As filed with the Securities and Exchange Commission on May __, 1998
Registration No.:
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIRCO INTERNATIONAL CORP.
(Exact name of registrant as specified in its charter)
New York 13-2511270
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
24 Richmond Hill Avenue
Stamford, Connecticut 06901
(203) 359-4100
(Address, including zip code, and telephone number,
including area code of Registrant's principal executive offices)
JOEL DUPRE
Chairman of the Board and Chief Executive Officer
Sirco International Corp.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
(203) 359-4100
(Name, address, including zip code and telephone number,
including area code, of agent for service)
Copy To:
Eric M. Hellige, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue
New York, New York 10022
(212) 421-4100
Approximate date of commencement of proposed sale of the securities to
the public: As soon as possible after this Registration Statement becomes
effective.
<PAGE>
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, 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 of 1933, 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 of 1933, 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, check the following box. [ ]
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<TABLE>
<CAPTION>
Calculation Of Registration Fee
Proposed Proposed
Maximum Maximum
Offering Aggregate
Title of Each Class of Amount to Price Per Offering Amount of
Securities to be Registered be Registered Share* Price* Registration Fee
--------------------------- ------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value............... 660,000 shares $5.875 $3,877,500 $775.50
</TABLE>
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* Calculated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee (based on the closing price per share of
the Registrant's Common Stock as reported on the NASDAQ Small Cap market on
May 11, 1998.)
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 this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 12, 1998
PROSPECTUS
660,000 Shares
SIRCO INTERNATIONAL CORP.
Common Stock
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This Prospectus relates to the offering and resale by the Shareholders
named herein (the "Selling Shareholders") of up to 600,000 shares of common
stock, par value $.10 per share (the "Common Stock"), of Sirco International
Corp. (the "Company"). The Company will not receive any proceeds from the sale
of shares of Common Stock by the Selling Shareholders. The Common Stock is
traded on the NASDAQ Small Cap market under the symbol "SIRC." The last reported
high and low trade prices for the Common Stock on May 11, 1998, were $6.6875 and
$5.75 per share, respectively.
The sale of Common Stock by the Selling Shareholders may be sold from
time to time directly or by pledgees, donees, transferees or other successors in
interest in the over-the-counter market, or on any stock exchange on which
shares of Common Stock may be listed at the time of sale, in negotiated
transactions, or through a combination of such methods of distribution, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices. The
shares of Common Stock may be sold by one or more of the following methods,
without limitation: (a) a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this Prospectus; (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (d) face-to-face transactions between
the Selling Shareholders and purchasers without a broker-dealer. In effecting
sales, brokers or dealers engaged by the Selling Shareholders may arrange for
other brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from the Selling Shareholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933, in connection with such
sales. In addition, any securities covered by this Prospectus that qualify for
sale pursuant to Rule 144 might be sold under Rule 144 rather than pursuant to
this Prospectus.
The aggregate proceeds to the Selling Shareholders from the sale of the
shares of Common Stock offered hereby will be the purchase price of the shares
of Common Stock sold less the aggregate agents' commissions and underwriters'
discounts, if any. By agreement, the Company will pay substantially all of the
expenses incident to the registration of the shares of Common Stock, except for
selling commissions associated with the sale of such shares, all of which will
be paid by the Selling Shareholders.
<PAGE>
SEE "RISK FACTORS" AT PAGE 6 OF THIS PROSPECTUS
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THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AND COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT
PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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The date of this Prospectus is ______, 1998.
<PAGE>
No dealer, salesperson or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus in connection with the offer made by this Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or the Selling Shareholders. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy, the securities offered hereby in any jurisdiction in which such offer or
solicitation is not authorized, or to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that any
information contained therein is correct as of any time subsequent to the date
hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder, and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). The Registration Statement, the exhibits and schedules
forming a part thereof and the reports, proxy statements and other information
filed by the Company with the Commission, can be inspected and copied, upon
payment of prescribed fees, at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's regional offices at Seven World Trade Center, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can also be obtained at
prescribed rates by writing to the public reference section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the Commission's Web site is: http://www.sec.gov.
The Company has filed with the Commission a registration statement (the
"Registration Statement") (of which this Prospectus is a part) under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does
not contain all of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. 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 other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and schedules
thereto. For further information regarding the Company, reference is hereby made
to the Registration Statement and such exhibits and schedules which may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the fees prescribed by the Commission.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended November 30, 1997, as amended by the Company's Form
10-K/A dated May 7, 1998;
(2) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended February 28, 1998; and
(3) The Company's Proxy Statement dated May 11, 1998.
All documents filed by the Registrant pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the date of filing such
documents (provided, however, that the information referred to in Item 402(a)(8)
of Regulation S-K of the Commission shall not be deemed specifically
incorporated by reference herein.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein (or in the applicable Prospectus Supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner of the securities
offered hereby to whom this Prospectus is delivered, upon written or oral
request. Requests should be made to Mr. Paul H. Riss, Chief Financial Officer of
the Company, 24 Richmond Hill Avenue, Stamford, Connecticut 06901 (telephone
number: (203) 359-4100).
The following discussion and analysis contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, among others,
general economic and business conditions; industry trends; the loss of major
customers; dependence on foreign sources of supply; the loss of licenses;
availability of management; availability, terms and deployment of capital; the
seasonal nature of the Company's business; and changes in state and federal
regulations of the telecommunications industry.
<PAGE>
THE COMPANY
The Company designs, manufacturers and markets a broad line of soft
luggage, sports bags, backpacks, children's bags, tote bags and related
products. The Company's strategy is to produce a diverse line of high quality,
fashionable products at competitive prices. The Company believes its ability to
merchandise high quality products is facilitated by its creative design,
manufacturing and sourcing capabilities.
The Company sells its products under many trade names, including "Cross
Trainer," "J.T. Madison," "Mondo" and "Sirco Kids," all of which are registered.
In addition, the Company sells its products under certain trademarked names
licensed from others, including "Dunlop," "Generra," "Gold's Gym," "Hedgren,"
"Koosh," "Maui and Sons" and "Perry Ellis". The Company also designs and
manufactures soft luggage and sports bags on a contract basis for unaffiliated
retailers and sportswear companies, and sells luggage and American Airlines logo
products to American Airlines, Inc. employees.
