As filed with the Securities and Exchange Commission on September 6, 1996
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
HIRSCH INTERNATIONAL CORP.
(Exact name of Registrant as specified in its charter)
Delaware 11-2230715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
200 Wireless Boulevard
Hauppauge, New York 11788
(516) 436-7100
(Address, including zip code, and telephone
number, including area code, of
Registrant's principal executive offices)
Henry Arnberg
President
Hirsch International Corp.
200 Wireless Boulevard
Hauppauge, New York 11788
(516) 436-7100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Raymond S. Evans, Esq.
Ruskin, Moscou, Evans & Faltischek, P.C.
170 Old Country Road
Mineola, New York 11501
(516) 663-6500
(516) 663-6641 (Facsimile)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Number of shares Proposed maximum Proposed maximum
Title of each class of securities to be offering price aggregate offering Amount of
to be registered registered per share (1) price (1) registration fee
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value issuable upon 205,078 $15.63 $3,205,369 $1,105
exercise of warrants (2)
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Common Stock Purchase Warrants 205,078 $.0005 $100 (3)
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee and
based on the average bid and asked price as of September 3, 1996, pursuant to
Rule 457(c).
(2) Pursuant to Rule 416, there are also being registered an indeterminate
number of shares of the Registrant's Common Stock which may become issuable
pursuant to the anti-dilution provisions of the Warrants.
(3) No fee due pursuant to Rule 457(g).
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 Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
PRELIMINARY PROSPECTUS DATED SEPTEMBER 6, 1996, SUBJECT TO COMPLETION
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PROSPECTUS
HIRSCH INTERNATIONAL CORP.
205,078 Shares of Class A Common Stock
205,078 Class A Common Stock Purchase Warrants
This Prospectus relates to the offer by certain securityholders named
herein (the "Selling Securityholders") for sale to the public from time to time
of (i) 205,078 Common Stock Purchase Warrants (the "Warrants") exercisable for
the purchase of the Class A Common Stock of Hirsch International Corp. (the
"Company"); and (ii) 205,078 shares of the Company's Class A Common Stock (the
"Common Stock") issuable upon the exercise of the Warrants. The Warrants were
issued to the Representative of the Underwriters (the "Representative") and
certain officers of the Representative in connection with the Company's initial
public offering completed on February 17, 1994 (the "IPO"). Each Warrant
entitles the holder to purchase one share of Common Stock at an exercise price
of $5.56 per share. The shares of Common Stock being offered hereby are referred
to herein as the "Shares." The Company is registering the Shares and the
Warrants pursuant to contractual obligations incurred by the Company in
connection with the original issuance of the Warrants. Except for the exercise
price received by the Company upon exercise of such of the Warrants as may be
exercised, the Company will not receive any proceeds from the sale of the Shares
or the Warrants offered hereby. See "Selling Securityholders" and "Use of
Proceeds."
The Common Stock is traded on The Nasdaq Stock Market under the symbol
"HRSH." As of September 3, 1996, the last sale price for the Common Stock as
reported on The Nasdaq Stock Market was $16.00. There is no market for the
Warrants which are held of record by 4 persons and it is unlikely that a trading
market will arise as a result of this offering.
Any or all of the Shares and Warrants offered hereby may be sold, from time
to time, to purchasers directly by the Selling Securityholders. The Selling
Securityholders and any underwriters, dealers or agents that participate in the
distribution of Shares may be deemed to be underwriters under the Act, and any
profit on the sale of the Shares or Warrants by them and any discounts,
commissions or concessions received by them may be deemed to be underwriting
discounts and commissions under the Act. The Shares and the Warrants may be
sold, from time to time, in one or more transactions at a fixed offering price,
which may be changed, or at varying prices determined at the time of sale or at
negotiated prices. The distribution of securities by the Selling Securityholders
may be effected in one or more transactions on The Nasdaq Stock Market or
otherwise. Usual and customary or specifically
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negotiated brokerage fees, discounts and commissions may be paid by the Selling
Securityholders in connection with such sales of securities.
