<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 4, 1997
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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SEL-LEB MARKETING, INC.
(Exact name of Registrant as specified in its charter)
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NEW YORK 11-3180295
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1435 51 STREET, NORTH BERGEN, NEW JERSEY 07047
(Address of Principal Executive Offices) (Zip Code)
SEL-LEB MARKETING, INC.
1435 51 STREET
NORTH BERGEN, NEW JERSEY 07047
(201) 864-3316
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
JAN S. MIRSKY
SEL-LEB MARKETING, INC.
1435 51 STREET
NORTH BERGEN, NEW JERSEY 07047
(201) 864-3316
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
COPY TO:
James Martin Kaplan, Esq.
Zimet, Haines, Friedman & Kaplan
460 Park Avenue
New York, New York 10022
(212) 486-1700
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Approximate date of commencement of proposed sale to the public: On such
date as the Selling Stockholder shall elect to commence sales to the public
following the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / x /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /___________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /___________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering aggregate offering Amount of
securities to be registered registered price per unit(1) price(1) registration fee
- ----------------------------------------------------------------------------------------------------------------
Common Stock, par value 360,000 shares $6.3125 $2,272,500 $688.64
$.01 per share(2)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933, as amended (the
"Act"), based on the average of the high and low prices of the Common Stock
on February 27, 1997, which was $6.3125
(2) Registered for resale by certain Selling Stockholders.
<PAGE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
SEL-LEB MARKETING, INC.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C> <C>
ITEM
NUMBER ITEM HEADING IN PROSPECTUS
- ------ ---- ---------------------
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus Table of Contents; Available Information;
Documents Incorporated by Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders Selling Stockholder
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Registered Incorporation of Certain Documents by Reference
10. Interests of Named Experts and Counsel Experts; Legal Matters
11. Material Changes Not applicable
12. Incorporation of Certain Information by
Reference Documents Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities Disclosure of Commission Position on Indemnification for Securities
Act Liabilities
</TABLE>
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* Not Applicable.
<PAGE>
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.
PRELIMINARY PROSPECTUS DATED MARCH 4, 1997
SUBJECT TO COMPLETION
360,000 Shares
SEL-LEB MARKETING, INC.
Common Stock
(Par Value $.01 Per Share)
---------------------
This Prospectus relates to up to 360,000 shares (the "Shares") of Common
Stock, par value $.01 per share (the "Common Stock"), of Sel-Leb Marketing, Inc.
(the "Company" or "Sel-Leb"). The Shares may be offered for sale by Sharpy
Corp., a New York corporation (the "Selling Stockholder"), or by pledgees,
donees, transferees, or other successors in interest of the Selling Stockholder.
See "Selling Stockholder." All proceeds from any sales of the Shares by the
Selling Stockholder will inure to the benefit of the Selling Stockholder. The
Company will receive none of the proceeds from the sale of Shares by the Selling
Stockholder hereunder. All expenses of registration incurred in connection
herewith, estimated to be approximately $26,000, are being borne by the Company;
provided, however, that all selling and other expenses incurred by the Selling
Stockholder will be borne by the Selling Stockholder.
The sale of the Shares by the Selling Stockholder, or by pledgees, donees,
transferees or other successors in interest thereof, may be effected from time
to time in transactions (which may include block transactions) on the Nasdaq
Small-Cap Market ("Nasdaq"), the over-the-counter market, the Boston Stock
Exchange ("BSE"), in private sales or in negotiated transactions, through the
writing of options on Shares, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices. See
"Selling Stockholder" and "Plan of Distribution".
The Common Stock is listed on Nasdaq and the BSE under the symbols "SELB"
and "SLL," respectively. The last closing sale price per share of the Common
Stock on Nasdaq on March 3, 1997 was $6.00.
The address of the principal executive offices of the Company is 1435 51
Street, North Bergen, New Jersey 07047, and its telephone number at that address
is (201) 864-3316.
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THE SHARES OFFERED HEREBY ARE SUBJECT TO CERTAIN RISKS WHICH SHOULD BE
CAREFULLY CONSIDERED BY POTENTIAL INVESTORS. SEE "RISK FACTORS".
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE 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 ________ __, 1997
<PAGE>
AVAILABLE INFORMATION
Pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
the Company has filed with the Commission a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") of which this Prospectus is a part. This Prospectus does not
contain all the information set forth in the Registration Statement, to which
reference is hereby made for further information. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is hereby made to the exhibit for a more complete description of the
matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith is
required to file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by the Company can be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
or at the Regional Offices of the Commission located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements. Such reports and other information may also be
inspected at Nasdaq, 1735 K Street, N.W., Washington, D.C. 20006.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission are incorporated into
this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;
(b) The Company's Quarterly Reports on Form 10-QSB for the periods ended
March 31, 1996, June 30, 1996 and September 30, 1996;
(c) The description of the Company's Common Stock, par value $.01 per
share, contained in the Company's Registration Statement on Form 8-A filed with
the Commission on June 1, 1995, as amended; and
(d) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since December 31, 1995.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the sale of all of the securities offered hereunder or the deregistration of all
such securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus 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 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.