Virtually all of the Company's products are manufactured by foreign
suppliers in accordance with the Company's design specifications. During the
fiscal year ended November 30, 1997, approximately 68% of the Company's products
were manufactured in the People's Republic of China. The primary markets for the
Company's products are the United States and Canada.
The Company sells its luggage, sport bags, backpacks and related
products primarily to large national retail chain stores, including Target,
Sears, Kmart and Wal-Mart, and to regional discount store chains, such as
ShopKo, Bradlees and Caldor. The Company also sells to department stores and
other specialty stores, including Federated Stores (Bloomingdale's and Stern's),
The May Company, Innovation Luggage and Bentley's Luggage, and to apparel chain
stores, such as The Marmaxx Group and Ross Stores. The Company also sells its
products to sporting goods retailers, such as Gold's Gym, and to warehouse
clubs, such as Price Costco. The loss by the Company of several of these
customers would have an adverse effect on the Company's operations. However, the
Company believes that these customers, if lost, could be partially, if not
completely, replaced by others.
During the fiscal years ended November 30, 1997, 1996 and 1995, sales
to Target represented approximately 27%, 19% and 25%, respectively, of net
sales. Sales to Kmart represented approximately 17% and 11% of net sales in the
fiscal years 1997 and 1996, respectively. Furthermore, in the fiscal year ended
November 30, 1997, sales to The Marmaxx Group represented approximately 14% of
net sales.
The Company currently maintains showrooms in New York City and Ontario,
Canada. The Company solicits business directly from its customers, using the
services of both full-time sales persons and independent sales representatives.
The independent sales representatives represent a number of manufacturers or
wholesalers other than the Company, and are compensated on a commission basis,
typically pursuant to the terms of a non-exclusive sales representative
contract. The Company fills orders on the terms and conditions of standard
purchase orders it receives from customers.
After extensive negotiations with FILA Sport S.p.A. ("FILA"), in
February 1996, the Company and FILA entered into an agreement pursuant to which
the Company ceased shipping FILA product under a non-exclusive license with FILA
during fiscal 1996. Net sales of the FILA product for the fiscal year ended
<PAGE>
November 30, 1996, were approximately $8,584,000 (including approximately
$482,000 sold to FILA), or approximately 30.9% of the Company's total net sales.
The Company did not sell any products bearing the FILA name or logo in fiscal
1997. The loss of the FILA trademark had an adverse effect on the Company's
results of operations in the fiscal year ended November 30, 1997 and will have
an adverse impact on the Company's results of operations for the fiscal year
ending November 30, 1998.
During fiscal 1996, the Company received notification from Airway
Industries Inc. ("Airway") that Airway would not renew its license agreement
with the Company pursuant to which Sirco International (Canada) Limited, the
Company's Canadian subsidiary ("Sirco Canada"), was granted an exclusive license
to sell in Canada, luggage and luggage related products under the trade names
"Atlantic" and "Oleg Cassini" through December 31, 1996. During the first
quarter of fiscal 1997 (prior to the December 31, 1996 termination date) and the
fiscal year ended November 30, 1996, sales of Atlantic product approximated
$472,000 and $5,782,000, respectively, which represented approximately 2.9% and
20.8%, respectively, of the Company's total net sales for those periods, and
approximately 63.8% and 95.4%, respectively, of the total net sales of Sirco
Canada for those periods. The loss of the Airway license agreement had an
adverse impact on the Company's results of operations for the year ended
November 30, 1997, and will have an adverse effect on the Company's results of
operations throughout the fiscal year ending November 30, 1998.
During the latter part of fiscal 1997, the Company's Board of Directors
began to review proposals for increasing the value of the Company's common stock
and thereby increasing shareholder value by considering alternative business
opportunities, including several outside of the luggage industry. Based in part
on the significant growth opportunities in the telecommunications industry and
the relatively high valuations that have been placed on competitive local
exchange carriers ("CLECs') by the U.S. capital markets, in the fourth quarter
of fiscal 1997, the Board determined to diversify into two business segments,
one focusing on the travel business (luggage, sport bags and the American
Airlines employee stores), and the other focused on the telecommunications
industry, including primarily CLECs.
In furtherance of its diversification strategy, since October 1997, the
Company has made several investments in Access One Communications Corp.
(formerly known as CLEC Holding Corp.) ("Access One"), which owns 95% of the
capital stock of The Other Phone Company, Inc. ("OPC"), an integrated
telecommunications provider based in Florida. The Company accounts for its
investment in Access One using the equity method of accounting. At May 1, 1998,
the Company was the largest shareholder of Access One, owning approximately
30.2% of Access One's capital stock. Access One has advised the Company that, at
February 28, 1998, OPC had approximately 9,000 local access lines, compared to
approximately 2,500 access lines at September 9, 1997.
As an additional step towards this strategy, the Company acquired Essex
Communications, Inc. ("Essex"), a newly formed CLEC, on February 27, 1998. Essex
intends to attract and retain a geographically concentrated customer base in the
metropolitan New York region, primarily through the resale of products and
services of incumbent and alternative facilities-based local providers. In March
and April 1998, Essex signed
<PAGE>
agreements with affiliates of Bell Atlantic Corporation allowing Essex to resell
local telephone service in New York and New Jersey. Essex has also filed an
application to resell local telephone service with the Connecticut Department of
Public Utility Control ("CDPUC"). Upon receipt of the requisite approval of the
CDPUC, Essex intends to enter into a resale agreement with Southern New England
Telecommunications Corporation that will allow Essex to resell local telephone
service in the State of Connecticut. Essex intends to focus its marketing
efforts primarily on small- and medium-sized businesses with telecommunications
usage of less than $2,000 per month. Its customer service strategy will include
being more responsive and innovative in satisfying customers' needs, while
providing a product that is less expensive than the telephone service provided
by the regional Bell operating companies. In addition to local telephone line
usage, Essex plans to sell other enhanced and value added telecommunication
services, such as voice mail, paging, long-distance and teleconferencing.
The Company has not declared any cash dividends during the past five
fiscal years with respect to the Common Stock. The declaration by the Company of
any cash dividends in the future will depend upon the determination of the
Company's Board of Directors as to whether, in light of the Company's earnings,
financial position, cash requirements and other relevant factors existing at the
time, it appears advisable to do so. The Company's current financing
arrangements prohibit the payment of dividends without the prior written consent
of its lender.
