contingencies, including
shareholder approval. If the transaction is consummated, the Company's line of
business will change to include computer software manufacturing, production and
other related activities. Although the Company's management believes the
transaction will close upon satisfaction of certain contingencies, there can be
no such assurance.
Antitakeover Provisions in the Company's Corporate Documents. The Company's
Board of Directors has the authority to issue up to 5,000,000 shares of
preferred stock, $.01 par value per share (the "Preferred Stock"), of the
Company, including the 10,000 shares of Series B 4% Preferred Stock including
1,050 Shares issued to date, and the 1,030 shares of Series C 4% Preferred which
have been issued to date and to determine the price, rights, preferences,
privileges and restrictions thereof, including voting rights, without any
further vote or action by the Company's stockholders. The voting and other
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. The
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Company's Board may similarly issue additional shares of Common Stock without
any further vote or action by stockholders. Such an issuance could occur in the
context of another public or private offering of shares of Common stock or
Preferred Stock or in a situation where the Common or Preferred Stock is used to
acquire the assets or stock of another company. The issuance of Common or
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company has no current plans to issue any additional shares of Common or
Preferred Stock other than as described herein. See "Description of Securities."
Dilutive Effect of Conversion; Redemption. The holders of Series B and
Series C Preferred Stock in the aggregate, currently have the right to convert
such shares into 3,200,000 Shares of Common Stock, based on a current Market
Price of $1.00 per share. In the event of a decline in such Market Price, the
number of shares issuable upon conversion of the Preferred Stock could increase
until such time as the total number of common shares issued for each class
equalled 19.9% of the then outstanding shares of Common Stock for each class, at
which time the Company would be obligated to redeem the remaining outstanding
and unconverted shares at a price of $1.250 per Share. The Company has no
sources of capital to effect such redemption at this time.
EFFECTS OF DELISTING FROM NASDAQ SMALLCAP MARKET; LACK OF LIQUIDITY OF LOW
PRICED STOCKS
If the Company fails to maintain the qualification for its Common Stock to
trade on the Nasdaq SmallCap Market, its securities would be delisted from the
Nasdaq SmallCap Market. Factors giving rise to such delisting could include, but
not limited to, a reduction of the Company's assets to below $1,000,000,
stockholders' equity being reduced to below $2,000,000, a minimum bid price
being less than $1.00 per share, a reduction to one active market maker or a
reduction in the value of the Company's publicly held securities to less than
$250,000. In such event, trading, if any, in Cal Pro Common Stock would
thereafter be conducted in the over-the-counter markets in the so-called "pink
sheets" or the National Association of Securities Dealer's "Electronic Bulletin
Board." Consequently, the liquidity of the Cal Pro's Common Stock would like be
impaired, not only in the number of shares which could be bought and sold, but
also through delays in the timing of the transactions, reduction in security
analysts' and the news media's coverage if any, of the Company, and lower prices
for the Company's securities than might otherwise prevail. If the Company's
common stock were to be delisted from the Nasdaq SmallCap Market, it would
become subject to Rule 15g-9 under the Securities Exchange Act of 1934, as
amended, (the "Penny Stock Rules"), which imposes additional sales practice
requirements on broker-dealers which sell such common stock to persons other
than established customers and certain institutional investors. For transactions
covered by this rule, a broker-dealer must make a special suitability
determination for the purchasers and have received the purchaser's written
consent to the transaction prior to sale. Consequently, the Penny Stock Rules
may adversely affect the ability of broker-dealers to sell the Company's common
stock and may adversely affect the ability of ImaginOn's shareholders to sell
any of the share of Cal Pro Common Stock in the secondary market.
SELECTED FINANCIAL AND OPERATING DATA
The following selected financial and operating data should be read in
conjunction with the Company's financial statements and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Annual Report on Form 10-KSB/A (the
"Annual Report"), incorporated by reference herein. The statement of operations
data for the years ended December 31, 1997 and 1996 and the balance sheet data
as of December 31, 1997 incorporated by reference herein, are derived from
financial statements of the Company that have been audited by Gelfond Hochstadt
Pangburn & Co., independent certified public accountants. The statement of
operations data for the nine months ended September 30, 1998 and 1997 and the
balance sheet data as of September 30, 1998 and the pro forma balance sheet data
as of September 30, 1998 are derived from unaudited financial statements of the
Company included in the Company's Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1998 ("September 10-QSB"). See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Annual Report and in the September 10-QSB.