The Company has informed the Selling Securityholders that the
anti-manipulation provisions of Rules 10b-6 and 10b-7 under the Securities
Exchange Act of 1934 (the "Exchange Act") may apply to their sales of the Shares
and Warrants. The Company also has advised the Selling Securityholders of the
requirements for delivery of this Prospectus in connection with any sale of the
Shares or Warrants.
--------------------
See "Risk Factors" on Page 7 for a discussion of certain factors that
should be considered by prospective purchasers of the Shares offered hereby.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________________, 1996
No dealer, sales representative or other person has been authorized to give
any information or to make any representation 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. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the Shares and the Warrants offered hereby by
anyone in any jurisdiction in which such an offer or solicitation is not
authorized, or in which the persons making such an offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such an
offer or solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that the
information contained herein is correct as of any date subsequent to its date.
--------------------
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Act"), with respect to the Shares and Warrants being
offered hereby. This Prospectus does not contain all the information set forth
or incorporated by reference in such Registration Statement and the exhibits and
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<PAGE>
schedules relating thereto, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Shares and Warrants offered by
this Prospectus, reference is made to such Registration Statement and exhibits
and schedules thereto filed as part thereof, which may be examined without
charge at the offices of the Commission and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material may be obtained at prescribed rates by mail
from the Public Reference Section of the Commission. The Registration Statement,
including the exhibits and schedules thereto, can also be accessed through the
EDGAR terminals in the Commission's Public Interest Rooms in Washington, Chicago
and New York or through the World Wide Web at http://www.sec.gov. Statements
contained in this Prospectus or in any document incorporated by reference in
this Prospectus as to the contents of any contract or other document referred to
are not necessarily complete. 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.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, NW, Washington, D.C. 20549. The Company's Common
Stock is quoted on the NASDAQ Stock Market and reports, proxy statements and
other information concerning the Company may also be inspected and copied at the
offices of the NASDAQ Stock Market, Inc., NASDAQ Operations, 1735 K Street, NW,
Washington, D.C. 20549.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the Commission
are hereby incorporated by reference in this Registration Statement:
(1) The Company's Annual Report on Form 10-K for the year ended January 31,
1996;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended April
30, 1996;
(3) The Company's Current Report on Form 8-K filed with the Commission on
June 19, 1996, as amended by the Company's Form 8-K/A filed with the Commission
on August 16, 1996;
(4) The Company's Report on Form 10-C reflecting the increase in the number
of shares of Common Stock outstanding as a result of a 5-for-4 stock split on
July 22, 1996 and the amendment to the Company's Stock Option Plan;
(5) The Company's Proxy Statement dated May 23, 1996;
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(6) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A (No. 0-23434), as filed with the
Commission on February 14, 1994.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which removes from
registration all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of 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 Registration Statement
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 Registration Statement.
The Company undertakes to provide without charge to each person to whom a
Prospectus is delivered, upon oral or written request of such person, a copy of
any document that has been incorporated in this Prospectus by reference.
Requests for such documents should be directed to the Company at its offices
located at 200 Wireless Boulevard, Hauppauge, New York 11788 (Telephone Number
(516) 436-7100), Attention: Secretary.
THE COMPANY
Hirsch International Corp. (the "Company") is a single source provider to
the embroidery industry of a complete line of technologically advanced
singlehead and multihead embroidery equipment, comprehensive customer service,
support and training, and diversified value added products, including (i)
leading edge proprietary application software; (ii) equipment leasing programs;
and (iii) an expanding line of embroidery supplies and accessories. The Company
believes that its breadth of products and services is unmatched and will enable
it to continue to strengthen its competitive position in the marketplace. The
Company's revenues have increased from $72.3 million in fiscal 1995 to $91
million in fiscal 1996. Earnings per share have increased from $.66 to $.87 for
the same periods. For the first six months of fiscal 1996 revenues were $43.6
million compared to revenues of $55.6 million for the comparable period of
fiscal 1997. Earnings per share increased from $.42 to $.53 for the same
periods.