The Company will provide without charge to each person, including any
beneficial owner of any of the Common Stock, to whom a copy of this Prospectus
has been delivered, upon the written or oral request of such person, a copy of
any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus. Requests for such copies of any
document should be directed to Jorge Lazaro, Secretary, Sel-Leb Marketing, Inc.,
1435 51 Street, North Bergen, New Jersey 07047, telephone number (201) 864-3316.
<PAGE>
PROSPECTUS SUMMARY
UNLESS OTHERWISE INDICATED, THE INFORMATION SET FORTH IN THIS PROSPECTUS
GIVES EFFECT TO A THREE-FOR-ONE STOCK SPLIT OF THE COMPANY'S COMMON STOCK, PAR
VALUE $.01 PER SHARE ("COMMON STOCK"), WHICH WAS EFFECTED IN THE FORM OF A SHARE
DISTRIBUTION ON FEBRUARY 29, 1996 (THE "SHARE DISTRIBUTION"). PURSUANT TO THE
SHARE DISTRIBUTION, EACH HOLDER OF RECORD OF COMMON STOCK ON FEBRUARY 2, 1996
RECEIVED TWO ADDITIONAL SHARES OF COMMON STOCK FOR EACH SHARE HELD ON SUCH DATE.
IN CONNECTION WITH THE SHARE DISTRIBUTION, THE COMPANY ADJUSTED THE TERMS OF THE
REDEEMABLE WARRANTS (THE "PUBLIC WARRANTS") ISSUED BY THE COMPANY IN ITS JULY
1995 INITIAL PUBLIC OFFERING OF SECURITIES (THE "IPO"), WHICH PUBLIC WARRANTS
ORIGINALLY REPRESENTED THE RIGHT TO PURCHASE ONE SHARE OF COMMON STOCK AT AN
EXERCISE PRICE OF $6.00 PER SHARE, TO PROVIDE THAT, AS A RESULT OF THE SHARE
DISTRIBUTION, EACH PUBLIC WARRANT REPRESENTED THE RIGHT TO PURCHASE THREE SHARES
OF COMMON STOCK AT AN EXERCISE PRICE OF $2.00 PER SHARE. ON JUNE 6, 1996, THE
COMPANY ELECTED TO ADJUST THE NUMBER OF PUBLIC WARRANTS OUTSTANDING (THE
"WARRANT ADJUSTMENT"). AS A RESULT OF THE WARRANT ADJUSTMENT, EFFECTIVE JUNE
20, 1996, EACH HOLDER OF A PUBLIC WARRANT ON JUNE 17, 1996 HELD, IN LIEU OF ONE
PUBLIC WARRANT TO PURCHASE THREE SHARES OF COMMON STOCK AT AN EXERCISE PRICE OF
$2.00 PER SHARE, THREE PUBLIC WARRANTS, EACH TO PURCHASE ONE SHARE OF COMMON
STOCK AT AN EXERCISE PRICE OF $2.00 PER SHARE. UNLESS OTHERWISE INDICATED, THE
INFORMATION SET FORTH IN THIS PROSPECTUS GIVES EFFECT TO THE WARRANT ADJUSTMENT.
THE COMPANY
The Company is primarily engaged in the distribution and marketing of
consumer merchandise to retail sellers such as mass merchandisers, discount
chain stores and food, drug and electronic retailers. The Company's business
presently consists of the following activities: (i) opportunistic purchasing
and secondary sourcing (i.e., distributing merchandise on a wholesale basis
outside of normal distribution channels to retail merchants) of a broad range of
name-brand and off-brand products such as health and beauty aids, cosmetics,
fragrances, kitchen items and other household items, (ii) developing, marketing
and selling the Company's own proprietary brands of budget-line health, beauty
aid and cosmetic products, which are manufactured for the Company by contract
manufacturers, (iii) representing manufacturers and distributors as a sales
agent, on a commission basis, in connection with the sale to mass merchandise
retailers of merchandise manufactured and distributed by such third parties and
(iv) developing, marketing and selling, or otherwise facilitating the
development, marketing or sale of, products to be promoted by celebrity
spokespersons and sold to mass merchandise retailers, as well as products which
will "tie in" to specific television shows and be sold by the Company either on
television in connection with those shows, with the intent to thereafter sell
such products to mass merchandise retailers, or directly to mass merchandise
retailers. The Company's strategy is to capitalize on increased consumer demand
for value and convenience resulting from the increased acceptance by consumers
of mass merchandisers, electronic retailers and other mass marketing retail
outlets, as well as on the popularity of consumer products endorsed by celebrity
spokespersons.