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<TABLE>
<CAPTION>
Nine Months ended Year ended
September 30, December 31,
1998 1997 1997 1996
Statement of Operation data:
<S> <C> <C> <C> <C>
Net Sales $ -- $ 8,849,356 $ 9,087,767 $ 16,952,904
Gross Profit -- 2,417,371 1,642,423 2,891,870
Loss from operations (1,392,153) (2,694,966) (4,075,182) (4,690,853)
Loss Before Extraordinary item (1,858,376) (3,519,070) (5,192,920) (5,575,882)
Extraordinary Item 383,705 383,705
Comprehensive Loss $ (1,858,376) $ (3,153,199) $ (4,809,215) $ (5,575,882)
Loss Per Share:
Before Extraordinary Item $ (.22) $ (.66) $ (.94) $ (1.37)
Extraordinary item .07 .07
Loss per common share $ (.22) $ (.59) $ (.87) $ (1.37)
Weighted Average
shares outstanding 8,527,479 5,293,473 5,544,833 4,078,864
September 5, 1998 December 31,
Proforma(1) Historical 1997
Balance Sheet data:
Current Assets $ 2,509,165 $ 3,262,552 $ 1,377,907
Total Assets 3,143,182 3,984,172 2,268,627
Working Capital (deficiency) 2,176,349 1,646,195 (400,625)
Shareholders' Equity 2,810,366 2,337,160 104,946
</TABLE>
7
<PAGE>
MARKET PRICE OF COMMON STOCK
The Company's Common Stock and Warrants have been traded over-the-counter
since January 18, 1995 and are currently quoted on the Nasdaq SmallCap Market
under the symbols CALP and CALPW, respectively. The following table sets forth
the range of high and low bid prices as quoted by Nasdaq. These market
quotations reflect inter-dealer prices without retail mark-up, mark-down or
commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
Common Stock Warrants
Bid Prices Bid Prices
1998 High Low High Low
- ---- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C>
First Quarter (1/1/98-3/31/98)................................ $ 1.63 $ 1.13 $ .75 $ .44
Second Quarter (4/1/98-6/30/98)............................... $ 1.94 $ 1.19 $ .88 $ .50
Third Quarter (7/1/98-9/30/98)............................... $ 1.53 $ .75 $ .72 $ .25
1997
First Quarter (1/1/97-3/31/97)................................ $ 1.53 $ .81 $ .40 $ .25
Second Quarter (4/1/97-6/30/97)............................... $ 2.00 $ .93 $ .68 $ .21875
Third Quarter (7/1/97-9/30/97)................................ $ 2.37 $ 1.37 $ .75 $ .4375
Fourth Quarter (10/1/97-12/31/97)............................. $ 3.06 $ 1.06 $ 1.15 $ .6875
1996
First Quarter (1/1/96-3/31/96)................................ $ 4.62 $ 2.56 $ 1.92 $ .65625
Second Quarter (4/1/96-6/30/96)............................... $ 4.00 $ 2.25 $ 1.00 $ .50
Third Quarter (7/1/96-9/30/96)................................ $ 3.06 $ 1.87 $ .90 $ .375
Fourth Quarter (10/1/96-12/31/96)............................. $ 2.31 $ 1.25 $ .56 $ .21875
</TABLE>
NASDAQ NOTIFICATION OF DELISTING. The NASDAQ Stock Market, Inc. ("NASDAQ")
issued new standards for continued listing of SmallCap Market participants which
became effective February 23, 1998. The Company is a SmallCap Market participant
and must meet these new requirements. On the effective date, the Company did not
meet one of the new requirements of having net tangible assets that exceed $2
million. Under the new standards, NASDAQ has established a review process for
companies temporarily out of compliance. The Company filed its written request
for a temporary exemption to the new standards on March 27, 1998. Along with the
written request, the Company filed a Form 8-K which, on a pro-forma basis, shows
compliance with the new continued listing requirements. NASDAQ granted a
conditional exceptions to the listing requirements on July 10, 1998, provided
the Company completed by August 14, 1998 certain placements (including the
placement of Preferred Stock). The Company filed a Form 10-QSB with NASDAQ on
August 14, 1998, and the Company subsequently received on August 20, 1998 notice
from NASDAQ that the Company has evidenced compliance with all requirements
necessary for continued listing on the NASDAQ SmallCap Market.
The number of record holders of the Company's Common Stock as of October
31, 1998 was approximately ___. Based on information from the brokerage
community, the Company believes that its Common Stock and Warrants each are held
beneficially by more than 300 persons.
The Company has not declared or paid dividends on its Common Stock, nor
does it anticipate paying any cash dividends in the foreseeable future. The
Company currently intends to retain any future earnings to fund operations and
for the continued development of its business. No dividends may be paid on
Common Stock unless all accrued and unpaid dividends have been paid on the
Preferred Stock.
PLAN OF DISTRIBUTION
The shares of Common Stock of the Company offered by the Selling
Stockholders (the "Shares") will be offered at market prices, as reflected on
NASDAQ. The aggregate number of shares offered for resale upon conversion of the
Preferred Stock will be based on the conversion rate in effect at the time of
conversion. It is anticipated that Selling Stockholders will sell their shares
of Common Stock on NASDAQ in which case registered broker-dealers
8
<PAGE>
will be allowed the commissions which are usual and customary in open market
transactions. No specific brokers or dealers have been identified, and no person
has agreed to sell or take down any shares. The expenses of the offering,
estimated at $30,000, will be paid entirely by the Company. Selling Stockholders
may also sell their shares of Common Stock in off-the-market transactions at
market price in which case no commissions would be paid. The Selling
Stockholders and broker dealers who act in connection with the sale of the
Shares may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, and any sales commissions or resales of the Common Stock as a
principal by such broker dealers may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933.