The embroidery equipment and value added products sold by the Company are
widely used by contract embroiderers, large and small manufacturers of apparel
and fashion accessories, retail stores, and embroidery entrepreneurs servicing
specialized niche markets. The Company's customers include large apparel
manufacturers, such as Wearguard, Osh Kosh B'gosh, the William Carter Company,
Gerber Childrenswear and 5 B's, rapidly growing specialty apparel manufacturers,
such as Champion Products, Cintas, Fruit of the Loom, Logo Athletic and Russell
Corporation, manufacturers of caps, towels, linens and home furnishings, and
embroidery entrepreneurs selling customized specialty products to, among others,
fraternal organizations, school systems, sports leagues, specialty retailers and
promotional advertisers.
Growth in the Company's sales of singlehead and multihead machines
continues to be driven by rapid technological advances in software and hardware.
These advances have reduced customers' embroidery production costs, increased
customers' profit margins and created new embroidery
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applications and markets, including the emergence of embroidery entrepreneurs as
a growing segment of the marketplace. The Company collaborates with its
suppliers in connection with their development of new embroidery equipment, and
develops application software to enhance the efficiency of producing embroidered
designs. One such recently introduced embroidery machine allows garments and
caps to be decorated with multiple colored chenille embroidery. The Company has
also introduced a proprietary 32-bit application software line which operates in
the Microsoft Windows(R) 95 environment.
The Company has the exclusive right to sell new embroidery machines
manufactured by Tajima Industries Ltd. ("Tajima") in the United States east of
the Mississippi River and in the states of Kansas and Missouri. Tajima is one of
the world's leading manufacturers of embroidery machines. In addition, the
Company sells new embroidery machines manufactured by Brother Industries Ltd.
("Brother") in that territory as well as in the states of Illinois, Iowa,
Minnesota and Wisconsin.
On June 7, 1996 Hirsch International Corp. acquired all of the outstanding
capital stock of Sewing Machine Exchange, Inc. ("SMX") for $8.69 million. The
purchase price was payable by delivery to each of the two shareholders of SMX of
a promissory note in the principal amount of $4.25 million and by delivery of an
aggregate of 9,375 shares of the Company's Class A Common Stock. Pursuant to the
terms of the promissory notes, the Company was required to make a principal
payment on each note in the amount of $2.5 million on June 12, 1996 with the
balance of each note ($1.75 million) payable in 60 equal monthly installments of
principal and interest beginning July 7, 1996.
In order to fund the acquisition of SMX and to repay approximately $2.5
million of SMX debt, the Company entered into a $7.5 million term loan agreement
with a bank.
As a result of the acquisition of SMX, the Company is now also the
exclusive distributor in the states of Illinois, Iowa, Minnesota, Wisconsin,
North and South Dakota and Nebraska of single and multihead embroidery machines
manufactured by Tajima. In additional, SMX sells embroidery equipment
manufactured by Melco Embroidery Systems. The Tajima and Brother territories,
including the additional states acquired as a result of the SMX acquisition, are
collectively referred to herein as the "New Equipment Territory."
The Company's value added products are sold within and outside the New
Equipment Territory. These products include software developed by the Company's
subsidiary, Pulse Microsystems Ltd. ("Pulse"), lease financing programs offered
through the Company's subsidiary, HAPL Leasing Co., Inc. ("HAPL Leasing"), and
embroidery supplies offered through the Company's Embroidery Supply Warehouse
division ("ESW"). The Company also sells used embroidery machines outside the
New Equipment Territory.
The Company's strategy is to continue to enhance revenue and profitability
by (i) increasing the overall size of the embroidery equipment market and the
Company's market share; (ii) increasing market penetration of its value added
products within and outside the New Equipment Territory; and (iii) improving and
introducing proprietary value added products developed internally or obtained by
strategic acquisition.
The Company's principal executive offices are located at 200 Wireless
Boulevard, Hauppauge, New York 11788, and its telephone number is (516)
436-7100.
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating an
investment in the Shares or Warrants offered hereby.