The Company, which was incorporated under the laws of the State of New York
on September 21, 1993, consummated in July 1995 the IPO pursuant to which the
Company issued units (the "IPO Units"), each IPO Unit consisting of three shares
of Common Stock and three Public Warrants. Immediately following the issuance
of the IPO Units, the Common Stock and Public Warrants became separately
tradeable and transferable. On May 18, 1995, Linette Cosmetics, Inc. ("Linette
Cosmetics"), a corporation founded in 1985 by Harold Markowitz, the Chairman of
the Board of the Company, and Jorge Lazaro, the Executive Vice President and
Secretary of the Company, was merged with and into the Company, with the Company
as the surviving corporation (the "Linette Merger"). Prior to the Linette
Merger, all of the outstanding capital stock of Linette Cosmetics was owned by
Mr. Markowitz, Mr. Lazaro and Paul Sharp, the President and Chief Executive
Officer of the Company, who together comprised the shareholders of the Company
until the IPO. In addition, immediately prior to the consummation of the IPO,
each of Messrs. Markowitz, Sharp and Lazaro contributed to the Company his 20%
equity interest in Lea Cosmetics, Inc. ("Lea Cosmetics") and the Company
acquired from the remaining shareholder his 40% equity interest in Lea Cosmetics
(the "Lea Acquisition"). As a result, Lea Cosmetics became a wholly-owned
subsidiary of the Company and, on August 3, 1995, Lea Cosmetics was merged with
and into the Company, with the Company as the surviving corporation.
The Company's principal executive offices are located at 1435 51 Street,
North Bergen, New Jersey 07047, and its telephone number is (201) 864-3316.
3
<PAGE>
RECENT DEVELOPMENTS
The Company has recently uncovered the theft of certain of its inventory
from its North Bergen, New Jersey premises. The Company is currently in the
process of investigating this matter, and has retained the services of an
investigator to assist the Company in determining the manner in which such
theft occurred and the amount of inventory in question. In addition, the
Company is currently reviewing its inventory security and control procedures in
order to determine any changes which must be made in order to prevent future
theft. Based on information known to the Company to date, the Company believes
that the theft was committed by a limited number of warehouse employees of the
Company and occurred in the fourth quarter of 1996. In addition, although the
Company has not yet determined the amount of the inventory involved, the
Company currently believes that the amount will be at least $50,000 but is
not expected to exceed $125,000. The Company anticipates that the loss of
such inventory during the year ended December 31, 1996 will have an adverse
effect on the results of operations of the Company for the fourth quarter of
1996. In addition, although the Company intends to file an insurance claim
with respect to this matter, the Company's current insurance policy provides
coverage for employee theft for only up to $100,000 per incident, with a
$10,000 deductible. There can be no assurance that the Company will be
successful in its claim under such insurance policy, or that the amount
collected by the Company thereunder will satisfy the full amount of its
losses.
THE OFFERING
Common Stock offered by the
Selling Stockholder.................... 360,000 shares
Common Stock to be outstanding
after the Offering..................... 8,624,897 shares (1)
Nasdaq symbol............................ SELB
BSE symbol............................... SLL
Use of proceeds.......................... Any and all Shares which may
be sold pursuant to this
Prospectus will be sold by the
Selling Stockholder for its own
account. The Company will receive
none of the proceeds from the sale
of Shares.
- ---------------------
(1) Based on 8,624,897 shares of Common Stock outstanding as of February 27,
1997. Excludes (i) 1,099,000 shares of Common Stock issuable upon the
exercise of stock options outstanding under the Company's stock option
plans (the "Plans") at the date of this Prospectus, (ii) 390,500 shares of
Common Stock reserved for issuance upon exercise of stock options available
for future grant under the Plans and (iii) 5,523,603 shares of Common Stock
issuable upon the exercise of 5,523,603 Public Warrants outstanding as of
February 27, 1997.
4
<PAGE>
RISK FACTORS
PRIOR TO INVESTING IN THE COMMON STOCK BEING OFFERED HEREBY, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH BELOW, TOGETHER WITH
THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW, INCLUDING BUT NOT
LIMITED TO GENERAL TRENDS IN THE RETAIL INDUSTRY, THE ABILITY OF THE COMPANY TO
SUCCESSFULLY IMPLEMENT ITS EXPANSION PLANS, CONSUMER ACCEPTANCE OF ANY PRODUCTS
DEVELOPED AND SOLD BY THE COMPANY, AND THE ABILITY OF THE COMPANY TO DEVELOP ITS
"CELEBRITY" PRODUCT BUSINESS.
DEPENDENCE ON CERTAIN CUSTOMERS
The Company's ten largest customers accounted for approximately 72% and 69%
of the Company's net sales during the nine-month period ended September 30, 1996
and the year ended December 31, 1995, respectively. During the nine-month
period ended September 30, 1996, BJ's Wholesale Club and McCrory's Stores
accounted for approximately 31% and 11%, respectively, of the Company's sales,
and during the year ended December 31, 1995, BJ's Wholesale Club and Ames
Department Stores accounted for approximately 26% and 11%, respectively, of the
Company's sales. The Company believes that it has good relationships with its
customers, and that, as a consequence of its strong and, in many instances,
long-term relationships with many of such customers, they will continue to do
business with the Company. However, the Company has no long-term contracts with
any of its customers, all of which purchase products from the Company pursuant
to individually placed purchase orders. Therefore, there can be no assurance
that the Company's customers, including any of its largest customers, will
continue to purchase merchandise from the Company, and the loss of a significant
volume of purchases from a number of its customers could have a material adverse
effect on the Company's business and results of operations. In addition,
although the Company has sold substantially all merchandise acquired by it
through opportunistic purchases in each of the last three fiscal years, there
can be no assurance that the Company, which typically purchases merchandise
before it has arranged for customers for such merchandise, will be able to
obtain customers for all such merchandise acquired by it in the future, or that
if it is able to secure such customers, sales to such customers will yield
acceptable profit margins.