SELLING STOCKHOLDERS
The number of shares of Common Stock estimated to be issuable upon
conversion of each of the 1,050 shares of Series B Preferred and 1,030 Shares of
Series C Preferred, and the consequent number of shares of Common Stock
available for resale under this Prospectus, is based upon a conversion ratio
which is $1,000 divided by 65% of the closing bid price of the Common Stock on
NASDAQ averaged over the five trading days immediately prior to the date of
conversion. The number of shares in the table below is based upon a rate of
$.65, or approximately 1538.46 shares of Common Stock per share of Series B and
C Preferred. The Selling Stockholders do not own any Common Stock except as
registered hereby and will own no shares after the completion of the offering.
The relationship, if any, between the Company and any Selling Stockholder is set
forth below.
<TABLE>
<CAPTION>
Percent of
Common Stock
Number of Number of Before
Name Preferred Shares Class Common Shares Offering(1)
<S> <C> <C> <C> <C>
The Augustine Fund(2) 200 B 307,692 2.6%
Congregation Beth Mordecai(3) 200 B 307,692 2.6%
Dale N. Stein 25 B 38,462 *
C. Jessie Reggio 75 B 115,385 *
Zaken Limited(4) 200 B 307,692 2.6%
Matthew Holstein 50 B 76,923 *
Russell G. Kraus 25 B 38,462 *
The Four Corporation
Defined Benefit Pension Trust(5) 25 B 38,462 *
Tabacalara, Ltd.(6) 100 B 153,846 1.3%
Keith Mazer(10) 50 B 76,923 *
Bertek Realty(7) 100 B 153,846 1.3%
The Shaar Fund, Ltd.(8) 1,030 C 1,584,615 12.1%
c/o Schaar Advisory Services, Ltd.
62 King George Street, Apartment 4F
Jerusalem, Israel
Liberty Capital Group, Inc.(9) 1,400,000 11.4%
1310 N. State Street
Bellingham, Washington 98226
World Capital Funding, L.L.C.(10) 325,000 2.8%
Wayne Mills IRA 250,000 2.1%
Jeffrey Werbalowsky 62,500 *
John Skeleton 62,500 *
Richard Lockwood 62,500 *
Craig Avery 62,500 *
John Black 69,076 *
John Burford 98,678 *
Jim Burford, M.D.(11) 98,678 *
David Saltiel 9,868 *
William Pallack 49,340 *
Richard Cammeron 49,340 *
9
<PAGE>
Joseph Maenza 128,282 1.1
Gary Tice 80,000 *
Totals 2,080 - 6,008,262 57.1%
*less than 1%
</TABLE>
(1) The holders of Preferred Stock do not have the right to convert to the
extent that such conversion would cause the holder to "beneficially"
hold more than 5% of the outstanding shares of Common Stock, as such
term is defined in Rule 13d-3 of the Securities Exchange Act of 1934.
(2) Thomas Duszynski controls the voting of the shares of The Augustine
Fund.
(3) Sholom Taversky controls the voting of the shares of Congregation Beth
Mordechei.
(4) Bernard Muller controls the voting of the shares of Zaken Limited.
(5) Jonathan Holstein controls the voting of the shares of The Four
Corporation Defined Benefit Pension Trust.
(6) Messod Maxo controls the voting of the shares of Tabacalera.
(7) Lazar Leybovich controls the voting of the shares of Bertek Realty.
(8) Samuel Levinson controls the voting of the shares of The Shaar Fund.
(9) Includes options to purchase 1,000,000 shares of Common Stock. Jay
Grieg is the principal officer, director and shareholder of Liberty
Capital. Liberty Capital has entered into a public relations campaign
contract with the Company pursuant to which it is entitled to receive
$200,000 in cash, $550,000 in value of free trading stock, and options
to purchase the 1,000,000 shares listed above. As of the date of this
Prospectus, Liberty Capital has received $100,000 in cash and 100,000
shares of common stock. The Company has notified Liberty Capital that
it has rescinded the agreement under which Liberty Capital is to receive the
shares and options; however, the Company and Liberty have not yet reached a
settlement and some or all of these shares and options could continue to be
valid.
(10) Keith Mazer is the principal officer, director and member of World
Capital Funding, LLC. Includes as to World Capital Funding 125,000
Shares of Common Stock and 200,000 shares issuable upon exercise of
warrants. World Capital Funding, LLC received a consulting fee of
$249,600 in connection with advising the Company with respect to the
Placement of Preferred Stock and other capitalization strategies.
(11) Jim Burford, MD is the brother of John Burford.
10
<PAGE>
DESCRIPTION OF SECURITIES
Common Stock
The Company's Articles of Incorporation authorizes the issuance of
20,000,000 shares of Common Stock, $.01 par value per share, of which 11,479,727
shares were outstanding as of July 31, 1998. Holders of shares of Common Stock
are entitled to one vote for each share on all matters to be voted on by the
shareholders. Holders of Common Stock have no cumulative voting rights. Holders
of shares of Common Stock are entitled to share ratably in dividends, if any, as
may be declared, from time to time by the Board of Directors in its discretion,
from funds legally available therefore. In the event of a liquidation,
dissolution or winding up of the Company, the holders of shares of Common Stock
are entitled to share pro rata all assets remaining after payment in full of all
liabilities. Holders of Common Stock have no preemptive rights to purchase the
Company's Common Stock. There are no conversion rights or redemption or sinking
fund provisions with respect to the Common Stock. All of the outstanding shares
of Common Stock are validly issued, fully paid and non-assessable.