Dependence on Suppliers
For the six months ended July 31, 1996, approximately 76.6% of the
Company's revenues resulted from the sale or lease of embroidery equipment
supplied by Tajima. Although the Company's exclusive distributorship agreement
with Tajima (the "Tajima Agreement") has an expiration date of February 20,
2011, it may be terminated at any time on two years advance written notice.
Management believes that the possibility of termination by Tajima is remote
because Tajima sells only through its exclusive distributors, the Company is
Tajima's largest distributor in the world and the Company has been distributing
Tajima embroidery equipment for approximately 20 years. The Company believes
that if it were to lose Tajima as a supplier it would be able to secure
alternative sources of supply within a reasonable period of time. However, there
can be no assurance that there would not be a material adverse effect on the
Company if it were to lose Tajima as a supplier.
For the six months ended July 31, 1996, approximately 12.7% of the
Company's revenues resulted from the sale of embroidery equipment supplied by
Brother. Currently, there is no written agreement between the Company and
Brother and there can be no assurance that Brother will remain a source of
supply for the Company. If the Company were to lose Brother as a supplier, it
would continue to sell comparable embroidery machines manufactured by Tajima.
However, the loss of Brother as a supplier would increase the Company's
dependence on Tajima.
The Company maintains inventory representing one months' sales, and its
ordering cycle is approximately three to four months. The interruption of supply
resulting from production or other problems could have a material adverse effect
on the Company's inventory levels and revenues. The Company has purchased
business interruption insurance covering profits up to $6,000,000 lost due to
the interruption of supply from Tajima or Brother or for any reason other than
earthquake or flood.
Risk of Leasing Operations
HAPL Leasing reduces its leasing risk by selling substantially all of its
leases to financial institutions on a non-recourse basis. To date, HAPL has sold
approximately $66.2 million, or 89.6% of its leases to third-party financial
institutions on a non-recourse basis. In some cases, third party funding sources
condition their purchase of leases on the establishment of a payment history.
HAPL Leasing also retains selected leases for which it has not obtained a
purchase commitment from its funding sources. In each case where a lease is
retained, HAPL Leasing applies its policies and procedures along with its
knowledge of the industry to determine whether to enter into the lease,
including an evaluation of the purchaser's business prospects and the
creditworthiness of the principals. HAPL Leasing sells these leases if financing
becomes available at a later date. The leases retained create the risk of
nonpayment by lessees, including the risk that foreclosure could be hampered by
bankruptcy or other legal proceedings, and the risk that foreclosed equipment
cannot be released or sold due to market conditions or the physical condition of
the equipment. In addition, the Company and HAPL Leasing would continue to be
obligated to repay funds borrowed, if any, to finance purchases of the leased
equipment.
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The operations of HAPL Leasing are interest rate sensitive. If interest
rates rise, there can be no assurance that profit margins can be maintained, and
the operations of HAPL Leasing could be adversely effected.
HAPL Leasing's strategy is to enter into leases that qualify as sales-type
leases for which revenue is recognized immediately in an amount equal to the
present value of minimum lease payments. However, high interest rates, weakness
of the U.S. dollar, poor general economic conditions, embroidery market
conditions, or other factors, could result in HAPL Leasing having to enter into
operating leases. Unlike sales-type leases, revenue relating to operating leases
is recognized over the term of the lease, resulting in deferral of revenue
recognition. HAPL Leasing does not currently intend to enter into operating
leases.
Risk of Technological Change
The Company's products, in particular, the embroidery machines produced by
Tajima and Brother and proprietary application software developed by Pulse, are
subject to technological advances and new product introductions. Current
competitors or new market entrants could introduce products with features that
render products sold by the Company and products developed by Tajima, Brother
and/or Pulse less marketable. The Company's future success will depend, to a
certain extent, on the ability of Tajima, Brother and Pulse to adapt to
technological change and address market needs. There can be no assurance that
Tajima, Brother or Pulse will be able to keep pace with technological change or
the demands of the marketplace.