The Company was incorporated under the laws of New York on July 22,
1964. The executive offices of the Company are located at 24 Richmond Hill
Avenue, Stamford, Connecticut 06901, and its telephone number at that address is
(203) 359-4100.
RISK FACTORS
The purchase of the Company's Common Stock involves a high degree of
risk, including, but not necessarily limited to, the risks described below:
Reliance on License Agreements; Recent Termination of Material Licenses
and Possible Termination of Existing Licenses. Sales of licensed products
accounted for approximately 66%, 83% and 65% of the Company's net sales during
fiscal 1997, 1996, and 1995, respectively. Sales of products developed and sold
under the Company's license from FILA accounted for approximately 30.9% and
21.4% of the Company's total net sales in fiscal 1996 and 1995, respectively.
Sales of products developed and sold under the Company's license from Airway
Industries Inc. ("Airway") accounted for approximately 2.9%, 20.8% and 14.4% of
the Company's total net sales in fiscal 1997, 1996 and 1995, respectively. The
Company's licenses with FILA and Airway were terminated in 1996. Primarily as a
result of the termination of the FILA and Airway licenses, the Company's net
sales for the year ended November 30, 1997 declined by approximately $11,738,000
when compared to the fiscal year ended November 30, 1996, which had a material
adverse effect on the Company's results of operations. See "The Company."
Although, during fiscal 1996, the Company entered into new license agreements to
develop and sell products bearing the "Perry Ellis" and "Hedgren" names and
logos, there can be no assurance that the Company will be able successfully to
develop and sell products under its Perry Ellis and Hedgren licenses in
sufficient quantity to replace the product sales under the Company's former FILA
and Airway licenses. In addition, there can be no assurance that the Company
will be able to procure new license agreements or renew existing license
agreements on commercially reasonable terms, or that existing licenses will not
be terminated. The Company's license agreements limit both the products that can
<PAGE>
be manufactured thereunder and the territory and market in which such products
may be marketed. Certain of the Company's license agreements require licensor
approval before merger, reorganization, certain management changes or assignment
of the license, which restrictions could affect the growth of the Company. In
addition, the Company's licensors typically have the right to approve, in their
sole discretion, the products developed by the Company and the third party
manufacturers of such product. Obtaining such approval may be time consuming and
could adversely affect the timing of the introduction of new products.
Adversely Changing Consumer Preferences; New Product Introductions. As
a result of changing consumer preferences, some of the Company's products may be
successfully marketed for only one or two years. There can be no assurance that
any of the Company's products or any of the Company's product lines will
continue to be popular. During fiscal 1997, the Company introduced its "Perry
Ellis," "Koosh" and "Hedgren" product lines. There can be no assurance that any
of these new product lines will be successful or that any new products or
product lines will be successful. The Company's products compete with other
similar products for retail shelf space. There can be no assurance that shelf
space in retail stores will be available to support the Company's existing
products or the expansion of the Company's products and product lines.
Dependence on Key Personnel. The Company's future success will be
highly dependent on the continued efforts of Joel Dupre, Chairman of the Board
and Chief Executive Officer of the Company. The Company has no employment
agreement or noncompete agreement with Mr. Dupre nor key-man life insurance on
the life of Mr. Dupre. The loss of the services of Mr. Dupre could have a
material adverse effect upon the Company. The Company's success is also
dependent upon its ability to retain its key management, sales, marketing and
product development personnel and to attract other personnel to satisfy the
Company's needs. There can be no assurance that the Company will be successful
in retaining and attracting such personnel.
Dependence on Third Party Manufacturers; No Long-Term Contracts;
International Relations. To date, substantially all of the Company's products
have been manufactured by third parties in The People's Republic of China, the
Philippines, Taiwan and Thailand. During the fiscal years ended November 30,
1997, 1996 and 1995, approximately 67.8%, 63.9% and 80.9%, respectively, of the
Company's products were manufactured in The People's Republic of China. The
Company does not have long-term contracts with any of these manufacturers.
Although the Company believes that it could arrange alternate sources of
manufacturing if the need arose, the Company has made no plans for securing
alternate sources in the event its present arrangements with any of its existing
manufacturers prove impossible to maintain, and there can be no assurance that
there would be sufficient alternate manufacturing facilities to meet the
increased demand for production which would likely result from a disruption of
manufacturing sources in China or any other foreign country. Furthermore, such a
shift to alternate facilities, if available, would likely result in increased
manufacturing costs and may subject the Company's products to additional and/or
higher quotas, duties, tariffs or other restrictions.
Foreign manufacturing is generally subject to risks such as
transportation delays and interruptions, political and economic disruptions, the
imposition of tariffs and import and export controls, changes in governmental
policies, restrictions on the transfer of funds and fluctuations of the United
States Dollar against foreign currencies. While the Company to date has not
experienced any material adverse effects due to foreign manufacturing, there can
be no assurances that such events will not occur in the future. The occurrence
of any such event, particularly one affecting the Company's business with
Chinese manufacturers, would have a material adverse effect on the Company.
<PAGE>
Reliance on Customers and Retailers for Sales and Distribution. The
Company sells and distributes its products principally through large national
retail chain stores, regional discount store chains, department and specialty
stores. There can be no assurance that the Company will be successful in
maintaining its existing arrangements with its customers or in entering into
arrangements with additional customers. A loss of several of these customers
could adversely effect the Company's profitability. During the fiscal years
ended November 30, 1997, 1996 and 1995, sales to Target represented
approximately 27%, 19% and 25%, respectively, of net sales. Sales to Kmart
represented approximately 17% and 11% of net sales in the fiscal years ended
November 30, 1997 and 1996, respectively. Furthermore, in the year ended
November 30, 1997, sales to The Marmaxx Group represented approximately 14% of
net sales. The loss of any of these customers could have a material adverse
effect on the Company's business and results of operations.
Competition. The luggage, sport bag and backpack industry is highly
competitive. Many of the Company's competitors have longer operating histories,
broader product lines and greater financial resources and advertising budgets
than the Company. In addition, the luggage, sport bag and backpack industry has
nominal barriers to entry. Competition is based primarily on the ability to
design and develop new products, procure licenses for popular characters and
trademarks, and successfully market products. Many of the Company's competitors,
including certain of the Company's licensors, offer similar products or
alternatives to the Company's products. The Company has not in the past and does
not in the immediate future plan to devote any material amount of its capital
resources to advertising. There can be no assurance that the Company will be
able to continue to compete effectively in this marketplace.