The transfer agent for the Common Stock is Corporate Stock Transfer, Inc.,
370 17th Street, Suite 2350, Denver, Colorado, 80202.
Preferred Stock
The Company's Certificate of Incorporation authorize the issuance of
5,000,000 shares of preferred stock, $.01 par value, of which as of July 31,
1998 1,050 shares of Series B Preferred and 1,030 shares of Series C Preferred,
are outstanding. The Preferred Stock is convertible into shares of common stock
at the option of the holders, and is mandatorily convertible three years after
issuance. See "Selling Stockholders". The annual dividend rate for the Series B
and Series C Preferred is $40.00 per share, when, as and if declared by the
Company's Board of Directors. If not declared, dividends will accumulate and be
payable in the future. Full dividends must be paid or set aside on the Series B
and Series C Preferred Stock before dividends may be paid or set aside on the
Company's Common Stock. A liquidation shall be deemed to occur in the event of
any voluntary liquidation, the sale of substantially all the assets of the
Company or certain changes of control and similar transactions. The holders of
Series B and Series C Preferred have a liquidation preference of $1,300 per
share over the Common Stock. In the event the holders of Series A Preferred
Stock or Series B Preferred Stock, in the aggregate, have converted into Shares
of Common Stock in excess of 19.99% of the outstanding Shares of Common Stock
(measured separately for each series) then the Company is required to redeem the
remaining shares of such class at a price of $1,250 per Share, together with
unpaid dividends. The Company does not expect to declare or pay such dividends
in the foreseeable future. The Company may issue additional preferred stock in
the future. The Company's Board of Directors has authority, without action by
the shareholders, to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of such series.
The Company considers it desirable to have preferred stock available to
provide increased flexibility in structuring possible future acquisitions and
financings and in meeting corporate needs which may arise. If opportunities
arise that would make desirable the issuance of preferred stock through either
public offering or private placements, the provisions for preferred stock in the
Company's Certificate of Incorporation would avoid the possible delay and
expense of a shareholder's meeting, except as may be required by law or
regulatory authorities. Issuance of the preferred stock could result, however,
in a series of securities outstanding that will have certain preferences with
respect to dividends and liquidation over the Common Stock which would result in
dilution of the income per share and net book value of the Common Stock.
Issuance of additional Common Stock pursuant to any conversion right which may
be attached to the terms of any series of preferred stock may also result in
dilution of the net income per share and the net book value of the Common Stock.
The specific terms of any series of preferred stock will depend primarily on
market conditions, terms of a proposed acquisition or financing, and other
factors existing at the time of issuance. Therefore, it is not possible at this
time to determine in what respect a particular series of preferred stock will be
superior to the Company's Common Stock or any other series of preferred stock
which the Company may issue. The Board of Directors may issue additional
preferred stock in future financings.
11
<PAGE>
The issuance of Preferred Stock could have the effect of making it more
difficult for a third party to acquire a majority of the outstanding voting
stock of the Company. Further, certain provisions of Delaware law could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company. While such provisions are intended to enable the Board of Directors to
maximize stockholder value, they may have the effect of discouraging takeovers
which could be in the best interest of certain stockholders. There is no
assurance that such provisions will not have an adverse effect on the market
value of the Company's stock in the future.
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for the
Company by Hand & Hand, a law corporation, Dana Point, California.
EXPERTS
The financial statements of the Company as of December 31, 1997 and for the
years ended December 31, 1997 and 1996, incorporated by reference in this
Prospectus from the Annual Report on Form 10-KSB/A, have been incorporated
herein in reliance on the report of Gelfond Hochstadt Pangburn & Co.,
independent certified public accountants, given on the authority of said firm as
experts in accounting and auditing.
No dealer, salesman or other person is authorized to give any information
or to make any representations not contained in this Prospectus in connection
with the offer made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
to an offer to buy the securities offered hereby to any person in any state or
other 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, create any implication that the information contained herein
is correct as of any time subsequent to the date hereof.
12
<PAGE>
TABLE OF CONTENTS
Page
Additional Information................................................ 2
Prospectus Summary.................................................... 3
Risk Factors.......................................................... 6
Market Price of Common Stock.......................................... 8
Selling Stockholders.................................................. 10
Description of Securities............................................ 10
Legal Matters......................................................... 11
Experts............................................................... 11
6,008,262 SHARES
13
<PAGE>
CALIFORNIA PRO SPORTS, INC.
PART II
Item 14. Other Expenses of Issuance and Distribution.
Filing fee under the Securities Act of 1933 $ 2,182.81
Blue Sky qualification fees and expenses(1) 1,000.00
Printing and engraving(1) 2,000.00
Legal Fees 15,000.00
Accounting Fees 6,800.00
Miscellaneous(1) 3,017.19
----------------
TOTAL $ 30,000.00
=================
(1) Estimates
Item 15. Indemnification of Directors and Officers.