DEPENDENCE ON THIRD-PARTY MANUFACTURERS AND SUPPLIERS
The Company makes opportunistic purchases of merchandise from manufacturers
as well as from secondary sources such as wholesalers, retailers, financially
distressed businesses and duty-free distributors. The Company purchases such
merchandise through individually placed purchase orders and does not have any
contracts with any such suppliers, depending, instead, on its ongoing
relationships and prior dealings with such suppliers to obtain merchandise at
favorable prices when it becomes available for sale to secondary suppliers.
Although the Company believes that its relationships with its suppliers are good
and that it would be able to locate other sources of merchandise in the event of
the loss of one or more of such suppliers, there can be no assurance that the
Company will not experience delays or other difficulties in obtaining
merchandise, which could have a material adverse effect on the Company's
business and results of operations.
To date, all of the Company's proprietary brand name budget-line health,
beauty aid and cosmetic products sold under the Linette-Registered Trademark-,
Vea-Registered Trademark-, Zia-Registered Trademark- and Loud Music-TM- brand
names and all packaging therefor have been manufactured and supplied by third
parties in accordance with the Company's specifications. The Company purchases
all materials for its products (including raw materials and packaging) through
individually placed purchase orders to various suppliers, who deliver the
products to LPD Packaging, Inc., a manufacturer engaged by the Company; such
manufacturer, in turn, provides filling and packaging services, performs quality
control, distributes the finished products and, if necessary, warehouses such
products. During the year ended December 31, 1995 and the nine-month period
ended September 30, 1996, the Company paid $616,640 and $741,270, respectively,
to this manufacturer for such services. Although the Company believes that its
manufacturer has the capacity to produce volumes of products sufficient to meet
the Company's foreseeable needs, there can be no assurance of such.
Furthermore, although the Company believes that it has a good relationship with
this manufacturer and that the Company will continue to obtain its finished
products to be sold
5
<PAGE>
under the Linette-Registered Trademark-, Vea-Registered Trademark-,
Zia-Registered Trademark- and Loud Music-TM- brand names from such manufacturer
in the foreseeable future, the Company does not have a written contract with
this manufacturer and there can therefore be no assurance of such. In the event
the Company were to experience difficulties with or the loss of services of its
present manufacturer, the Company believes that it would be able to retain the
services of other manufacturers; however, there can be no assurance that such
services could be retained on a timely basis or on terms as favorable as those
with its present manufacturer. Likewise, although the Company has experienced
no difficulty in obtaining necessary products, supplies and packaging from its
suppliers and believes that it could obtain items of the same quantity and
quality from other suppliers, in the event the Company were to experience
difficulties with any of its present suppliers, the Company might be unable to
obtain such items on a timely basis. The loss of either the Company's present
manufacturer or any of its present suppliers, or any significant delays in
obtaining another manufacturer or other suppliers in the event of any such loss,
could have an adverse effect on the Company's business and results of
operations.
To date, all merchandise sold by the Company in connection with the "Jackie
Collins" line of products has been purchased by the Company from third-party
manufacturers and distributors, both in the United States and abroad. In
addition, the Company currently anticipates that all products developed by it as
television program "tie-in" products (including, without limitation, the "Jabot"
line of products to be marketed by the Company pursuant to its agreement with
Bell Abbott Haussmann Inc. ("BAHI") and the CLUELESS line of products to be
marketed by the Company pursuant to its agreement with Viacom Consumer Products,
Inc. ("VCP")), as well as other celebrity-endorsed products, if any, developed
by the Company, will be purchased from third-party manufacturers. Typically,
the Company develops or will develop (i) the design of the celebrity-endorsed
products in conjunction with the celebrity who is to promote such products and
(ii) the design of any television "tie-in" products in conjunction with BAHI or
VCP, as the case may be. Once the product has been developed in accordance with
applicable design and quality specifications, the Company will arrange for the
manufacture of the product by a third-party manufacturer according to the
Company's design specifications; however, the Company does not enter into
long-term contracts with such third parties, but instead purchases (and
currently anticipates that it will in the future continue to purchase) such
merchandise through individually placed purchase orders. Accordingly, the
Company is dependent on the ability of its manufacturers to meet applicable
design and quality specifications. Although the Company believes that, in the
event it were to experience difficulties with or the loss of services of any of
such manufacturers, it would be able to engage other manufacturers who could be
retained by the Company and meet its production requirements on a timely basis,
there can be no assurance of such. The loss of any of such manufacturers, or
any significant delays in obtaining other manufacturers in the event of any such
loss, could have an adverse effect on the Company's business and results of
operations.
