AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1998,
REGISTRATION NO. 333-______
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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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STEVEN MADDEN, LTD.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
NEW YORK 3140 13-3588231
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(STATE OR OTHER JURIS- (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
DICTION OF ORGANIZATION) CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
(ADDRESS OF PRINCIPAL PLACE OF BUSINESS OR
INTENDED PRINCIPAL PLACE OF BUSINESS)
STEVE MADDEN
PRESIDENT
52-16 BARNETT AVENUE
LONG ISLAND CITY, NY 11104
(718) 446-1800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
STEVEN F. WASSERMAN, ESQ.
ALAN N. FORMAN, ESQ.
BERLACK, ISRAELS & LIBERMAN LLP
120 WEST 45TH STREET
NEW YORK, NY 10036
(212) 704-0100
(212) 704-0196 (FAX)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: AS SOON AS REASONABLY
PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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, 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. [ ]
CONTINUED OVERLEAF
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED OFFERING PRICE PER OFFERING PRICE(1) REGISTRATION FEE
SECURITIES(1)
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<S> <C> <C> <C> <C>
Common Stock, par value $.0001 per 64,520 $11.00 $709,720.00 $209.37
share, held by Selling Securityholder
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Total Registration Fee $209.37
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</TABLE>
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(1) Established solely for purposes of calculating registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended (the
"Act").
(2) $209.37 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.
ii
<PAGE>
PROSPECTUS
STEVEN MADDEN, LTD.
64,520 Shares of Common Stock
---------------
This Prospectus relates to an aggregate offering of up to 64,520 shares
(the "Shares") of Common Stock, par value $.0001 per share (the "Common Stock"),
of Steven Madden, Ltd., a New York corporation (the "Company"), which may be
offered and sold from time to time by Robert Schmertz and Deborah Schmertz, or
their transferees (the "Selling Securityholder"). In connection with the
execution of an Employment Agreement between Shoe Biz, Inc., a wholly owned
subsidiary of the Company ("Shoe Biz"), and Mr. Schmertz, Shoe Biz loaned Mr.
Schmertz $300,000. The promissory note issued by Mr. Schmertz to Shoe Biz in
exchange for the loan is secured by the pledge of 36,232 Shares. Any brokerage
commissions or other similar expenses incurred pursuant to the sale of the
Shares will be borne by the Selling Securityholder. Sales of such securities or
the potential of such sales at any time may have an adverse effect on the market
prices of the securities offered hereby. See "Selling Securityholder" and "The
Offering".
The securities offered by this Prospectus may be sold from time to time
by the Selling Securityholder, or its transferees. No underwriting arrangements
have been entered into by the Selling Securityholder. The distribution of the
securities by the Selling Securityholder or its transferees may be effected in
one or more transactions that may take place on the over-the-counter market
including ordinary broker's transactions, privately negotiated transactions or
through sales to one or more market makers or dealers for resale of such
securities as principals at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the Selling Securityholder or its transferees in connection with sales
of the Company's securities.
The Selling Securityholder or its transferees, brokers, dealers or
underwriters and intermediaries that participate with the Selling Securityholder
in the distribution of the Company's securities may be deemed "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Act"), with
respect to the securities offered and any profits realized or commissions
received may be deemed underwriting compensation.
The Company's shares of Common Stock, Class A Warrants and Class B
Warrants were quoted since December 10, 1993 on The Nasdaq SmallCap Market under
the symbols SHOO, SHOOW and SHOOZ, respectively. In January 1996, the Class A
Warrants ceased trading as a result of the Company's call for redemption of such
securities. In January 1997, the Company's shares of Common Stock and Class B
Warrants commenced trading on The Nasdaq National Market. In December 1998, the
Class B Warrants will expire, and as a result, such securities will no longer
trade on the Nasdaq National Market. On June 26, 1998, the closing price of the
Common Stock and Class B Warrants were $11.25, and $5.69, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JULY __, 1998.
<PAGE>
AVAILABLE 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, proxy statements and other information
including annual and quarterly reports on Form 10-KSB and 10-QSB (the "1934 Act
Filings") with the Securities and Exchange Commission (the "Commission"). The
statements contained in this Prospectus with respect to the contents of any
agreement or other document referred to herein are not necessarily complete and,
in each instance, reference is made to a copy of such agreement or document as
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by reference to the provisions of the relevant
documents. Reports and other information filed by the Company can be inspected
and copied at the public reference facilities maintained at the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, DC 20549. Copies of such material
can be obtained upon written request addressed to the Commission, Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a web site on the Internet (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission through the
Electronic Data Gathering, Analysis and Retrieval System ("EDGAR"). This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. For further information reference is made to
the Registration Statement.