Risks Associated with Telecommunications Division. In the fourth
quarter of fiscal 1997, the Board of Directors of the Company determined to
diversify into the telecommunications industry. In furtherance of its
diversification strategy, since October 1997, the Company has made several
investments in Access One, which owns 95% of OPC, an integrated
telecommunications provider based in Florida, and in February 1998, the Company
acquired Essex, a newly-formed CLEC. See "The Company". The Company's
diversification strategy involves a high degree of risk, including, but not
necessarily limited to, the risks described below:
Short Operating History; Net Losses. Since its inception, Essex has
been engaged almost exclusively in organizational activities and in obtaining
the required authorizations to operate as a telephone reseller in the States of
Connecticut, New Jersey and New York. Essex first began marketing its
telecommunications products in early May 1998. Accordingly, Essex has had a
limited relevant operating history upon which an evaluation of its prospects can
be made. Consequently, the likelihood of success of Essex must be considered in
view of all of the risks, expenses and delays inherent in the establishment of a
new business, including, but not limited to, expenses, complications and delays
that cannot be foreseen when a new business is commenced, initiation of
marketing activities, the uncertainty of market acceptance of new products,
intense competition from larger, more established competitors and other factors.
Since its inception, Essex has incurred a net loss and has not
generated any operating revenues. There can be no assurance that Essex will be
able to compete successfully in the telecommunications business.
<PAGE>
The development and expansion of the Company's telecommunications
business require significant capital and operational and administrative
expenditures, a substantial portion of which will be incurred before the
realization of significant revenues. These expenditures will result in negative
cash flow until an adequate customer base can be established. There can be no
assurance that the Company will achieve or sustain profitability.
Risks of Acquisitions, Implementation and Suitable Resale Arrangements.
The Company intends to develop and expand its telecommunications business and to
enter new markets initially through the acquisition of additional
telecommunications and related businesses. There can be no assurance that the
Company will be able to identify, acquire or profitably manage additional
businesses or successfully integrate acquired businesses, if any, into the
Company without substantial costs, delays or other operational or financial
problems. Further, acquisitions may involve a number of special risks, including
adverse effects on the Company's operating results, diversion of management's
attention, failure to retain acquired key personnel, risks associated with
unanticipated events or circumstances or legal liabilities and the possible
impairment of the value of acquired intangible assets, some or all of which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The development and expansion of the Company's telecommunications
business and its entry into new markets will be dependent, among other things,
on its ability to lease or purchase suitable sites, obtain equipment on a timely
basis, negotiate suitable resale or interconnect arrangements with incumbent
local exchange carriers ("ILECs") on satisfactory terms and conditions and
finance such expansion. These factors and others could adversely affect the
ability of the Company to expand its telecommunications customer base and
commence operation in new markets. If the Company is not able to develop and
expand its telecommunications business or enter new markets in accordance with
its plans, the development and growth of its telecommunications business would
be materially adversely affected.
Dependence on Key Personnel and Consultants. The Company's
telecommunications business is managed by a small number of key management and
operating employees and consultants, the loss of whom could have a material
adverse impact on the Company's telecommunications business. The Company
believes that its future success in the telecommunications business will depend
in large part on its ability to attract and retain highly skilled and qualified
telecommunications personnel.
Reliance on Others. The Company's telecommunications business is
organized in a manner that includes extensive reliance on third parties in order
to limit the Company's capital expenditures and support staff. The Company does
not own any part of a local exchange network or a long distance network. As a
result, the Company depends entirely on facilities-based carriers for the
transmission of customer telephone calls. Under the Telecommunications Act of
1996, the Company is entitled to purchase capacity from facilities-based
carriers by entering into resale agreements with such carriers. The risks
inherent in this approach include, but are not limited to, negotiating and
renewing favorable resale agreements, timeliness of the ILEC in processing the
Company's orders for customers who seek to utilize the Company's services,
effectiveness of outside telemarketing services to attract new customers, and
reliance on others for prompt and accurate billing of the Company's customers.
<PAGE>
Competition; Rapid Technological Change. In the markets in which the
Company intends to compete, the Company will face significant competition for
its local telephone services from ILECs, which currently dominate their local
telecommunications markets, other CLECs and others. ILECs have long-standing
relationships with their customers that may create competitive barriers. In
addition, a continuing trend toward business combinations and alliances in the
telecommunications industry may create significant new competitors to the
Company. Many of the Company's existing and potential competitors have
financial, personnel and other resources significantly greater than those of the
Company.
Although the Company plans to offer rates for its services that are
below those currently charged by ILECs, ILECs or new competitors with greater
capital and other resources than the Company may meet or undercut the Company's
proposed price structure and prevent the Company from attaining the share of the
telecommunications market necessary to achieve profitable telecommunications
operations.
The telecommunications industry is subject to rapid and significant
changes in technology. While the Company believes that for the foreseeable
future these changes will not materially affect or hinder the Company's ability
to acquire necessary technologies, the effect of technological changes on the
business of the Company cannot be predicted.
Regulation. The Company's telecommunications business will be subject
to varying degrees of federal, state and local regulation. The
telecommunications industry in general, and the CLEC industry in particular, is
undergoing substantial regulatory change and uncertainty. Delays in receiving
required regulatory approvals, new court decisions or the enactment of new
adverse regulations or regulatory requirements may have a material adverse
effect on the Company's telecommunications business, financial condition and
results of operations.
Dividend Policy; No Dividend Payments in Near Future. For the
foreseeable future, the Company expects to retain earnings to finance the
expansion and development of its business. Any future payment of cash dividends
will be within the discretion of the Company's Board of Directors, which is
controlled by the present shareholders, and will depend, among other factors, on
the earnings, capital requirements, operating and financial condition of the
Company and other relevant factors, and compliance with various financing
covenants to which the Company is or may become a party. At present, the Company
is party to a credit facility with Coast Business Credit, a division of Southern
Pacific Thrift & Loan Association ("Coast"), that prohibits the payment of
dividends without the prior consent of Coast. See "Item 5. Market for the
Company's Common Equity and Related Stockholder Matters" and "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" in the Company's Annual Report on
Form 10-K for the year ended November 30, 1997, as amended, which is
incorporated by reference herein.
<PAGE>
Limited Public Market and Possibility Volatility of Stock Price.