RISKS ASSOCIATED WITH PUBLIC TRENDS IN THE RETAIL INDUSTRY
The retail industry is significantly affected by many factors, including
changes in the national economy or in regional and local economies, changes in
consumer preferences and confidence in the overall economy, increases in the
number of retail operations and intense competition in the retail industry
generally. In addition, factors such as inflation may have a greater effect on
the retail industry than on other industries. Furthermore, several retail
firms, including retail customers of the Company, have filed for bankruptcy
protection and there can be no assurance of their continued existence or of the
continued existence of any of the Company's retail customers. During the past
three years, the Company has written off an immaterial amount of receivables as
a result of these bankruptcies. The loss of any of the Company's substantial
customers could have a material adverse effect on the business and results of
operations of the Company.
RISK OF LOSS OF CERTAIN PRODUCTS
The Company currently warehouses all of the raw materials used in
connection with its proprietary brand name health, beauty aid and cosmetics
products, as well as the finished products, at LPD Packaging, Inc.'s warehouses.
Accordingly, the Company is subject to the risk of the loss of all or a portion
of such inventory, either as a result of theft, fire or otherwise. Although the
Company maintains insurance which would cover any such losses (including losses
associated with business interruptions) and believes that, in the event of a
complete or significant loss, it would be able to replace such inventory (I.E.,
by purchasing materials from other sources and, if necessary, retaining the
services of another manufacturer) within a period of approximately two to three
months, the Company is subject to the risk of loss of customers during such
period.
6
<PAGE>
RISKS ASSOCIATED WITH EXPANSION PLANS; DEPENDENCE ON NEW PRODUCT INTRODUCTIONS
AND MARKET ACCEPTANCE TO IMPLEMENT EXPANSION PLANS; LITIGATION RELATING TO
CERTAIN NEW PRODUCTS
As part of the Company's strategy of taking advantage of the growth in mass
merchandising and value retailing, the Company will seek to continue introducing
its own brand name health, beauty aid and cosmetic products, thereby providing
the Company with an ongoing supply of products and making the Company less
reliant on third party and/or opportunistic sources of merchandise. The success
of the Company's expansion plan is dependent upon its ability to identify and
develop products that can be successfully sold to retail chains and other mass
merchandisers at acceptable profit margins. There can be no assurance that the
Company will be able to successfully develop and introduce new products under
its own brand names, that any such products will meet with consumer acceptance
in the marketplace or that any such products will be sold at acceptable profit
margins. In addition, the Company may seek to obtain rights to additional
proprietary lines either by acquisition or through licensing or other
arrangements. However, there can be no assurance that any such acquisition
opportunities will become available, that the Company would be successful in
acquiring any such rights on favorable terms, or that the Company would be
successful in marketing and selling any product lines so acquired by it.
The Company is also seeking to expand the "celebrity" product area of its
business, including by marketing and distributing in the traditional retail
market celebrity merchandise which is originally offered for sale on television
or by developing products to be promoted by celebrities and sold directly in
such traditional markets. The success of the Company's expansion plan is
dependent on the Company's ability to retain the services of celebrities and to
develop products to be endorsed by such celebrities which will meet with
consumer acceptance. In 1996, the Company entered into an arrangement with
Regis Philbin, co-host of the television program LIVE WITH REGIS AND KATHIE LEE,
and Beau Brummel, a leading New York City clothier, involving a line of menswear
accessories to be promoted by Mr. Philbin. Pursuant to such arrangement, the
Company provided a portion of the financing required in connection with Mr.
Philbin's initial live television appearance on QVC Network in December 1996. A
second appearance by Mr. Philbin on QVC Network has been tentatively scheduled
for March 1997 and, in connection therewith, the Company is seeking to formalize
and extend the terms of its arrangement with such parties. In addition, the
Company has previously developed a line of products endorsed by best-selling
author Jackie Collins which were sold on Home Shopping Network in 1994 and 1995,
and, in 1996, the Company sold directly into the traditional retail market a
line of "Jackie Collins Wild" fragrances. There can be no assurance that the
Company will be able to market additional amounts of celebrity-endorsed products
in the future, that it will be able to successfully participate in the
development and/or promotion of any other products for Mr. Philbin, Ms. Collins
or any other celebrities, that the Company will be able to retain the services
of any celebrities in the future or that the Company will be able to
successfully develop and/or promote any products for any celebrities. There can
be no assurance that any such products so developed for Mr. Philbin, Ms. Collins
or any other celebrities will meet with consumer acceptance or generate any
significant revenues.