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents or portions thereof, as filed with the
Securities and Exchange Commission by the Company, are incorporated herein by
reference into this Prospectus:
(1) Proxy Statement on Schedule 14A dated April 22, 1998.
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
(3) Current Report on Form 8-K filed on February 13, 1998.
(4) Current Report on Form 8-K filed on January 20, 1998.
(5) Annual Report on Form 10-KSB for the year ended December 31, 1997.
(6) The description of the Common Stock, par value $.0001 per share
("Common Stock"), the Class A Redeemable Common Stock Purchase
Warrants ("Class A Warrants"), and the Class B Redeemable Common
Stock Purchase Warrants ("Class B Warrants"), of the Company
contained in the Company's registration statement filed under
Section 12 of the Exchange Act, including any amendment or report
filed for the purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act, subsequent to the effective date of this
Prospectus and prior to the filing of a post-effective amendment which indicate
that all securities offered have been sold or which registers all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be part thereof from the date of filing such documents. Any
statement contained 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 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.
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<PAGE>
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND
INVOLVES A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION AND SHOULD ONLY BE
PURCHASED BY INVESTORS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
PROSPECTIVE PURCHASERS, PRIOR TO MAKING AN INVESTMENT, SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISKS AND SPECULATIVE FACTORS, AS WELL AS OTHER INFORMATION SET
FORTH ELSEWHERE IN THIS PROSPECTUS, ASSOCIATED WITH THIS OFFERING, INCLUDING THE
INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS INCORPORATED BY REFERENCE
HEREIN.
STATEMENTS IN THIS PROSPECTUS THAT ARE NOT STATEMENTS OF HISTORICAL OR
CURRENT FACT CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER UNKNOWN
FACTORS THAT COULD CAUSE THE ACTUAL RESULTS OF THE COMPANY TO BE MATERIALLY
DIFFERENT FROM THE HISTORICAL RESULTS OR FROM ANY FUTURE RESULTS EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. IN ADDITION TO STATEMENTS THAT
EXPLICITLY DESCRIBE SUCH RISKS AND UNCERTAINTIES, READERS ARE URGED TO CONSIDER
STATEMENTS LABELED WITH THE TERMS "BELIEVES," "BELIEF," "EXPECTS," "INTENDS,"
"ANTICIPATES" OR "PLANS" TO BE UNCERTAIN AND FORWARD-LOOKING. THE FORWARD-
LOOKING STATEMENTS CONTAINED HEREIN ARE ALSO SUBJECT GENERALLY TO OTHER RISKS
AND UNCERTAINTIES THAT ARE DESCRIBED FROM TIME TO TIME IN THE COMPANY'S REPORTS
AND REGISTRATION STATEMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
AND CERTAIN OF THESE RISKS ARE SUMMARIZED BELOW.
1. DEPENDENCE ON KEY PERSONNEL. The Company is dependent, in
particular, upon the services of Steven Madden, its Chief Executive Officer,
President, Chairman of the Board and chief designer and Rhonda Brown, its Chief
Operating Officer. If Mr. Madden or Ms. Brown are unable to provide services to
the Company for whatever reason, the business would be adversely affected. The
Company therefore maintains a key person life insurance policy on Mr. Madden
with coverage in the amount of $10,000,000; however, the Company does not
maintain a policy on Ms. Brown. The Company has an employment contract with Mr.
Madden that expires on December 31, 2007, and an employment contract with Ms.
Brown that expires on June 30, 2001. In the event Mr. Madden is terminated for
other than cause or total disability, the Company will be required to pay Mr.
Madden's remaining salary under his 10-year contract (up to approximately
$2,000,000 depending on the timing of such termination), half of which must be
paid upon termination. Mr. Madden is also entitled during the term of the
contract to an annual $50,000 non-accountable expense account. In the event of a
change in control, Mr. Madden and Ms. Brown may choose to continue their
employment with the Company or terminate employment and receive the remaining
salary under their respective contracts.
Since Mr. Madden and Ms. Brown are involved in all aspects of the
Company's business, there can be no assurance that a suitable replacement for
either could be found if either were unable to perform services for the Company.