Although there is a public market for the Common Stock, the market for the
Common Stock is thinly traded. The trading prices of the Common Stock could be
subject to wide fluctuations in response to variations in the Company's
operating results, announcements by the Company or others, developments
affecting the Company or its competitors and other events and factors. In
addition, the stock market has experienced extreme price and volume fluctuations
in recent years. These fluctuations have had a substantial effect on the market
prices for many companies, often unrelated to their performance, and may
adversely affect the market price for the Common Stock.
Effect of Certain Charter Provisions; Limitation of Liability of
Directors; Antitakeover Effects of New York Law. The Board of Directors has the
authority to issue up to 1,000,000 shares of preferred stock of the Company
("Preferred Stock") in one or more series, and to determine the prices, rights,
preferences, privileges and restrictions, including voting rights, of the shares
within each series without any further vote or action by shareholders. The
Company has no current plans to issue shares of Preferred Stock. However, the
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 issuance of Preferred Stock, while providing flexibility in
connection with possible acquisitions and other corporate activities, could have
the effect of making it more difficult for a third party to acquire control of
the Company. Further, certain anti-takeover provisions of New York law could
delay or make more difficult a change of control of the Company. While such
provisions are intended to enable the Board of Directors to maximize shareholder
value, they may have the effect of discouraging takeovers that could be in the
best interest of certain shareholders. There can be no assurance that such
provisions will not have an adverse effect on the market value of the Company's
stock in the future. In addition, the Company's charter provides that its
directors shall not be personally liable to the Company or its shareholders for
monetary damages in the event of a breach of fiduciary duty to the extent
permitted by New York law.
USE OF PROCEEDS
The shares of Common Stock offered hereby are being registered for the
account of the Selling Shareholders. The Company will not receive any part of
the proceeds from the sale of the Common Stock by the Selling Shareholders.
SELLING SHAREHOLDERS
The Company has been informed by the Selling Shareholders that the
name, address, maximum number of shares of Common Stock to be sold and total
number of shares of Common Stock owned by each Selling Shareholder are as set
forth in the following table. The Selling Shareholders may sell all or part of
their shares of Common Stock pursuant to this Prospectus, and the offering of
shares of Common Stock hereunder is not being underwritten on a firm commitment
basis. As a result, no estimates can be given as to the number and percentage of
shares of Common Stock that will be held by each Selling Shareholder upon
termination of the offering made by this Prospectus.
<PAGE>
<TABLE>
<CAPTION>
No. of Shares
Beneficially Owned Percentage of Class Maximum No.
Name and Address Prior to Offering Ownership of Shares to be Offered
---------------- ----------------- --------- -----------------------
<S> <C> <C> <C>
Ideal Pacific Ltd. 377,777(a) 6.9% 66,667
Block N, 4/F Phase Three Kaiser Estates
11 Hok Yuen Street, Hong Hom
Kowloon, Hong Kong
Evereal Industries Limited 377,777(a) 6.9% 44,444
Block N, 4/F Phase Three Kaiser Estates
11 Hok Yuen Street, Hong Hom
Kowloon, Hong Kong
TN Capital, Inc. 247,500(b) 4.5% 100,000
1616 Post Road East
Suite 4222
Fairfield, Connecticut 06430
Access One Communications Corp 210,000 3.8% 210,000
3427 N.W. 55th Street
Ft. Lauderdale, Florida 33309
Constellation Enterprise Co., Ltd. 177,777(c) 3.2% 88,889
199 Chung Ching North Road
11th Floor, Section 3
Taipei, Taiwan R.O.C.
Richard Greenberg 50,000 * 50,000
5 Briar Court
Melville, New York 11747
Winner Camping Goods Mfy. Ltd. 30,000 * 30,000
13/F, Block N-0 Wah Lik Ind. Centre
459-469 Castle Peak Road, Tsuen Wan, N.T.
Tai Tak Industrial Building
Kowloon, Hong Kong
Koon Hing Plastic Factory 30,000 * 30,000
Fuk Tsun Fty. Bldg., 4/F., Block "A"
66-68 Fuk Tsun Street
Kowloon, Hong Kong
Kenneth Baritz(d) 20,000 * 20,000
5519 North Miltary Trail
Boca Raton, Florida 33496
Michael Burman 10,000 * 10,000
19355 King Palm Court
Boca Raton, Florida 33498
Jaymac, Inc. 10,000 * 10,000
16 Pond Road
Woodbury, New York 11797
1,163,054 660,000
=======
</TABLE>
- ----------------------
<PAGE>
* Less than 1%.
(a) Includes 66,667 shares of Common Stock owned of record by Ideal Pacific
Ltd., 44,444 shares of Common Stock owned of record by Evereal Industries
Limited and 266,666 shares of Common Stok owned of record by Pacific
Million Enterprise Ltd. ("Pacific"), 95% of the outstanding shares of which
are owned by Joseph Takata, who is the Managing Director of Ideal Pacific
Ltd. and has a controlling equity interest in Evereal Industries Limited.
Pacific has granted to Joel Dupre, the Chairman of the Board and Chief
Executive Officer of the Company, an option to purchase all of the 266,666
shares it owns of record.
(b) Includes 2,500 shares of Common Stock issuable upon the exercise of
outstanding stock options.
(c) Includes 88,888 shares of Common Stock owned of record by Albert H. Cheng,
the President of Constellation Enterprise Co., Ltd. Mr. Cheng has granted
to Joel Dupe an option to purchase all of the 88,888 shares he owns of
record.
(d) Mr. Baritz is the Chairman of the Board and Chief Executive Office of Access
One Communications Corp.
On April 23, 1998, Access One acquired from the Company 350,000 shares
of Common Stock, including the 210,000 shares to be sold hereunder.
In October 1997, the Company acquired from Access One 3,000,000 shares
of common stock of Access One in consideration of the issuance to Access One of
425,000 shares of Common Stock, which shares of Common Stock were sold by Access
One in February 1998. In connection with such transaction, Access One granted
the Company the right to nominate one director to the Board of Directors of
Access One. The Company has nominated Paul H. Riss, its Chief Financial Officer
and a director of the Company, as its representative to the Board of Directors
of Access One. Access One has granted to Mr. Riss, as well as its other
non-affiliated directors, three-year options to purchase up to 100,000 shares of
common stock of Access One with an exercise price of $1.00 per share.