In October 1996, the Company entered into an agreement with VCP pursuant to
which VCP has granted to the Company a license to use the designs, trademarks,
service marks, logos, visual representations, characters and characterizations
of the television series CLUELESS in connection with the manufacture and
distribution in the United States of a CLUELESS line of cosmetics (including
nail care products, lip stick products, cologne fragrances, mass market gift
sets, signature gift sets and children's gift sets). Pursuant to the agreement,
the Company has the exclusive right to sell such items in mass market stores,
grocery stores, drug stores, beauty outlets, discount chain stores and wholesale
clubs, and the non-exclusive right to sell such items in toy stores and
department stores; provided, however, that under certain conditions (including
failure to make a timely royalty payment or failure to meet certain sales
targets), the Company's exclusive rights shall become non-exclusive. The
Company is required under the agreement to pay to VCP a specified royalty fee on
all items sold by the Company pursuant to the agreement, and has paid to VCP a
non-returnable advance of $90,000 (subject to reduction in the event certain
episodes of the show are not picked up for broadcast) to be applied against the
Company's royalty payments. In addition, to the extent not already paid to VCP
through royalty payments, the Company shall be required to pay to VCP on March
31, 1998 a guarantee of $225,000. Furthermore, the Company is also required
under the agreement to spend a designated amount each year on advertising for
the CLUELESS cosmetics line. The agreement commenced on October 15, 1996 and
will continue, subject to certain conditions, until October 31, 1999; provided,
however, that in the event the Company shall have met certain royalty targets
during the initial term, the Company shall have the right to extend the
agreement for an additional
7
<PAGE>
two-year period, subject to payment of an additional advance and an additional
guarantee; and provided further that, in the event CLUELESS is not picked up for
broadcast under certain circumstances, the Company shall have the option to
terminate the agreement. As of the date hereof, the Company has commenced
manufacturing a line of CLUELESS lipsticks, nail polishes and mascaras, which
the Company currently anticipates will be launched in March 1997. However,
there can be no assurance that these products will meet with consumer acceptance
or that the CLUELESS show will continue to be broadcast during the anticipated
term of the agreement.
In February 1997, the Company and Paramount Pictures Corporation, an
affiliate of VCP ("Paramount"), were named as defendants in an action brought in
the United States District Court for the Southern District of California
entitled SASSABY, INC. V. PARAMOUNT PICTURES CORPORATION AND SEL-LEB MARKETING,
INC. (No. 97CV0197S (JFS)). The plaintiff in this action, a manufacturer of a
line of cosmetic products which are marketed under the trademark "Jane"-TM-, has
recently commenced marketing a type of makeup known as concealer under the name
"Clueless." Plaintiff alleges that the marketing and sale of the CLUELESS line
of cosmetics by the Company constitutes trademark infringement and unfair
competition, and seeks to enjoin the Company from using the CLUELESS mark.
Plaintiff also seeks damages in an unspecified amount. Pursuant to the
Company's agreement with VCP, Paramount (on behalf of VCP) is assuming the
defense of this action on behalf of the Company, and the Company shall be
entitled to be indemnified by VCP for any losses suffered by it as a result of
this action. The Company has been advised by Paramount that it believes that
plaintiff's claims are without merit and will be vigorously defended by
Paramount.
In January 1997, the Company entered into an agreement with BAHI pursuant
to which the Company has been granted the exclusive right to use the trademark
"Jabot" in connection with the production, marketing and distribution of certain
cosmetic and fragrance items (including, without limitation, perfumes, colognes,
toilet water, talcum powder, bath gels and personal deodorants) in the United
States and Canada, and has also been granted the exclusive right to use the
trademark "Jabot for the Young and the Restless Generation" in connection with
the marketing and distribution of such items in Canada. The "Jabot" and "Jabot
for the Young and the Restless Generation" marks were inspired by the fictional
name of a cosmetics company featured on a leading daytime television drama.
Pursuant to the agreement, the Company has the right to sell the cosmetic and
fragrance items through various retail distribution channels, including mass
merchandisers, retail stores, catalogues, electronic media, direct response
advertising, mail order, telemarketing and other similar retail channels. The
Company is required under the agreement to pay to BAHI a specified royalty fee
on all items sold by the Company pursuant to the agreement, and has paid to BAHI
a nonrefundable $10,000 advance to be applied against the Company's royalty
payments. The agreement is for a term of five years commencing March 31, 1997,
and shall be automatically extended for an additional term of five years and a
second additional term of ten years, in each case subject to certain minimum
royalty payments having been met during the preceding term, and thereafter to
subsequent additional terms of five years unless either party does not wish to
extend the term of the agreement. As of the date hereof, the Company has
developed a line of "Jabot" and "Jabot for the Young and the Restless
Generation" products which the Company currently anticipates will be launched in
the spring of 1997. There can be no assurance that the Company will be
successful in selling such products or that any such products developed by the
Company will meet with consumer acceptance.
COMPETITION
The areas of business in which the Company engages are highly competitive
businesses. The secondary sourcing business is characterized by intense
competition, both in the products sold and in the retaining of relationships
with suppliers and customers. With respect to its ability to obtain
merchandise, the Company competes with other secondary sources, as well as with
wholesale distributors and retailers. The Company believes that its ability to
purchase a broad array of merchandise at competitive prices is critical to its
success. With respect to sales to its customers, the Company competes with
other secondary suppliers of merchandise, as well as with manufacturers who sell
directly to retail merchandisers. In addition, with respect to products sold
under the Company's Linette-Registered Trademark-, Vea-Registered Trademark-,
Zia-Registered Trademark- and Loud Music-TM- brand names, the Company competes
with other manufacturers at the retail store level for shelf space and
promotional space. Many of the Company's existing or potential competitors are
well established companies and have or will have substantially greater
financial, marketing and other resources than the Company. The Company believes
that it competes on the basis of value, product assortment and availability,
service to customers and reputation, as well as on the basis of its
long-standing and well-established relationships with both its suppliers and
Although the
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<PAGE>
Company believes that it will be able to compete effectively on the
basis of such factors, there can be no assurance of such.