As a consequence, a loss of Mr. Madden, Ms. Brown or other key management
personnel could have a material adverse effect upon the Company's business,
results of operations and financial condition. In addition, the Company's
ability to market its products and to achieve profitability will depend, in
large part, on its ability to attract and retain qualified personnel.
Competition for such personnel is intense and there can be no assurance that the
Company will be able to attract and retain such personnel. The inability of the
Company to attract and retain such qualified personnel would have a material
adverse effect on the Company's business, financial condition and results of
operations.
3
<PAGE>
2. FASHION INDUSTRY RISKS. The success of the Company will depend in
significant part upon its ability to anticipate and respond to women's product
and fashion trends as well as to anticipate, gauge and react to changing
consumer demands in a timely manner. There can be no assurance that the
Company's products will correspond to the changes in taste and demand or that
the Company will be able to successfully market products which respond to such
trends. If the Company misjudges the market for its products, it may be faced
with significant excess inventories for some products and missed opportunities
with others. In addition, misjudgments in merchandise selection could adversely
affect the Company's image with its customers and weak sales and resulting
markdown requests from customers could have a material adverse effect on the
Company's business, results of operations and financial condition.
The industries in which the Company operates are cyclical, with
purchases tending to decline during recessionary periods when disposable income
is low. Purchases of contemporary shoes and accessories tend to decline during
recessionary periods and also may decline at other times. While the Company has
fared well in recent years in a difficult retail environment, there can be no
assurance that the Company will be able to maintain its historical rate of
growth in revenues and earnings, or remain profitable in the future. A recession
in the national or regional economies or uncertainties regarding future economic
prospects, among other things, could affect consumer spending habits and have a
material adverse effect on the Company's business results of operations and
financial condition.
In recent years, the retail industry has experienced consolidation and
other ownership changes. In addition, some of the Company's customers have
operated under the protection of the federal bankruptcy laws. In the future,
retailers in the United States and in foreign markets may consolidate, undergo
restructurings or reorganizations, or realign their affiliations, any of which
could decrease the number of stores that carry the Company's products or
increase the ownership concentration within the retail industry. While such
changes in the retail industry to date have not had a material adverse effect on
the Company's business or financial condition, there can be no assurance as to
the future effect of any such changes.
3. INVENTORY MANAGEMENT. The Company's ability to manage its
inventories properly is an important factor in its operations. Inventory
shortages can adversely affect the timing of shipments to customers and diminish
brand loyalty. Conversely, excess inventories can result in increased interest
costs as well as lower gross margins due to the necessity of providing discounts
to retailers. The inability of the Company to effectively manage its inventory
would have a material adverse effect on the Company's business, financial
condition and results of operations.
4. DEPENDENCE UPON CUSTOMERS AND RISKS RELATED TO EXTENDING CREDIT TO
CUSTOMERS. The Company's customers purchasing shoes consist principally of
department stores and specialty stores, including shoe boutiques. Certain of the
Company's department store customers, including some under common ownership,
account for significant portions of the Company's wholesale net sales.
Presently, the Company sells approximately fifty percent (50%) of its products
to department stores, including Federated Stores (Bloomingdales, Burdines,
Macy's and Bullocks), Dillards and Dayton Hudson and approximately fifty (50%)
percent to specialty stores, including shoe boutiques. As a result of the merger
between Federated Stores and R.H. Macy and Company, Federated Stores, the
Company's largest customer, accounts for approximately seventeen percent (17%)
of the Company's sales.
The Company believes that a substantial portion of sales of the
Company's licensed products by its domestic licensing partners are also made to
the Company's largest department store customers. The
4
<PAGE>
Company generally enters into a number of purchase order commitments with its
customers for each of its lines every season and does not enter into long-term
agreements with any of its customers. Therefore, a decision by Federated Stores
or any other significant customer, whether motivated by competitive conditions,
financial difficulties or otherwise, to decrease the amount of merchandise
purchased from the Company or its licensing partners, or to change its manner of
doing business could have a material adverse effect on the Company's business,
financial condition and results of operations.
The Company sells its products primarily to retail stores across the
United States and extends credit based on an evaluation of each customer's
financial condition, usually without requiring collateral. While various
retailers, including some of the Company's customers, have experienced financial
difficulties in the past few years which increased the risk of extending credit
to such retailers, the Company's losses due to bad debts have been limited.
However, financial difficulties of a customer could cause the Company to curtail
business with such customer or require the Company to assume more credit risk
relating to such customer's receivables.