Prior to such transactions, Access One owned no shares of Common Stock
or other securities of the Company, and was not otherwise affiliated with, and
did not have any material relationship with, the Company or any of its
affiliates, except that on September 9, 1997, Access One borrowed from Joel
Dupre, Chairman of the Board and Chief Executive Officer of the Company,
$150,000 under a promissory note that was repaid on November 10, 1997 through
the conversion into 306,000 shares of common stock of Access One. The promissory
note carried an interest rate of 12% per annum. In addition, Mr. Dupre was
granted three-year warrants to purchase up to 150,000 shares of common stock of
Access One at $1.20 per share. Of the $150,000 originally loaned by Mr. Dupre to
Access One, Mr. Dupre borrowed $100,000 from Joseph Takada, a shareholder of the
Company and the Managing Director of Ideal Pacific Ltd., the Company's
manufacturing agent in Hong Kong, and $50,000 from Albert Cheng, a shareholder
of the Company and the President of Constellation Enterprise Co., Ltd., a
supplier of certain of the Company's luggage and backpack products. See "Item
13. Certain Relationships and Related Transactions" in the Company's Annual
Report on Form 10-K for the year ended November 30, 1997, as amended, which is
incorporated by reference herein.
Ideal Pacific Ltd. ("Ideal") is the Company's manufacturing agent in
Hong Kong. During the fiscal year ended November 30, 1997, the Company paid
aggregate commissions of approximately $40,000 to Ideal.
<PAGE>
During the year ended November 30, 1997, the Company purchased
approximately $891,000 of luggage and backpack products from Constellation
Enterprise Co., Ltd.
During the year ended November 30, 1997, the Company purchased
approximately $2,507,000 of luggage, sports bag and backpack products from Hing
Wah Leather Products Manufactory Ltd., an affiliate of Winner Camping Goods Mfy.
Ltd.
During the year ended November 30, 1997 the Company purchased
approximately $573,000 of luggage, sports bag and backpack products from Koon
Hing Plastic Factory.
During the year ended November 30, 1997, the Company purchased
approximately $942,000 of sports bag and backpack products from Evereal
Industries Limited.
PLAN OF DISTRIBUTION
The sale of Common Stock by the Selling Shareholders may be sold from
time to time directly or by pledgees, donees, transferees or other successors in
interest in the over-the-counter market, or on any stock exchange on which
shares of Common Stock may be listed at the time of sale, in negotiated
transactions, or through a combination of such methods of distribution, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices. The
shares of Common Stock may be sold by one or more of the following methods,
without limitation: (a) a block trade in which the broker-dealer so engaged will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to this Prospectus; (c) ordinary brokerage transactions and transactions in
which the broker solicits purchasers; and (d) face-to-face transactions between
the Selling Shareholders and purchasers without a broker-dealer. In effecting
sales, brokers or dealers engaged by the Selling Shareholders may arrange for
other brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from the Selling Shareholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act in connection with such sales. In
addition, any securities covered by this Prospectus that qualify for sale
pursuant to Rule 144 might be sold under Rule 144 rather than pursuant to this
Prospectus.
The Selling Shareholders and any broker-dealers acting in connection
with the sale of shares of Common Stock hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit realized by them on the resale
of shares of Common Stock as principals may be deemed underwriting compensation
under the Securities Act.
Upon the Company being notified by a Selling Shareholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares of Common Stock through a block trade, special offering or secondary
distribution or a purchase by a broker or dealer, a supplemental prospectus will
be filed, if required, pursuant to Rule 424(c) under the Securities Act,
disclosing: (i) the name of the Selling Shareholder and of the participating
broker-dealer(s), (ii) the number of shares of Common Stock involved, (iii) the
price at which such shares of Common Stock were sold, (iv) the commissions paid
or discounts or concessions allowed to such broker-dealer(s), where applicable,
(v) that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this Prospectus and (vi)
other facts material to the transaction.
<PAGE>
The Selling Shareholder reserves the sole right to accept and, together
with any agent of the Selling Shareholder, to reject in whole or in part any
proposed purchase of the shares of Common Stock. The Selling Shareholder will
pay any sales commissions or other seller's compensation applicable to such
transactions.
Offers and sales of shares of the Common Stock have not been registered
or qualified under the laws of any country, other than the United States. To
comply with certain states' securities laws, if applicable, the shares of Common
Stock will be offered or sold in such jurisdictions only through registered or
licensed brokers or dealers. In addition, in certain states the shares of Common
Stock may not be offered or sold unless they have been registered or qualified
for sale in such states or an exemption from registration or qualification is
available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of shares of the Common Stock may not
simultaneously engage in market-making activities with respect to such shares of
Common Stock for a period of two to nine business days prior to the commencement
of such distribution. In addition to and without limiting the foregoing, the
Selling Shareholders and any other person participating in a distribution will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including without limitation, Rules 10b-2, 10b-6 and
10b-7, which provisions may limit the timing of purchases and sales of any of
the shares of Common Stock by the Selling Shareholders or any such other person.
All of the foregoing may affect the marketability of the Common Stock and the
broker's' and dealers' ability to engage in market-marking activities with
respect to the Common Stock.
The Company will pay substantially all of the expenses incident to the
registration of the shares of Common Stock hereby, estimated to be approximately
$16,000.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The authorized capital stock of the Company consists of 10,000,000
shares of Common Stock, par value $.10 per share, and 1,000,000 shares of
Preferred Stock, par value $.10 per share. At May 11, 1998, 5,475,400 shares of
Common Stock were issued and outstanding; no shares of Preferred Stock are
outstanding as of the date hereof.
Each outstanding share of Common Stock will entitle the holder to one
vote on all matters presented to Shareholders for a vote. Holders of shares of
Common Stock will have no preemptive, subscription or conversion rights. All
shares of Common Stock to be outstanding following this offering will be duly
authorized, fully paid, and nonassessable. Distributions may be paid to the
holders of shares of Common Stock if and when declared by the Board of Directors
of the Company out of funds legally available therefor. The Company has not
declared any cash dividends during the past fiscal year with respect to its
Common Stock. The declaration by the Company of any cash dividends in the future
will depend upon the determination of the Company's Board of Directors as to
whether, in light of the Company's earnings, financial position, cash
requirements and other relevant factors existing at the time, it appears
advisable to do so. In addition, the Company is party to a credit facility that
prohibits the payment of dividends without the prior consent of its lender.