In connection with its "celebrity" products business, the Company competes
or will compete with manufacturers and marketing organizations that seek out
celebrities to endorse products and assist in marketing programs for their
merchandise. In addition, the Company believes that virtually all celebrities
have agents who can negotiate directly with retailers in order to secure
marketing contracts on their behalf. The Company believes that it competes on
the basis of its ability to design products which are consistent with the
celebrities' respective preferences and characters and to provide such products
to retailers at competitive prices. Furthermore, although the Company is not
aware of any other entities which currently manufacture, market or develop
television "tie-in" products to be sold on television during the airing of the
related program, the Company believes that any such products developed by the
Company will compete with other products sold in the electronic retailing market
(including through television infomercials and interactive television shopping
networks), and that these products, as well as the CLUELESS line of cosmetics
expected to be sold by the Company, will compete with other products sold in the
traditional retail market which relate to characters or themes of television
shows or movies. The Company believes that it will compete on the basis of the
unique nature of such television "tie-in" products, as well as on its ability to
provide such products at competitive prices.
DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL
The success of the Company is largely dependent on the personal efforts of
Harold Markowitz, its Chairman of the Board, Paul Sharp, its President and Chief
Executive Officer, Jan Mirsky, the Company's Executive Vice President-Finance
and Chief Operating Officer, Jack Koegel, its Vice Chairman, and Jorge Lazaro,
its Executive Vice President. In particular, the future success of the
Company's celebrity products line of business is dependent on the efforts of Mr.
Markowitz. Although the Company has entered into an employment agreement with
each of Messrs. Markowitz, Sharp, Mirsky, Koegel and Lazaro, each of which
agreements provides that the employee shall devote substantially all of such
employee's working time and attention to the Company, the loss of services of
any of such individuals could have a material adverse effect on the Company's
business and prospects.
CONTROL BY MANAGEMENT AND CURRENT SHAREHOLDERS
As of the date of this Prospectus, Messrs. Markowitz, Sharp, Mirsky, Koegel
and Lazaro, each of whom is an officer and director of the Company, beneficially
own, in the aggregate, approximately 51.3% of the outstanding Common Stock
(assuming no exercise of options or warrants held by persons other than Messrs.
Markowitz, Sharp, Mirsky, Koegel and Lazaro). Accordingly, in the event such
shareholders were to act in concert with respect to the Company's operations,
they would be in a position to cause an increase in the authorized capital or
cause the dilution, merger or sale of assets of the Company, and generally
control the affairs of the Company.
INSURANCE AND POTENTIAL LIABILITY
While no material product liability claims have been made against the
Company in the past, as a distributor of merchandise, including health and
beauty aids, cosmetics, fragrances and household items, the Company could be
exposed to possible liability claims from others for personal injury or property
damage due to design or manufacturing defects or otherwise. The Company
maintains a product liability insurance policy that has a $1,000,000 per
occurrence limit and a $2,000,000 aggregate limit, and a $3,000,000 umbrella
liability insurance policy to cover claims in excess of the limits of its
products liability insurance. In addition, the Company believes that the
suppliers from whom it purchases such merchandise, including the manufacturers
thereof, maintain adequate levels of product liability insurance. Although the
Company believes that its product liability insurance coverage is adequate in
light of prior experience and future expectations, there can be no assurance of
such. In addition, the Company maintains other insurance, including insurance
relating to property and personal injury, similar, the Company believes, to that
maintained by comparable retail businesses and in amounts which the Company
currently considers adequate. Nevertheless, a partially or completely uninsured
claim against the Company, if successful and of sufficient magnitude, could have
a material adverse effect on the Company.
9
<PAGE>
RISK OF ELIMINATION OF SUPPLY OF PRESTIGE FRAGRANCES
The Company believes that a portion of the prestige fragrances purchased by
it may include trademarked products manufactured in foreign countries and
trademarked products manufactured in the United States that may have been sold
to foreign distributors. From time to time, United States trademark owners and
their licensees and trade associations have initiated litigation or
administrative agency proceedings seeking to halt the importation into the
United States of such foreign manufactured or previously exported trademarked
products. Although the Company is not currently the subject of any such legal
or administrative actions, and is not aware of any such threatened legal or
administrative actions, there can be no assurance that the Company's business
activities will not become the subject of such actions in the future, or that
future judicial, legislative or administrative agency action will not limit or
eliminate some or all of the secondary sources of supply of prestige fragrances
used by the Company. However, the Company believes that any future limitation
on or elimination of its sources of supply of prestige fragrances for sale to
its customers would not have a material adverse effect on the Company, although
there can be no assurance of such.
NO DIVIDENDS
The Company has not paid any dividends to date, other than a dividend paid
in 1995 to those individuals who constituted the Company's shareholders prior to
the IPO, which dividend was paid in connection with the termination of the
Company's status as an S Corporation. It is the Company's intention to retain
earnings, if any, to finance the operation and expansion of its business and,
therefore, it does not expect to pay cash dividends in the foreseeable future.