5. IMPACT OF FOREIGN MANUFACTURERS. A significant portion of the
Company's products are currently sourced outside the United States through
arrangements with a number of foreign manufacturers in four different countries.
During fiscal 1997, approximately 95% of the Company's products were purchased
from sources outside the United States, including Mexico, China, Brazil and
Spain.
Risks inherent in foreign operations include work stoppages,
transportation delays and interruptions, changes in social, political and
economic conditions which could result in the disruption of trade from the
countries in which the Company's manufacturers or suppliers are located, the
imposition of additional regulations relating to imports, the imposition of
additional duties, taxes and other charges on imports, significant fluctuations
of the value of the dollar against foreign currencies, or restrictions on the
transfer of funds, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
does not believe that any such economic or political conditions will materially
affect the Company's ability to purchase products, since a variety of materials
and alternative sources exist. The Company cannot be certain, however, that it
will be able to identify such alternative sources without delay or without
greater cost to the Company, if ever. The Company's inability to identify and
secure alternative sources of supply in this situation would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's imported products are also subject to United States
customs duties which comprise a material portion of the cost of the merchandise.
The United States and the countries in which the Company's products are produced
or sold may, from time to time, impose new quotas, duties, tariffs, or other
restrictions, or may adversely adjust prevailing quota, duty or tariff levels,
any of which could have a material adverse effect on the Company's business,
financial condition and results of operations.
6. POSSIBLE ADVERSE IMPACT OF UNAFFILIATED MANUFACTURERS' INABILITY TO
MANUFACTURE IN A TIMELY MANNER, TO MEET QUALITY STANDARDS OR TO USE ACCEPTABLE
LABOR PRACTICES. As is common in the footwear industry, the Company contracts
for the manufacture of a majority of its products to its specifications through
foreign manufacturers. The Company does not own or operate any manufacturing
facilities and is therefore dependent upon independent third parties for the
manufacture of all of its products. The Company's products are manufactured to
its specifications by both domestic and international manufacturers. The
inability of a manufacturer to ship orders of the Company's products in a timely
manner or to meet the Company's quality standards could cause the Company to
miss the
5
<PAGE>
delivery date requirements of its customers for those items, which could result
in cancellation of orders, refusal to accept deliveries or a reduction in
purchase prices, any of which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Although the Company enters into a number of purchase order commitments
each season specifying a time frame for delivery, method of payment, design and
quality specifications and other standard industry provisions, the Company does
not have long-term contracts with any manufacturer. As a consequence, any of
these manufacturing relationships may be terminated, by either party, at any
time. Although the Company believes that other facilities are available for the
manufacture of the Company's products, both within and outside of the United
States, there can be no assurance that such facilities would be available to the
Company on an immediate basis, if at all, or that the costs charged to the
Company by such manufacturers will not be greater than those presently paid.
The Company requires its licensing partners and independent
manufacturers to operate in compliance with applicable laws and regulations.
While the Company promotes ethical business practices and the Company's staff
periodically visits and monitors the operations of its independent
manufacturers, the Company does not control such manufacturers or their labor
practices. The violation of labor or other laws by an independent manufacturer
of the Company or by one of the Company's licensing partners, or the divergence
of an independent manufacturer's or licensing partner's labor practices from
those generally accepted as ethical in the United States, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
7. INTENSE INDUSTRY COMPETITION. The fashionable footwear industry is
highly competitive and barriers to entry are low. The Company's competitors
include specialty companies as well as companies with diversified product lines.
The recent substantial growth in the sales of fashionable footwear has
encouraged the entry of many new competitors and increased competition from
established companies. Most of these competitors, including Kenneth Cole, Nine
West, Esprit, Reebok, Nike, Zodiac and Guess, have significantly greater
financial and other resources than the Company and there can be no assurance
that the Company will be able to compete successfully with other fashion
footwear companies. Increased competition could result in pricing pressures,
increased marketing expenditures and loss of market share, and could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company believes effective advertising and marketing, fashionable
styling, high quality and value are the most important competitive factors and
plans to employ these elements as it develops its products. The Company's
inability to effectively advertise and market its products could have a material
adverse effect on the Company's business, financial condition and results of
operations.
8. EXPANSION OF RETAIL BUSINESS. The Company's continued growth
depends to a significant degree on further developing the Steve Madden and David
Aaron brands, creating new product categories and businesses and operating
Company-owned stores on a profitable basis. The Company plans to open 10 stores
through June 1999, representing a significant increase in the number of stores
opened and operated in one fiscal year. The Company's recent and planned
expansion includes the opening of stores in new geographic markets. New markets
have in the past presented, and will continue to present, competitive and
merchandising challenges that are different from those faced by the Company in
its existing markets. There can be no assurance that the Company will be able to
open new stores, and if opened, that such new stores will be able to achieve
sales and profitability levels consistent with existing stores.