Pursuant to the Company's Certificate of Incorporation, as
amended, the Company may indemnify each of its directors and officers with
respect to all liability and loss suffered and reasonable expense incurred by
such person in any action, suit or proceeding in which such person was or is
made or threatened to be made a party or is otherwise involved by reason of the
fact that such person is or was a director of the Company. In addition, the
Company may pay the reasonable expenses of indemnified directors and officers
incurred in defending such proceedings if the indemnified party agrees to repay
all amounts advanced should it be ultimately determined that such person is not
entitled to indemnification.
In addition, as permitted by the Delaware General Corporation Law,
the Company's Certificate of Incorporation provides that the Company's directors
will not be held personally liable to the Company or its stockholders for
monetary damages for a breach of fiduciary duty as a director except to the
extent such exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Law. This provision does not eliminate
the duty of care, and injunctive or other forms of non-monetary equitable relief
will remain available under Delaware law. In addition, each director continues
to be liable for monetary damages for (i) misappropriation of any corporate
opportunity in violation of the director's duties, (ii) acts or omissions in bad
faith or involving intentional dishonesty, (iii) knowing violations of law, and
(iv) any transaction from which a director derives an improper personal benefit.
The provision does not affect a director's responsibilities under any other law,
such as the federal securities laws of state or federal environmental laws.
Item 16. Exhibits
Exhibits being filed herewith are listed below.
Number Description
3.1 Certificate of Incorporation of the Registrant.
(INCORPORATED BY REFERENCE TO EXHIBIT 3.1 TO THE REGISTRANT'S REGISTRATION
STATEMENT ON FORM SB-2, REGISTRATION NO. 33-85108 AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION "SEC" ON OCTOBER 13, 1994 (THE "1994 REGISTRATION
STATEMENT").)
3.2 Bylaws as currently in effect. (INCORPORATED BY
REFERENCE TO EXHIBIT 3.2 TO THE 1994 REGISTRATION STATEMENT.)
14
<PAGE>
3.3 Certificate of Designations for Series B 4% Convertible Preferred Stock.
(INCORPORATED BY REFERENCE TO EXHIBIT 3.(I).1 OF THE REGISTRANT'S
JUNE 30, 1998 10-QSB.)
3.4 Certificate of Designations for Series C 4% Convertible Preferred Stock.
FILED HEREWITH.
4.1 Specimen of Common Stock certificate. (INCORPORATED BY REFERENCE TO
EXHIBIT 4.1 TO AMENDMENT NO. 4 TO THE 1994 REGISTRATION STATEMENT,
FILED WITH THE SEC ON DECEMBER 22, 1994 ("1994 AMENDMENT #4).)
5.0 Opinion of Hand & Hand. FILED HEREWITH.
10.1 Manufacturing Agreement, dated April 1, 1993, between the Registrant and
Playmaker. (INCORPORATED BY REFERENCE TO EXHIBIT 10.2 TO THE 1994 REGISTRATION
STATEMENT.)
10.2 Exclusive License Agreement, dated April 1, 1993, between the Registrant
and Playmaker. (INCORPORATED BY REFERENCE TO EXHIBIT 10.4 TO THE 1994
REGISTRATION STATEMENT.)
10.3(a)Indemnity letter agreement, dated April 1, 1993, between the Registrant
and Playmaker.INCORPORATED BY REFERENCE TO EXHIBIT 10.8(A) TO THE 1994
REGISTRATION STATEMENT.)
10.3(b) Patent License Agreement, dated April 1, 1993 and Assignment thereof.
(INCORPORATED BY REFERENCE TO EXHIBIT 10.8(B) TO THE 1994
REGISTRATION STATEMENT.)
10.4 Loan and Security Agreement, dated April 1, 1993, with LaSalle National
Bank, N.A. ("Loan Agreement"). (INCORPORATED BY REFERENCE TO EXHIBIT 10.10 TO
THE 1994 REGISTRATION STATEMENT.)
10.5(a) Amendment, dated June 15, 1994, to Loan Agreement. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.10(A) TO AMENDMENT NO. 1 TO THE 1994
REGISTRATION STATEMENT, FILED WITH THE SEC ON OCTOBER 28, 1994
("1994 AMENDMENT #1).)
10.5(b) Consent and Amendment, dated August 3, 1994, to Loan Agreement.
(INCORPORATED BY REFERENCE TO EXHIBIT 10.10(B) TO 1994 AMENDMENT #1.)
10.5(c) Amendment, dated August 30, 1995, to Loan Agreement. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.10(C) TO REGISTRATION STATEMENT ON FORM
SB-2, REGISTRATION NO. 33-98898 ("REGISTRATION STATEMENT 33-98898.")
10.6 Demand Note, dated April 1, 1993. (INCORPORATED BY REFERENCE TO EXHIBIT
10.11 TO THE 1994 REGISTRATION STATEMENT.)
10.7 Continuing Unconditional Guaranties, dated April 1, 1993, of Henry Fong
and Michael S. Casazza. (INCORPORATED BY REFERENCE TO EXHIBIT 10.12 TO THE
1994 REGISTRATION STATEMENT.)
10.8 Letter Agreement, dated April 1, 1993, from the Registrant to LaSalle.
(INCORPORATED BY REFERENCE TO EXHIBIT 10.13 TO THE 1994
REGISTRATION STATEMENT.)