The Company's software products, like software programs generally, may
contain undetected errors or bugs when introduced, or as new versions are
released. While the Company's current products have not experienced post-release
software errors that have had a significant financial or operational impact on
the Company, there can be no assurance that such problems will not occur in the
future, particularly as the Company's software programs continue to become more
complex and sophisticated. Such defective software may result in loss of or
delay in market acceptance of the Company's software products, warranty
liability or product recalls.
While the Company has been granted patent and copyright protections, it
does not believe that the ownership of such patents or copyrights is a
significant factor in its business or that its success is materially dependent
upon the ownership, validity or enforceability of such patents or copyrights.
Existing intellectual property laws afford limited protection of patents and
copyrights and unauthorized parties may obtain and use information that the
Company regards as proprietary. The Company intends to enforce its intellectual
property rights, but there can be no assurance that it will be successful in
doing so.
Competition
The Company competes with at least one other significant distributor and
one major equipment manufacturer that sell directly into the New Equipment
Territory. Other distributors and original equipment manufacturers could
increase their efforts to distribute products into the Company's markets. In
addition, the Company's customers are subject to competition from importers of
embroidered products, which could adversely effect the Company's operations.
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Dependence on Key Personnel
The Company's continued success will depend to a significant extent upon
the abilities and continued efforts of Henry Arnberg, Chairman of the Board,
President and Chief Executive Officer of the Company, Paul Levine, Executive
Vice President, Chief Operating Officer, Secretary and Director of the Company
and Kenneth Shifrin, Vice President-Finance, Chief Financial Officer and
Assistant Secretary of the Company. Pulse's continued success will depend to a
significant extent upon the abilities and continued efforts of Tas Tsonis, a
Director and Vice President of the Company and President of Pulse and Brian
Goldberg, Vice President of the Company and Executive Vice President of Pulse.
The loss of their services or the services of other key management personnel
could have a material adverse effect upon the Company. In order to manage its
planned growth, the Company will need to employ additional qualified senior
management personnel. There can be no assurance that the Company will be able to
attract and retain such personnel.
Control By Principal Stockholders; Anti-Takeover Provisions
Henry Arnberg, the Chairman of the Board, President and Chief Executive
Officer of the Company, and Paul Levine, a director, Executive Vice President,
Chief Operating Officer and Secretary of the Company, beneficially own in the
aggregate 2,657,249 shares of the Company's Class B Common Stock. The Company's
certificate of incorporation provides that as long as the number of outstanding
shares of Class B Common Stock equals or exceeds 400,000, the holders thereof
will be able to elect two-thirds of the Company's Board of Directors.
Accordingly, Messrs. Arnberg and Levine will be able to dispose of a significant
amount of their Class B Common Stock while retaining the ability to elect
two-thirds of the Company's Board of Directors. Because of such ownership and
their positions with the Company, Messrs. Arnberg and Levine will be able to
continue to control management policy and make decisions relating to the conduct
of the business of the Company, except as otherwise provided in the Delaware
General Corporation Law. The loss of control of Messrs. Arnberg and Levine could
result in termination of the Tajima Agreement. In addition, the Board of
Directors without further action by stockholders can issue preferred stock with
provisions that could make it more difficult to acquire a controlling interest
in the Company. Further, Section 203 of the Delaware General Corporation Law
contains provisions that may have the effect of discouraging unsolicited
takeover bids from third parties.
USE OF PROCEEDS
Other than the exercise price of such of the Warrants as may be exercised,
the Company will not receive any of the proceeds from the sale of the Shares or
the Warrants offered hereby. The Company will pay the costs of this offering,
which are estimated to be $24,605. Holders of the Warrants are not obligated to
exercise their Warrants, and there can be no assurance that such holders will
choose to exercise all or any of such Warrants. The gross proceeds to the
Company in the event that all of the Warrants are exercised would be $1,140,234.
The Company intends to apply the net proceeds it receives from the exercise
of the Warrants, to the extent any are exercised, to augment its working capital
and for general corporate purposes.