<PAGE>
If the Company is liquidated, subject to the right of any holders of
Preferred Stock to receive preferential distributions, each outstanding share of
Common Stock will be entitled to participate pro rata in the assets remaining
after payment of, or adequate provision for, all known debts and liabilities of
the Company.
The holders of a majority of the outstanding shares of Common Stock
constitute a quorum at any meeting of the shareholders. Directors of the Company
are elected by a plurality of the votes cast at a meeting of shareholders. The
Common Stock does not have cumulative voting rights; therefore, the holders of a
majority of the outstanding shares of Common Stock can elect all directors of
the Company. In general, shareholders action other than the election of
directors must be authorized by a majority of the votes cast at a meeting of
shareholders. However, the Business Corporation Law of the State of New York
(the "BCL") provides that certain extraordinary matters, such as a merger or
consolidation in which the Company is a constituent corporation, a sale or other
disposition of all or substantially all of the Company's assets, and the
dissolution of the Company, require the vote of the holders of two-thirds of all
outstanding voting shares. Most amendments to the Company's Certificate of
Incorporation require the vote of the holders of a majority of all outstanding
voting shares.
Under the Company's Certificate of Incorporation, as amended, shares of
Preferred Stock can be issued from time to time in one or more series as
determined by the Board of Directors. The Board of Directors is authorized to
fix by resolution as to any series the designation and number of shares of the
series, the voting rights, the dividend rights, the redemption price, the amount
payable upon liquidation or dissolution, the conversion rights, and any other
designations, preferences or special rights or restrictions as may be permitted
by law. Unless the nature of a particular transaction and the rules of law
applicable thereto require such approval, the Board of Directors has the
authority to issue these shares of Preferred Stock without shareholder approval.
The Company has no present plans, arrangements, commitments or understandings
regarding the issuance of any shares of Preferred Stock.
The Board of Directors is able to issue authorized and unissued shares
of one or more new series of Preferred Stock with such voting, conversion,
liquidation, redemption and other rights as the Board determines in its sole
discretion without further shareholder action. Any issuance of shares of
Preferred Stock could have the effect of diluting the earnings per share and
book value of existing shares of Common Stock. Because the Board of Directors
has the authority to fix the voting rights to be accorded to any series of
Preferred Stock, the holders of shares of a new series of Preferred Stock could
be entitled to vote separately as a class in connection with the approval of
certain extraordinary corporate transactions in circumstances where New York law
does not require such class vote, or might be given a disproportionately large
number of votes. The issuance of shares of Preferred Stock could also result in
a class of securities outstanding that would have certain preferences (for
example, with respect to dividends or liquidation), or would enjoy certain
voting rights in addition, to those of the Common Stock.
<PAGE>
Although the Company currently has no such intention, authorized but
unissued shares of Preferred Stock could be used to make more difficult a change
in control of the Company. Any issuance of shares of Preferred Stock could
dilute the stock ownership of persons seeking to gain control of the Company.
Shares of a new series of Preferred Stock could also be convertible into a large
number of shares of Common Stock or have other terms which might make more
difficult or costly the acquisition of a controlling interest in the Company.
Under certain circumstances, such shares could be used to create voting
impediments or to frustrate persons attempting to effect a takeover or otherwise
gain control of the Company. Such shares could be privately placed with
purchasers who might side with the Board of Directors in opposing a hostile
takeover bid. In addition, the Board of Directors could authorize holders of a
series of Preferred Stock to vote as a class, either separately or with the
holders of the Common Stock, on any merger, sale or exchange of assets by the
Company or any other extraordinary corporate transactions. The ability of the
Board of Directors to take such actions might be considered as having an effect
of discouraging any attempt by another person or entity to acquire control of
the Company.
The registrar and transfer agent for the Company's Common Stock is
Registrar and Transfer Company.
LEGAL MATTERS
Certain legal matters in connection with this offering, including the
validity of the issuance of the shares of Common Stock offered hereby, will be
passed upon for the Company by Pryor Cashman Sherman & Flynn LLP, New York, New
York.
EXPERTS
The consolidated balance sheets of the Company as of November 30, 1997
and 1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for the three years ended November 30, 1997 appearing in
the Company's Annual Report on Form 10-K for the years ended November 30, 1997,
as amended, have been audited by Nussbaum Yates & Wolpow, P.C., independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference, which is based in part on the report of Blackman Kallick
Bartelstein, LLP. The financial statements referred to above are incorporated
herein by reference in reliance upon such reports given upon the authority of
such firms as experts in accounting and auditing.
<PAGE>
- --------------------------------------------------------------------------------
No dealer, sales representative, or other person has been authorized to
give any information or to make any representations in connection with this
offering other than those 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 or any Underwriter. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or that the information contained herein is correct as of any time
subsequent to the date hereof.
---------------
TABLE OF CONTENTS
Page
----
Available 2
Information....................
Incorporation of Certain
Documents by Reference...... 2
The 4
Company........................
Use of Proceeds................ 9
Selling 10
Shareholders...................
Plan of 12
Distribution...................
Description of Securities to be
Registered..................... 13
Legal Matters.................. 14
Experts........................ 15
<PAGE>
660,000 Shares
SIRCO INTERNATIONAL CORP.
Common Stock
---------------
PROSPECTUS
---------------
___________ , 1998
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
Estimated expenses to be paid by the Company in connection with the
issuance and distribution of the securities being registered are as follows:
Registration Fee................................. $ 775.50
Legal Fees and Expenses.......................... 9,000.00
Accounting Fees and Expenses..................... 5,000.00
Miscellaneous.................................... 1,224.50
------------
Total 16,000.00
ITEM 15. Indemnification of Directors and Officers
Reference is made to Sections 721 through 725 of the Business
Corporation Law of the State of New York (the "BCL"), which provides for
indemnification of directors and officers of New York corporations under certain
circumstances.
Section 722 of the BCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees, in connection with actions or proceedings, whether civil or
criminal (other than an action by or in the right of the corporation, a
"derivation action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to amounts paid in settlement and reasonable expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
actions, and the statute does not apply in respect of a threatened action, or a
pending action that is settled or otherwise disposed of, and requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Section 721 of the BCL
provides that Article 7 of the BCL is not exclusive of other indemnification
that may be granted by a corporation's certificate of incorporation,
disinterested director vote, shareholders vote, agreement or otherwise.