6
<PAGE>
The Company's retail expansion is dependent on a number of factors,
including the Company's ability to locate and obtain favorable store sites, the
performance of the Company's wholesale and retail operations, and the ability of
the Company to manage such expansion and hire and train personnel. Past
comparable store sales results may not be indicative of future results, and
there can be no assurance that the Company's comparable store sales results will
increase or not decrease in the future. In addition, there can be no assurance
that the Company's strategies to increase other sources of revenue, which may
include expansion of its licensing activities, will be successful or that the
Company's overall sales or profitability will increase or not be adversely
affected as a result of the implementation of such retail strategies.
The Company's growth has increased and will continue to increase demand
on the Company's managerial, operational and administrative resources. The
Company has recently invested significant resources in, among other things, its
management information systems and hiring and training new personnel. However,
in order to manage currently anticipated levels of future demand, the Company
may be required to, among other things, expand its distribution facilities,
establish relationships with new manufacturers to produce its products, and
continue to expand and improve its financial, management and operating systems.
There can be no assurance that the Company will be able to manage future growth
effectively and a failure to do so could have a material adverse effect on the
Company's business, financial condition and results of operation.
9. SEASONAL AND QUARTERLY FLUCTUATIONS. The Company's quarterly
results may fluctuate quarter to quarter as a result of the timing of holidays,
weather, the timing of larger shipments of footwear, market acceptance of the
Company's products, the mix, pricing and presentation of the products offered
and sold, the hiring and training of additional personnel, the timing of
inventory write downs, the cost of materials, the mix between wholesale and
licensing businesses, the incurrence of other operating costs and factors beyond
the Company's control, such as general economic conditions and actions of
competitors. In addition, the Company expects its sales and operating results
may fluctuate significantly with the opening of new retail stores, the amount of
revenue contributed by new stores, changes in comparable store sales and the
introduction of new products. Accordingly, the results of operations in any
quarter will not necessarily be indicative of the results that may be achieved
for a full fiscal year or any future quarter.
10. TRADEMARK AND SERVICEMARK PROTECTION. The Steve Madden trademark
has been registered in one International Class (Int'l Cl. 18 - leather goods,
hand bags, wallets) in the Untied States Patent and Trademark Office and the
Company has numerous applications for registration in other International
Classes (such as clothing, sunglasses, jewelry, cosmetics, and fragrances)
pending in the United States Patent and Trademark Office, the Company also has a
service mark registration in the United States Patent and Trademark Office for
the Steve Madden service mark in Int'l Cl. 35 for retail store services. Through
the Company's seven year long use of the Steve Madden trademark in the United
States in connection with shoes, the Company has also acquired common law
trademark right in the Steve Madden trademark. The Company also has pending
trademark applications for the Steve Madden trademark in numerous countries
around the world. There can be no assurance, however, that the Company will be
able to effectively obtain rights in the Steve Madden mark throughout the world.
The failure of the Company to protect such right from unlawful and improper
appropriation may have a material adverse effect on the Company's business,
financial condition and results of operation.
7
<PAGE>
The Company also owns a federal trademark registration in the United
States Patent and Trademark Office for the David Aaron trademark in Int'l
Classes 18 and 25 (leather goods and clothing, shoes) and has numerous
applications pending in the United States and around the world for the David
Aaron trademark and service mark. The Company believes that the David Aaron
trademark has a significant value and is important to the marketing of the
Company's products. The Company believes that its trademarks and other
proprietary rights are important to its success and its competitive position.
Accordingly, the Company devotes substantial resources to the establishment and
protection of its trademarks on a worldwide basis. Nevertheless, there can be no
assurance that the actions taken by the Company to establish and protect its
trademarks and other proprietary rights will be adequate to prevent imitation of
its products by others or to prevent others from seeking to block sales of the
Company's products as violative of the trademarks and proprietary rights of
others. Moreover, no assurance can be given that others will not assert rights
in, or ownership of, trademarks and other proprietary rights of the Company or
that the Company will be able to successfully resolve such conflicts. In
addition, the laws of certain foreign countries may not protect proprietary
rights to the same extent as do the laws of the United States. The failure of
the Company to establish and then protect such proprietary rights from unlawful
and improper appropriation could have a material adverse impact on the Company's
business, financial condition and results of operations.