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SELLING SECURITYHOLDERS
The following table sets forth certain information with respect to persons
as to which the Company is registering the Shares for resale to the public and
assumes the exercise of all of the Warrants and the sale of all of the Shares.
See "Plan of Distribution."
<TABLE>
<CAPTION>
Common Stock
Common Stock Beneficial
Beneficial Maximum Ownership After
Ownership Prior Amount Offering if
Stock to Offering (1) to be Sold Maximum is Sold
Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C>
Janney Montgomery Scott Inc. 109,922 1.4% 109,922 0 *
Herbert M. Gardner 61,001 (2) * 42,042 18,959 *
William J. Barrett 62,548 (3) * 42,042 20,506 *
Ira M. Cotler 14,182 (4) * 11,074 3,108 *
</TABLE>
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* Less than 1%
(1) Includes the Shares underlying the Warrants.
(2) Includes 8,202 shares held in his retirement account. Also includes
1,640 shares owned by his wife as to which he disclaims beneficial ownership.
Includes options to purchase 9,117 shares of Class A Common Stock. Does not
include options to purchase 9,638 shares of Class A Common Stock not exercisable
within sixty (60) days.
(3) Includes 2,460 shares owned by his wife as to which he disclaims
beneficial ownership.
(4) Includes 1,640 shares of Class A common Stock owned jointly with his
children.
Pursuant to the terms of the Warrants, the Company has agreed, upon the
request of the Selling Securityholders, to register the Warrants and the Shares
underlying the Warrants under the Securities Act of 1933 and to include such
Shares and Warrants in any appropriate registration statement which is filed by
the Company during that period. The Company has agreed to pay all registration
expenses in connection with any requested registration, except that the Selling
Securityholders will pay any fees and expenses of counsel for the Selling
Securityholders. The Company has agreed to indemnify the Selling Securityholders
against certain liabilities in respect of this offering, including liabilities
under the Act.
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PLAN OF DISTRIBUTION
Any or all of the Shares and Warrants offered hereby may be sold, from time
to time, to purchasers directly by the Selling Securityholders. The Selling
Securityholders and any underwriters, dealers or agents that participate in the
distribution of Shares may be deemed to be underwriters under the Act, and any
profit on the sale of the Shares or Warrants by them and any discounts,
commissions or concessions received by them may be deemed to be underwriting
discounts and commissions under the Act. The Shares and the Warrants may be
sold, from time to time, in one or more transactions at a fixed offering price,
which may be changed, or at varying prices determined at the time of sale or at
negotiated prices. The distribution of securities by the Selling Securityholders
may be effected in one or more transactions on The Nasdaq Stock Market or
otherwise. Usual and customary or specifically negotiated brokerage fees,
discounts and commissions may be paid by the Selling Securityholders in
connection with such sales of securities.
Other than the exercise price of such of the Warrants as may be exercised,
the Company will not receive any of the proceeds from the sale by the Selling
Securityholders of the Shares offered hereby. All of the filing fees and the
expenses of this Registration Statement will be borne in full by the Company,
other than any fees or expenses of counsel to the Selling Securityholders and,
to the extent that the Selling Securityholders retain an underwriter with
respect to such registration, underwriting fees, discounts and commissions
relating to this offering.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to the Shares for a period of two business days
prior to the commencement of such distribution. In addition and without limiting
the foregoing, the Selling Securityholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Rules 10b-6 and 10b-7, which provisions may limit
the timing of purchases and sales of the Shares by the Selling Securityholders.
In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdiction only through registered or licensed
brokers or dealers. In certain states the Shares may not be sold unless the
securities have been registered or qualified for sale in such state, or unless
an exemption from registration or qualification is available and is obtained.
In addition to sales pursuant to the Registration Statement of which this
Prospectus is a part, the Shares offered hereby may be sold pursuant to Rules
144, 144A or 904 under the Securities Act provided the requirements of such
rules, including, without limitation, the holding period and the manner of sale
requirements are met.