Article XII of the Registrant's by-laws requires the Registrant to
indemnify its officers and directors to the fullest extent permitted under the
BCL. Article XII of the Registrant's by-laws further provides that no director
of the Registrant shall be personally liable to the Registrant or its
shareholders for monetary damages for breach of fiduciary duty as a director,
except that no indemnification shall be made in respect of (1) a threatened
action, or a pending action which is settled or otherwise disposed of, or (2)
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the Registrant unless and only to the extent that the court in
<PAGE>
which such action or suit was brought or, if no action was brought, any court of
competent jurisdiction determines upon application that, in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such portion of the settlement and expenses as the court deems
proper.
Section 402(b) of the BCL provides that a corporation's certificate of
incorporation may include a provision that eliminates or limits the personal
liability of the corporation's directors to the corporation or its shareholders
for damages for any breach of a director's duty, provided that such provision
does not eliminate or limit (1) the liability of any director if a judgment or
other final adjudication adverse to the director establishes that the director's
acts or omissions were in bad faith or involved intentional misconduct or a
knowing violation of law or that the director personally gained a financial
profit or other advantage to which the director was not legally entitled or that
the director's acts violated Section 719 of the BCL, or (2) the liability of any
director for any act or omission prior to the adoption of a provision authorized
by Section 402(b) of the BCL. Article Sixth of the Registrant's Certificate of
Incorporation, as amended, provides that no director of the Registrant shall be
liable to the Registrant or its shareholders for any breach of duty in such
capacity except as provided in Section 402(b) of the BCL.
Any amendment to or repeal of the Registrant's Certificate of
Incorporation or by-laws shall not adversely affect any right or protection of a
director or officer of the Registrant for or with respect to any acts or
omissions of such director or officer occurring prior to such amendment or
repeal.
The Registrant maintains directors and officers insurance which,
subject to certain exclusions, insures the directors and officers of the
Registrant against certain losses which arise out of any neglect or breach of
duty (including, but not limited to, any error, misstatement, act, or omission)
by the directors or officers in the discharge of their duties, and insures the
Registrant against amounts which it has paid or may become obligated to pay as
indemnification to its directors and/or officers to cover such losses.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing, the Registrant has been informed that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits
Exhibit No. Description
----------- -----------
5 Opinion of Pryor Cashman Sherman & Flynn LLP
23.1 Consent of Pryor Cashman Sherman & Flynn LLP
(included as part of Exhibit 5.1)
23.2 Consent of Nussbaum Yates & Wolpow, P.C.
23.3 Consent of Blackman Kallick Bartelstein, LLP
24 Powers of Attorney (included in the signature page of
this Registration Statement)
<PAGE>
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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 (1)(i) and (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 with or furnished to the
Commission by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, 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 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, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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.
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described in Item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the 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 of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, State of New York on this 12th day of May,
1998.
SIRCO INTERNATIONAL CORP.
By: /s/ Joel Dupre
--------------
Joel Dupre
Chairman of the Board and
Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes Joel
Dupre, Eric M. Hellige and Paul H. Riss, and each of them singly, his true and
lawful attorneys-in-fact with full power to execute in the name of such person,
in the capacities stated below, and to file, such one or more amendments to this
Registration Statement as the Registrant deems appropriate, and generally to do
all such things in the name and on behalf of such person, in the capacities
stated below, to enable the Registrant to comply with the provisions of the
Securities Act of 1933, and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming the signature of such
person as may be signed by said attorneys-in-fact, or any one of them, to any
and all amendments to this Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Dated: May 12, 1998 /s/ Joel Dupre
--------------
(Joel Dupre)
Chairman of the Board and
Chief Executive Officer
Dated: May 12, 1998 /s/ Paul H. Riss
----------------
(Paul H. Riss)
Chief Financial Officer
and Treasurer
Dated: May 12, 1998 /s/ Eric M. Hellige
-------------------
(Eric M. Hellige)
Secretary
Dated: May 12, 1998 /s/ Eric Smith
--------------
(Eric Smith)
Director
Dated: May 12, 1998 /s/ Barrie Sommerfield
----------------------
(Barrie Sommerfield)
Director
EXHIBIT 5
May 12, 1998
Sirco International Corp.
24 Richmond Hill Avenue
Stamford, Connecticut 06901
Gentlemen:
We refer to the Registration Statement on Form S-3 (the "Registration
Statement"), to be filed by you with the Securities and Exchange Commission with
respect to the registration under the Securities Act of 1933, as amended (the
"Act"), of 660,000 shares of common stock, par value $.01 per share (the
"Shares"), of Sirco International Corp. (the "Company") for resale by the
Selling Shareholders (as defined in the Registration Statement).
We are qualified to practice law in the State of New York. We express
no opinion as to, and, for the purposes of the opinion set forth herein, we have
conducted no investigation of, and do not purport to be experts on, any laws
other than the laws of the State of New York and the federal laws of the United
States of America.
We have examined such documents as we considered necessary for the
purposes of this opinion. Based on such examination, it is our opinion that the
Shares have been duly authorized and are legally issued, fully-paid and
non-assessable under the laws of the State of New York (the state of
incorporation of the Company).
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/PRYOR CASHMAN SHERMAN & FLYNN LLP
------------------------------------
PRYOR CASHMAN SHERMAN & FLYNN LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related prospectus of Sirco
International Corp. for the registration of 660,000 shares of its common stock
and to the incorporation by reference therein of our report dated February 4,
1998 (except for the last paragraph of such report, as to which the date is
April 23, 1998 and for Note 15, as to which the date is February 27, 1998), with
respect to the consolidated financial statements and schedule of Sirco
International Corp. and subsidiaries included in its Annual Report (Form 10-K)
for the year ended November 30, 1997, as amended, filed with the Securities and
Exchange Commission.
/s/ Nussbaum Yates & Wolpow, P.C.
---------------------------------
NUSSBAUM YATES & WOLPOW, P.C.
Melville, New York
May 12, 1998
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related prospectus of Sirco
International Corp. for the registration of 660,000 shares of its common stock
and to the incorporation by reference therein of our report dated February 18,
1998, with respect to the consolidated financial statements and schedule of
Sirco International Corp. and subsidiaries included in its Annual Report (Form
10-K) for the year ended November 30, 1997, as amended, filed with the
Securities and Exchange Commission.
/s/Blackman Kallick Bartelstein, LLP
------------------------------------
BLACKMAN KALLICK BARTELSTEIN, LLP
Chicago, Illinois
May 12, 1998