11. FOREIGN CURRENCY FLUCTUATIONS. The Company generally purchases its
products in U.S. dollars. However, the Company sources substantially all of its
products overseas and, as such, the cost of these products may be affected by
changes in the value of the relevant currencies. Changes in currency exchange
rates may also affect the relative prices at which the Company and foreign
competitors sell their products in the same market. There can be no assurance
that foreign currency fluctuations will not have a material adverse impact on
the Company's business, financial condition and results of operations.
12. ABSENCE OF DIVIDENDS. The Company anticipates that all of its
earnings in the foreseeable future will be retained to finance the continued
growth and expansion of its business and has no current intention to pay cash
dividends.
13. OUTSTANDING WARRANTS AND OPTIONS. The Company currently has
outstanding approximately 1,854,943 Class B Warrants exercisable at $5.50 per
share and 150,000 Class C Warrants exercisable at $15.00 per share. The Class B
Warrants and Class C Warrants expire in December 1998. As of June 26, 1998, the
Company had outstanding options to purchase an aggregate of approximately
2,200,000 shares of Common Stock. Holders of such options and warrants are
likely to exercise them when, in all likelihood, the Company could obtain
additional capital on terms more favorable than those provided by the options.
Further, while its options and warrants are outstanding, they may adversely
affect the terms in which the Company could obtain additional capital.
8
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares by the Selling Securityholder.
SELLING SECURITYHOLDER
The Registration Statement of which this Prospectus is a part relates
to the offer and sale of 64,520 shares of Common Stock (the "Shares") by the
Selling Securityholder or its transferees. All of such shares of Common Stock
are expected to become tradable on or about the date of this Prospectus.
The following table sets forth the beneficial ownership of the
securities of the Company held by each person who is a Selling Securityholder
prior to this Offering and after this Offering, assuming all of the shares of
Common Stock owned by the Selling Securityholder are sold.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SHARES OF COMMON SHARES OF COMMON PERCENTAGE OF
STOCK PERCENTAGE OF COMMON STOCK COMMON STOCK
BENEFICIALLY STOCK BENEFICIALLY SHARES OF BENEFICIALLY BENEFICIALLY
OWNED BEFORE OWNED COMMON STOCK OWNED AFTER OWNED AFTER
NAME OFFERING BEFORE OFFERING OFFERED HEREBY OFFERING(1) OFFERING(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert Schmertz (2)(3) 32,260(4) .35% 32,260 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Deborah Schmertz(2) 32,260(5) .35% 32,260 0 0
- -----------------------------------------------------------------------------------------------------------------------------
Total 64,520 .7% 64,520 0 0
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes the sale of all of the Shares.
(2) Robert and Deborah Schmertz acquired the shares from Daniel Scott,
Inc., a New York corporation which was dissolved on June 29, 1998.
Robert and Deborah Schmertz are married and were the sole shareholders
of Daniel Scott, Inc. prior to its dissolution.
(3) Robert Schmertz is an employee of Shoe Biz, Inc., a wholly owned
subsidiary of the Company.
(4) Disclaims beneficial ownership of shares of Common Stock held by
Deborah Schmertz.
(5) Disclaims beneficial ownership of shares of Common Stock held by Robert
Schmertz.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Securityholder or its transferees.
The securities offered by this Prospectus may be sold from time to time
directly by the Selling Securityholder or its transferees, or to their
transferees. Alternatively, the Selling Securityholders or its transferees may
from time to time offer such securities through underwriters, brokers or agents.
No underwriting arrangements have been entered into by the Selling
Securityholder or its transferees. The distribution of the securities by the
Selling Securityholder or its transferees may be effected in one or
9
<PAGE>
more transactions that may take place on the over-the-counter market including
ordinary broker's transactions, privately negotiated transactions or through
sales to one or more market makers or dealers for resale of such securities as
principals at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholder or its transferees in connection with sales of the securities.
This offering is currently not being underwritten. However, the Selling
Securityholder or its transferees, brokers, dealers or underwriters and
intermediaries that participate with the Selling Securityholder or its
transferees may be deemed "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Act"), with respect to the securities offered and
any profits realized or commissions received may be deemed underwriting
compensation. It is anticipated that all the securities being offered hereby,
when sales thereof are made, will be made in one or more transaction (which may
involve one or more block transaction) through customary brokerage channels,
either through brokers acting as brokers or agents for the sellers, or through
market makers, dealers or underwriters acting as principals who may resell the
Common Stock on The Nasdaq National Market or the securities in privately
negotiated sales, or otherwise, or by a combination of such methods of offering.