15
<PAGE>
10.9 1994 Stock Option Plan. (INCORPORATED BY REFERENCE TO EXHIBIT 10.14 TO
THE 1994 REGISTRATION STATEMENT.)
10.10License Agreement, dated July 28, 1994, between Front 500 Corporation
and CP. INCORPORATED BY REFERENCE TO EXHIBIT 10.16 TO THE 1994
REGISTRATION STATEMENT.)
10.11 Exclusive Distributorship Agreement, dated March 1994, with Maneuverline
Co. Ltd. (INCORPORATED BY REFERENCE TO EXHIBIT 10.20 TO THE 1994 REGISTRATION
STATEMENT.)
10.12Exclusive Distributorship Agreement, dated March 1, 1991, with Airtool Ltd.
(Incorporated by reference to Exhibit 10.21 to the 1994 Registration Statement.)
10.13 Exclusive Distributorship Agreement, dated June 15, 1994, with Wolf
Strobel Sportswear GMBH.(INCORPORATED BY REFERENCE TO EXHIBIT 10.22 TO THE 1994
REGISTRATION STATEMENT.)
10.14 License Agreement, dated May 10, 1995, granted by California Pro, Inc. to
Big5 Co., Ltd. (INCORPORATED BY REFERENCE TO EXHIBIT 10.23 IN REGISTRATION
STATEMENT 33-98898.)
10.15 Form of Warrant related to the Registrant's issuance of warrants to
purchase up to 200,000 shares of Common Stock. (INCORPORATED BY REFERENCE TO
EXHIBIT 10.29(A) TO THE 1994 REGISTRATION STATEMENT.)
10.16 Form of Warrant related to the issuance of warrants to purchase up to
21,000 shares of Common Stock.(INCORPORATED BY REFERENCE TO EXHIBIT 10.29(C) TO
1994 AMENDMENT #1.)
10.17 Form of Indemnity Agreements for the Registrant's directors and officers.
(INCORPORATED BY REFERENCE TO EXHIBIT 10.31 TO THE 1994
REGISTRATION STATEMENT.)
10.18 Lease Agreement, dated February 16, 1993, for office space, as amended by
letter agreement dated February 16, 1994. (INCORPORATED BY REFERENCE TO EXHIBIT
10.32 TO THE 1994 REGISTRATION STATEMENT.)
10.19 Patent License Agreement, with Out of Line Sports, Inc. dated as of
September 30, 1994. (INCORPORATED BY REFERENCE TO EXHIBIT 10.33 TO THE 1994
REGISTRATION STATEMENT.)
10.20 Trademark License Agreement, dated as of September 30, 1994.(INCORPORATED
BY REFERENCE TO EXHIBIT 10.34 TO THE 1994 REGISTRATION STATEMENT.)
10.21 Agreement, dated October 31, 1994, between California Pro Sports, Inc.
and Playmaker related to royalty payments. (INCORPORATED BY REFERENCE TO
EXHIBIT 10.35 TO AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT, FILED WITH
THE SEC ON NOVEMBER 16, 1994 ("1994 AMENDMENT #2").)
10.22 Form of Warrant related to the Registrant's issuance of warrants to
purchase up to 300,000 shares of Common Stock. (INCORPORATED BY REFERENCE TO
EXHIBIT 10.37 IN REGISTRATION STATEMENT 33-98898.)
16
<PAGE>
10.23 Letter Agreement dated August 24, 1995 among the
Registrant and Warren Amendola, Patricia Amendola,
Three R Sales, Inc., Three R Profit Sharing
Retirement Plan and USA Skate Company, Inc.
(Incorporated by reference to Exhibit 10.38 in
Registration Statement 33-98898.)
10.24 Form of Warrant related to the Registrant's issuance
of warrants to purchase up to 150,000 shares of
Common Stock with Registration Rights Agreement.
(INCORPORATED BY REFERENCE TO EXHIBIT 10.39 IN
REGISTRATION STATEMENT 33-98898.)
10.25 Stock Purchase Agreement effective as of April 30,
1996 by and among Warren Amendola, Sr., Patricia
Amendola, Three R Profit Sharing Retirement Plan,
Warren Amendola, Jr., Richard Amendola and Russell
Amendola, as sellers, and USA, as purchaser, and the
Registrant, including the following exhibit
agreements thereto. (INCORPORATED BY REFERENCE TO
EXHIBIT 10.1 TO THE REGISTRANT'S FORM 8-K, FILED MAY
30, 1996, REPORTING AN EVENT ON MAY 15, 1996,
COMMISSION FILE NO. 0-25114 (THE "1996 FORM 8- K").)
10.26(a) Exhibit A - USA's Promissory Note to sellers in the principal
amount of $1,050,000, with related Guaranty. (INCORPORATED BY REFERENCE TO
EXHIBIT 10.1(A) TO THE 1996 FORM 8-K.)
10.26(b) Exhibit B - License Agreement from Warren Amendola, Sr. to USA
Skate, with related Guaranty. (INCORPORATED BY REFERENCE TO EXHIBIT 10.1(B) TO
THE 1996 FORM 8-K.)
10.26(c) Exhibit C - Consulting and Non-Competition Agreement among Warren
Amendola, Sr., USA and the Registrant, with related Guaranty. (INCORPORATED
BY REFERENCE TO EXHIBIT 10.1(C) TO THE 1996 FORM 8-K.)