LEGAL MATTERS
The validity and issuance of the Shares offered hereby will be passed upon
for the Company and the Selling Securityholders by Ruskin, Moscou, Evans &
Faltischek, P.C., Mineola, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended January 31, 1996
have been audited by Deloitte & Touche LLP,
11
<PAGE>
independent auditors, as stated in their report, which is incorporated herein by
reference, and has been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Warrants provide for reciprocal indemnification and such provisions are
incorporated by reference herein.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provision or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
12
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses payable in connection
with the sale and distribution of the securities being registered, all of which
will be paid by the Company.
Total
SEC registration fee................................................ $ 1,105
Legal fees and expenses............................................. 12,500
Accounting fees and expenses........................................ 4,000
Blue Sky fees and expenses.......................................... 7,000
Total.......................................................... $24,605
=======
Item 15. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
provides for the indemnification of officers and directors under certain
circumstances against expenses incurred in successfully defending against a
claim and authorizes Delaware corporations to indemnify their officers and
directors under certain circumstances against expenses and liabilities incurred
in legal proceedings involving such persons because of their being or having
been an officer or director.
Section 102(b) of the Delaware General Corporation Law permits a
corporation, by so providing in its certificate of incorporation, to eliminate
or limit director's liability to the corporation and its stockholders for
monetary damages arising out of certain alleged breaches of their fiduciary
duty. Section 102(b)(7) provides that no such limitation of liability may affect
a director's liability with respect to any of the following: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts or
omissions not made in good faith or which involve intentional misconduct of
knowing violations of law; (iii) liability for dividends paid or stock
repurchased or redeemed in violation of the Delaware General Corporation Law; or
(iv) any transaction from which the director derived an improper personal
benefit. Section 102(b)(7) does not authorize any limitation on the ability of
the corporation or its stockholders to obtain injunctive relief, specific
performance or other equitable relief against directors.
Article Ninth of the Company's Certificate of Incorporation provides that a
director shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director, except: (i) for any
breach of the duty of loyalty; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or knowing violations of law; (iii) for
liability under Section 174
II-1
<PAGE>
of the Delaware General Corporation Law (relating to certain unlawful dividends,
stock repurchases or stock redemptions); or (iv) for any transaction from which
the director derived any improper personal benefit. The effect of this provision
in the Certificate is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of the Company)
to recover monetary damages against a director for breach of the fiduciary duty
of care as a director (including breaches resulting from negligent or grossly
negligent behavior) except in certain limited situations. This provision does
not limit or eliminate the rights of the Company or any stockholder to seek
non-monetary relief such as an injunction or rescission in the event of a breach
of a director's duty of care. These provisions will not alter the liability of
directors under federal securities laws.
Article Tenth of the Company's Certificate of Incorporation provides that
all persons who the Company is empowered to indemnify pursuant to the provisions
of Section 145 of the General Corporation Law of the State of Delaware (or any
similar provision or provisions of applicable law at the time in effect), shall
be indemnified by the Company to the full extent permitted thereby. The
foregoing right of indemnification shall not be deemed to be exclusive of any
other rights to which those seeking indemnification may be entitled under any
by-law, agreement, vote of stockholders or disinterested directors or otherwise.
The Company's By-Laws (the "By-Laws") provide that the Company shall
indemnify each director and such of the Company's officers, employees and agents
as the Board of Directors shall determine from time to time to the fullest
extent provided by the laws of the State of Delaware.
The Company currently maintains directors' and officers' liability
insurance coverage for all directors and officers and has entered into
indemnification agreements with its directors and officers.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provision or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
The Warrants provide for reciprocal indemnification and such provisions are
incorporated by reference herein.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
* 1.1 Form of Representative's Warrant
**4.1 Specimen of Class A Common Stock Certificate
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors
23.2 Consent of Ruskin, Moscou, Evans & Faltischek, P.C. (included in
Exhibit 5.1)
- ---------------------
*Incorporated by reference from Registrant's Registration Statement on Form
S-1, Registration No. 33- 72618, as filed with the Securities and Exchange
Commission on December 7, 1993.