Sales may be made at market prices prevailing at the time of the sales or at
negotiated prices.
At the time a particular offer of securities is made by or on behalf of
a Selling Securityholder or its transferees, to the extent required, a
prospectus will be distributed which will set forth the number of securities
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for securities purchased from the Selling Securityholder or its
transferees and any discounts, commissions or concessions allowed or reallowed
or paid to dealers, and the proposed selling price to the public.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares of Common Stock may not
simultaneously engage in market making activities with respect to the Common
Stock for a period of up to five days preceding such distribution. The Selling
Securityholder or its transferees will be subject to the applicable provisions
of the Exchange Act and the rules and regulations promulgated thereunder,
including without limitation Regulation M, which provisions may limit the timing
of purchases and sales by the Selling Securityholder or its transferees.
In order to comply with certain state securities laws, if applicable,
the Common Stock will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states, the Common Stock may not be sold
unless the Common Stock has been registered and qualified for sale in such
state, or unless an exemption from registration or qualification is available
and is obtained.
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon for
the Company by Berlack, Israels & Liberman LLP.
10
<PAGE>
EXPERTS
The consolidated financial statements of Steven Madden, Ltd. and
subsidiaries included in the Company's annual report on Form 10-KSB for the year
ended December 31, 1997, incorporated by reference in this Prospectus and the
Registration Statement have been audited by Richard A. Eisner & Company, LLP,
independent auditors, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the report of said firm given
upon their authority as experts in accounting and auditing.
11
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in this Prospectus and
if given or made, such information or representations must not be relied upon as
having been authorized by the Company or any Underwriter. 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. This Prospectus does not constitute an offer of
any securities other than the securities to which it relates or an offer to any
person in any jurisdiction in which such an offer would be unlawful.
-------------
TABLE OF CONTENTS
Page
----
Available Information................................... 2
Risk Factors............................................ 3
Use of Proceeds......................................... 9
Selling Securityholder.................................. 9
Plan of Distribution.................................... 9
Legal Matters........................................... 10
Experts................................................. 11
================================================================================
-------------
STEVEN MADDEN, LTD.
64,520 SHARES OF COMMON STOCK
-------------
PROSPECTUS
-------------
JULY __, 1998
================================================================================
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with this offering are as
follows:
SEC filing fee................................ $ 202.23
Legal fees and expenses*...................... $ 12,500.00
Accounting fees and expenses*................. $ 5,000.00
Blue Sky fees and expenses*................... $ --
Printing and engraving*....................... $ 500.00
Transfer Agent's and Registrar fees*.......... $ --
Miscellaneous expenses*....................... $ 797.77
-----------
Total......................................... $ 19,000.00
===========
* Estimated
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IV of the By-Laws of the Company ("By-Laws"), which is
set forth below in its entirety, provides for indemnification of
officers, directors, employees and agents substantially to the
extent permitted under the New York Business Corporation Law.
Article IV of the By-Laws provides as follows:
"ARTICLE IV"
INDEMNIFICATION
INDEMNIFICATION. The Corporation shall (a) indemnify any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation
as a director, officer or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense of settlement of
such action or suit, (b) indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Corporation), by reason of the fact that he is or was
a director or officer of the Corporation, or served at the request
of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, for expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with any such action, suit or
proceeding, in each case to the fullest extent permissible under
the indemnification provisions of Section 722 of the New York
Business Corporation Law or any successor
<PAGE>
statute and (c) advance reasonable and necessary expenses in
connection with such actions or suits, and not seek reimbursement
of such expenses unless there is a specific determination that the
officer or director is not entitled to such indemnification. The
foregoing right of indemnification shall in no way be exclusive of
any other rights of indemnification to which any such persons may
be entitled, under any by-law, agreement, vote of shareholders or
disinterested directors or otherwise, and shall inure to the
benefit of the heirs, executors and administrators of such a
person.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
controlling persons of the Registrant pursuant to the provisions
referred to in Item 15 of this Registration Statement 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 Securities Act and is, therefore,
unenforceable.
ITEM 16. EXHIBITS.
Exhibits
--------
3.01* Certificate of Incorporation of the Company.