10.26(d) Exhibit D - Escrow Agreement by and among Warren Amendola, Sr., USA,
the Registrant and Blau, Kramer, Wactlar & Lieberman, P.C. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.1(D) TO THE 1996 FORM 8-K.)
10.26(e)(1) Exhibit E1 - Employment Agreement between USA Skate and Warren
Amendola, Sr.(INCORPORATED BY REFERENCE TO EXHIBIT 10.1(E)(1) TO THE 1996 FORM
8-K.)
10.26(e)(2) Exhibit E2 - Non-Disclosure and Non-Competition
Agreement by and among Warren Amendola, Jr., USA
Skate, USA and the Registrant. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.1(E)(2) TO THE 1996 FORM
8-K.)
10.26(e)(3) Exhibit E3 - Non-Disclosure and Non-Competition Agreement by and
among Richard Amendola, USA Skate, USA and the Registrant. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.1(E)(3) TO THE 1996 FORM 8-K.)
10.26(f) Exhibit F - Registration Rights Agreement by and among the sellers and
USA, with related Guaranty. (INCORPORATED BY REFERENCE TO EXHIBIT 10.1(F) TO
THE 1996 FORM 8-K.)
10.26(g) Exhibit G - Guaranty for the benefit of Patricia Amendola.
(INCORPORATED BY REFERENCE TO EXHIBIT 10.1(G) TO THE 1996 FORM 8-K.)
10.26(h) Exhibit H - Davtec's Promissory Note to Warren Amendola, Sr. in the
principal amount of $125,000, with related Guaranty. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.1(H) TO THE 1996 FORM 8-K.)
17
<PAGE>
10.27(a) Loan and Security Agreement between USA Skate and
LaSalle National Bank (the "USA Skate Loan Agreement)
(INCORPORATED BY REFERENCED TO EXHIBIT 10.27(A) TO
THE COMPANY'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER
31, 1996 (THE "1996 FORM 10-KSB").)
10.27(b)Demand Note related to the USA Skate Loan Agreement. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.2(A) TO THE 1996 FORM 8-K.)
10.27(c)(1) Guaranty of the USA Skate Loan by the Registrant, California Pro,
Inc. and USA.(INCORPORATED BY REFERENCE TO EXHIBIT 10.27(C)(1) TO THE 1996
FORM 10-KSB.)
10.27(c)(2) Guaranty of the USA Skate Loan by Henry Fong. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.27(C)(2) TO THE 1996 FORM 10-KSB.)
10.27(c)(3) Guaranty of the USA Skate Loan by Michael Casazza. (INCORPORATED
BY REFERENCE TO EXHIBIT 10.27(C)(3) TO THE 1996 FORM 10-KSB.)
10.27(d)Letter from the Registrant, USA and Three R Sales, Inc. to LaSalle
National Bank. (INCORPORATED BY REFERENCE TO EXHIBIT 10.2(C) TO THE 1996 FORM
8-K.)
10.28(a) Letter Amendment, dated as of April 30, 1996, to the Loan Agreement
dated April 1, 1993 between California Pro, Inc. and LaSalle National Bank, as
amended (the "CP Loan"). (INCORPORATED BY REFERENCE TO EXHIBIT 10.3(A) TO THE
FORM 8-K.)
10.28(b)Guaranty of the CP Loan by USA Skate. (Incorporated by reference to
Exhibit 10.3(b) to the 1996 Form 8-K.)
10.29 Lease Agreement, dated November 1, 1996, between Philip Calabrese and USA
Skate Co., Inc. (INCORPORATED BY REFERENCE TO EXHIBIT 10.31 IN REGISTRATION
STATEMENT 33-98898.)
10.30(a) Asset Purchase Agreement, dated September 10, 1997 by
and among Les Equipements Sportifs Davtec Inc., USA
Skate Co., Inc., USA Skate Corporation, the
Registrant, Rawlings Canada Inc. and Rawlings
Sporting Goods Company, Inc. (INCORPORATED BY
REFERENCE TO EXHIBIT 10.1(A) TO REGISTRANT'S FORM
8-K, FILED SEPTEMBER 29, 1997, REPORTING AN EVENT ON
SEPTEMBER 12, 1997, COMMISSION FILE NO. 0-25114 (THE
"1997 FORM 8-K").)
10.30(b) Exhibit A - Escrow Agreement, dated September 12,
1997 by and among Les Equipements Sportifs Davtec
Inc., USA Skate Co., Inc., Rawlings Canada Inc.,
Rawlings Sporting Goods Company, Inc. and the Bank of
New York. (INCORPORATED BY REFERENCE TO EXHIBIT
10.1(B) TO REGISTRANT'S 1997 FORM 8-K.)
10.30(c)Exhibit C - Guaranty, dated September 12, 1997 for Rawlings Canada Inc.
and Rawlings Sporting Goods Company, Inc. (INCORPORATED BY REFERENCE TO EXHIBIT
10.1(C) TO REGISTRANT'S 1997 FORM 8-K.)