**Incorporated by reference from Registrant's Amendment No. 2 to Form S-1,
Registration No. 33- 72618, as filed with the Securities and Exchange Commission
on February 14, 1994.
Item 17. Undertakings
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant 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 Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and continued
II-3
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in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act each
post-effective amendment that contains a form of Prospectus shall be deemed to
be a new Registration Statement relating to the securities offered therein and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, in Hauppauge, New York, on September 6, 1996
HIRSCH INTERNATIONAL CORP.
By: \s\ Henry Arnberg
----------------------------------------
Henry Arnberg, President
Dated: September 6, 1996
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated. Each person whose signature appears below hereby authorizes each of
Henry Arnberg and Paul Levine with full power of substitution to execute in the
name of such person and to file any amendment or post effective amendment to
this Registration Statement (or any Registration Statement filed pursuant to
Rule 462) making such changes in this Registration Statement as the Registrant
deems appropriate and appoints each of Henry Arnberg and Paul Levine with full
power of substitution, attorney-in-fact to sign and to file any amendment and
post-effective amendment to this Registration Statement.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
\s\ Henry Arnberg Chairman of the Board of Directors, September 6, 1996
- ---------------------------------- President and Chief Executive Officer
Henry Arnberg (Principal Executive Officer)
\s\ Paul Levine Executive Vice President, Chief Operating September 6, 1996
- ---------------------------------- Officer and Secretary (Principal Operating
Paul Levine Officer)
- ---------------------------------- Vice President and Director September _, 1996
Tas Tsonis
\s\ Kenneth Shifrin Vice President-Finance and Chief September 6, 1996
- ---------------------------------- Financial Officer (Principal Accounting
Kenneth Shifrin and Financial Officer)
\s\ Herbert M. Gardner Director September 6, 1996
- ----------------------------------
Herbert M. Gardner
\s\ Marvin Broitman Director September 6, 1996
- ----------------------------------
Marvin Broitman
\s\ Douglas Schenendorf Director September 6, 1996
- ----------------------------------
Douglas Schenendorf
\s\ Ronald Krasnitz Director September 6, 1996
- ----------------------------------
Ronald Krasnitz
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
5.1 Opinion of Ruskin, Moscou, Evans & Faltischek, P.C.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Ruskin, Moscou, Evans & Faltischek, P.C.
(included in Exhibit 5.1)
EXHIBIT 5.1
RUSKIN, MOSCOU, EVANS & FALTISCHEK, P.C.
170 OLD COUNTRY ROAD
MINEOLA, NY 11501
(516) 663-6600
September 6, 1996
Hirsch International Corp.
200 Wireless Boulevard
Hauppauge, NY 11788
Re: Hirsch International Corp.
Gentlemen:
We have acted as counsel to Hirsch International Corp., a Delaware
corporation (the "Company"), in connection with its filing of a Registration
Statement (the "Registration Statement") on Form S-3 with respect to 205,078
shares of the Company's Class A Common Stock ("Shares") issuable upon the
exercise of Common Stock Purchase Warrants, and 205,078 Common Stock Purchase
Warrants ("Warrants"), issued by the Company to the Representative of the
Underwriters and certain officers of the Representative ("Selling
Securityholders") in connection with the Company's initial public offering
completed on February 17, 1994. In connection therewith, we have examined such
corporate records, certificates and documents as we deemed necessary for the
purpose of this opinion, including, without limitation, the Warrants and a
specimen of Class A Common Stock Certificate. Based on our examination, we
advise you that, in our opinion, the Shares and Warrants to be sold by the
Selling Securityholders are duly and validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus constituting a part of the Registration Statement.
Very truly yours,
\S\ Ruskin, Moscou, Evans & Faltischek, P.C.
--------------------------------------------
RUSKIN, MOSCOU, EVANS & FALTISCHEK, P.C.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Hirsch International Corp. on Form S-3 of our report dated March 12, 1996,
appearing in the Annual Report on Form 10-K of Hirsch International Corp. for
the year ended January 31, 1996 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Jericho, New York
September 5, 1996