3.02* By-Laws of the Company. (Incorporated by reference to
the Company's Registration Statement on Form S-8,
File No. 33-8810)
4.01* Specimen Certificate for shares of Common Stock.
5.01 Legal Opinion of Berlack, Israels & Liberman LLP.
10.25 Asset Purchase Agreement by and among Daniel Scott,
Inc., Steven Madden Outlets, Inc., Steven Madden,
Ltd. and Robert Schmertz.
23.01 Consent of Richard A. Eisner & Company, LLP
23.02 Consent of Berlack, Israels & Liberman LLP (included
in Exhibit 5.01).
* Previously filed with and incorporated hereby with reference
to the Company's Registration Statement on Form SB-2
(No.33-67162-NY, as amended, declared effective on December
10, 1994.)
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING
The undersigned registrant will:
1. File, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:
14
<PAGE>
(i) Include any prospectus required by Section 10(a)(3) of
the Act;
(ii) Reflect in the prospectus any facts or events which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement;
(iii) Include any additional or changed material information
on the plan of distribution;
2. For determining liability under the Securities Act, treat
each such post-effective amendment as a new registration statement
of the securities offered, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering.
3. File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(c) INDEMNIFICATION
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
controlling persons of the Registrant pursuant to the provisions
referred to 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 Securities 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.
(d) RULE 430A
The undersigned Registrant will:
(1) For determining any liability under the Securities Act,
treat the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in the form of a prospectus filed by the Company under
Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of
this Registration Statement as of the time the Commission declared
it effective.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form of
prospectus as a new Registration Statement for the securities
offered in the Registration Statement, and the offering of the
securities at that time shall be deemed as the initial bona fide
offering of those securities.
15
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, as amended,
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 Long Island City, New York, on the 10th day of July, 1998.
STEVEN MADDEN, LTD
By: /s/ STEVEN MADDEN
-------------------------------------
Steven Madden
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendments thereto has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ STEVEN MADDEN Chairman of the Board, President July 10, 1998
- ------------------------ and Chief Executive Officer
Steven Madden
/s/ RHONDA BROWN Chief Operating Officer July 10, 1998
- ------------------------ and Director
Rhonda Brown
/s/ ARVIND DHARIA Chief Financial Officer July 10, 1998
- ------------------------ and Director
Arvind Dharia
/s/ JOHN BASILE Director of Operations July 10, 1998
- ------------------------ and Director
John Basile
/s/ JOHN L. MADDEN Director July 10, 1998
- ------------------------
John L. Madden
/s/ LES WAGNER Director July 10, 1998
- ------------------------
Les Wagner
/s/ PETER MIGLIORINI Director July 10, 1998
- ------------------------
Peter Migliorini
/s/ CHARLES KOPPELMAN Director July 10, 1998
- ------------------------
Charles Koppelman
EXHIBIT 5.01
[LETTERHEAD OF BERLACK, ISRAELS & LIBERMAN LLP]
July 10, 1998
Steven Madden, Ltd.
52-16 Barnett Avenue
Long Island City, NY 11105
Ladies and Gentlemen:
We have acted as counsel for Steven Madden, Ltd., a New York
corporation ("Company"), in connection with a Registration Statement on Form S-3
("Registration Statement") being filed contemporaneously herewith by the Company
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), covering 64,520 shares (the "Shares") of the
Company's common stock, par value $.0001 per share, on behalf of certain selling
securityholders.
In that connection, we have examined the Certificate of Incorporation,
as amended, and the By-Laws of the Company, the Registration Statement,
corporate proceedings of the Company relating to the issuance of the Common
Stock and such other instruments and documents as we have deemed relevant under
the circumstances.
In making the aforesaid examinations, we have assumed the genuineness
of all signatures and the conformity to original documents of all copies
furnished to us as original or photostat copies. We have also assumed that the
corporate records of the Company include all corporate proceedings taken by the
Company to date.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized, validly issued and are fully paid and
nonassessable.
We hereby consent to the use of this opinion as herein set forth as an
exhibit to the Registration Statement.
Very truly yours,
/s/ BERLACK, ISRAELS & LIBERMAN LLP
---------------------------------------
Berlack, Israels & Liberman Llp
EXHIBIT 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-3 of our report dated February 6, 1998 on the financial
statements of Steven Madden, Ltd. included in the 1997 Annual Report on Form
10-KSB. We also consent to the reference to our firm under the caption "Experts"
in the prospectus.
Richard A. Eisner & Company, LLP
New York, New York
July 15, 1998