10.31 Agreement and Plan of Merger, dated January 30, 1998 by and among the
Registrant, ImaginOn, Inc. and ImaginOn Acquisition Corp. (INCORPORATED BY
REFERENCE TO EXHIBIT 95 SAME NUMBER TO REGISTRANT'S 1997 FORM 10-KSB.)
11.1 Statement Re: Computation of Per Share Earnings. FILED HEREWITH.
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21.1 List of Subsidiaries. (INCORPORATED BY REFERENCE TO EXHIBIT 21.1 IN
REGISTRATION STATEMENT 33-98898.)
23.1 Consent of Independent Certified Public Accountants. FILED HEREWITH.
23.2 Consent of Hand & Hand, (INCLUDED IN EXHIBIT 5.)
* Management contract or compensatory plan or agreement.
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Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(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;
(iii) To include any material information
with respect to the plan of
distribution not previously disclosed
in the registration statement or any
material change to such information in
the registration statement;
Provided, however, that paragraphs
(a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be
included in a post-effective amendment
by those paragraphs is contained in
periodic reports filed by the
registrant pursuant to section 13 or
section 15(d) of the Securities
Exchange Act of 1934 that are
incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to
be a new registration statement relating to the
securities offered therein, and the offering of
such securities offered at that time shall be
deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities
being registered which remain unsold at the
termination of the offering.
(b)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 section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) 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 such liabilities (other than the payment by 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 that
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.
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(i) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information
omitted from the form of prospectus filed as
part of this registration statement in reliance
upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of
this registration statement as of the time it
was declared effective.
(2) For the purposes of determining any liability
under the Securities Act of 1933, each
post-effective amendment that contains a form of
prospectus 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.
Item 18. Not Applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Greer, State
of South Carolina on December 2, 1998.
CALIFORNIA PRO SPORTS, INC.
By: /s/ Barry S. Hollander
Barry S. Hollander, Acting President
The undersigned officer and/or director of California Pro Sports, Inc.,
a Delaware corporation (the "Corporation"), hereby constitutes and appoints
Barry S. Hollander and Henry Fong, with full power of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities this Registration Statement and any and all amendments thereto, and
any and all applications or other documents to be filed pertaining to this
Registration Statement with the Securities and Exchange Commission or with any
states or other jurisdictions in which registration is necessary to provide for
notice or sale of all or part of the securities to be registered pursuant to
this Registration Statement and with full power and authority to do and perform
any and all acts and things whatsoever required and necessary to be done in the
premises, as fully to all intents and purposes as the undersigned could do if
personally present. The undersigned hereby ratifies and confirms all that said
attorney-in-fact and agent, or any of his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof and incorporate such changes as
any of the said attorneys-in-fact deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 2, 1998.
By: /s/ Henry Fong
Henry Fong, Chief Executive
Officer and Director
/s/ Barry S. Hollander
Barry S. Hollander, Chief Financial
Officer and Principal Accounting Officer
/s/ Brian C. Simpson
Brian C. Simpson, Director
/s/ Hung-Chang Yang
Hung-Chang Yang, Director
22
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December 16, 1998
The Board of Directors and Selling Stockholders
California Pro Sports, Inc.
1221-B South Batesville Road
Greer, South Carolina 29650
Re: Registration Statement on
Form S-3 ("Registration Statement")
Gentlemen:
You have asked for our opinion regarding the legality of an estimated
6,008,262 Shares of common stock, $.01 par value including 3,200,000 shares,
issuable upon conversion of the Series B 4% Convertible Preferred Stock and the
Series C 4% Convertible Preferred Stock, 1,608,262 shares of common stock held
by certain shareholders, and 1,200,00 shares issuable upon exercise of options,
all as set forth in the Registration Statement.
As your counsel, we have reviewed and examined:
1. The Certificate of Incorporation of the Corporation;
2. The Bylaws of the Corporation;
3. A copy of certain resolutions of the Corporation;
4. The Registration Statement; and
5. The Certificate of Designations filed with the Delaware Secretary of
State describing the terms of the Series B and C Stock.
In giving our opinion, we have assumed without investigation the
authenticity of any document or instrument submitted us as an original, the
conformity to the original of any document or instrument submitted to us as a
copy, and the genuineness of all signatures on such originals or copies.
Based upon the foregoing, we are of the opinion that the Shares to be
offered pursuant to the Registration Statement, if sold as described in the
Registration Statement will be legally issued, and since the Series B and Series
C stock has been fully paid for, fully paid and nonassessable.
No opinion is expressed herein as to the application of state
securities or Blue Sky laws.
We consent to the reference to our firm name
in the Prospectus filed as a part of the Registration Statement and the use of
our opinion in the Registration Statement. In giving these consents, we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
HAND & HAND
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3/A of California Pro Sports, Inc. of our report dated April 14, 1998
(which expresses an unqualified opinion and includes an explanatory paragraph
relating to the Company's ability to continue as a going concern), relating to
the consolidated balance sheet of California Pro Sports, Inc. and subsidiaries
as of December 31, 1997, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1997, which report appears in the December 31, 1997
annual report on Form 10-KSB/A of California Pro Sports, Inc. We also consent to
the use of our name and the statements with respect to us under the heading
"experts" in the prospectus.
GELFOND HOCHSTADT PANGBURN & CO.
Denver Colorado
December 16, 1998
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