ELIMINATION OF LIABILITY OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation eliminates the liability of a
director of the Company for monetary damages for breach of duty as a director,
subject to certain exceptions. In addition, the Certificate of Incorporation
provides for the Company to indemnify, under certain conditions, directors and
officers of the Company against all expenses, liabilities and losses reasonably
incurred by such persons in connection therewith. The foregoing provisions may
reduce the likelihood of derivative litigation against directors and may
discourage or deter shareholders or management from suing directors for breaches
of their duty of care, even though such an action, if successful, might
otherwise benefit the Company and its shareholders.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
Upon the consummation of this offering, the Company will have 8,624,897
shares of Common Stock outstanding (assuming no exercise of outstanding options
or warrants), of which 4,397,397 shares of Common Stock will be freely tradeable
without restriction or further registration under the Securities Act of 1933, as
amended (the "Securities Act"). All of the remaining 4,227,500 shares of Common
Stock outstanding are "restricted securities," as that term is defined under
Rule 144 promulgated under the Securities Act, and in the future may only be
sold pursuant to a registration statement under the Securities Act, in
compliance with the exemption provisions of Rule 144 or pursuant to another
exemption under the Securities Act. Commencing in October 1995, an aggregate of
4,140,000 restricted shares became eligible for sale under Rule 144, subject to
certain volume limitations prescribed by Rule 144 and to the contractual
restrictions described below. The balance of the restricted shares will become
eligible for sale under Rule 144, subject to the volume limitations prescribed
by Rule 144, at various times commencing in July 1997. Pursuant to an agreement
between the Company and the Underwriter of the Company's IPO (the
"Underwriter"), the Company granted the Underwriter demand and piggyback
registration rights with respect to shares of Common Stock underlying the
Underwriter's warrants issued in connection with the IPO (the "Underwriter's
Warrants"), which Underwriter's Warrants entitled the holders thereof to
purchase an aggregate of 240,000 shares of Common Stock and 240,000 Public
Warrants, and, in July 1996, the 480,000 shares of Common Stock underlying the
Underwriter's Warrants were registered by the Company under the Securities Act.
As of the date of this Prospectus, all of the Underwriter's Warrants have been
exercised and the Company has issued 240,000 shares of Common Stock and 240,000
Public Warrants in connection therewith. In addition, pursuant to a Warrant and
Registration Agreement between the Company and Jan S. Mirsky, the Company's
Executive Vice President - Finance and Chief Operating Officer, the Company
granted Mr. Mirsky certain demand and "piggyback" registration rights (subject
to certain limitations) with respect to shares of Common Stock issuable upon
exercise of warrants (the "Warrants") issued
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<PAGE>
to Mr. Mirsky under such agreement. In January 1997, the Company filed
with the Commission a Registration Statement on Form S-8 pursuant to which it
registered under the Securities Act, among other things, the 490,689 shares of
Common Stock underlying the Warrants, as well as the resale by Mr. Mirsky of
such shares of Common Stock. As of the date of this Prospectus, Mr. Mirsky has
exercised Warrants to purchase an aggregate of 109,000 shares of Common Stock.
No prediction can be made as to the effect, if any, that sales of shares of
Common Stock or even the availability of such shares for sale will have on the
market prices prevailing from time to time. While Messrs. Markowitz, Sharp,
Lazaro and Mirsky have agreed to extend until January 12, 1998 certain
contractual transfer restrictions in favor of the Underwriter, pursuant to which
restrictions each of such persons has agreed not to sell or otherwise dispose of
90% of the shares of Common Stock held by him (including, without limitation,
shares which may be acquired upon exercise of options and warrants) without the
prior written consent of the Underwriter (other than pursuant to private
transfers in which the transferee agrees to abide by the same restriction), the
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect prevailing market prices for the Common Stock and
the Public Warrants and could impair the Company's ability to raise capital
through the sale of its equity securities.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF PUBLIC WARRANTS
The Public Warrants may be redeemed by the Company at any time, upon notice
of not less than 30 days, at a price of $.0167 per Public Warrant, provided the
closing bid quotation of the Common Stock on Nasdaq has exceeded $3.33 (subject
to adjustment) for a period of 20 consecutive trading days during the period in
which the Public Warrants are exercisable. Redemption of the Public Warrants
could force the holders to exercise the Public Warrants and pay the exercise
price at a time when it may be disadvantageous for the holders to do so, to sell
the Public Warrants at the then-current market price when they might otherwise
wish to hold the Public Warrants, or to accept the redemption price, which is
likely to be substantially less than the market value of the Public Warrants at
the time of redemption.
POSSIBLE DELISTING OF SECURITIES FROM NASDAQ SYSTEM; RISKS RELATING TO
LOW-PRICED STOCKS
The Company's Common Stock and Public Warrants are listed on Nasdaq. In
order to continue to be listed on Nasdaq, however, the Company must maintain
$2,000,000 in total assets, a $200,000 market value of the public float and
$1,000,000 in total capital and surplus. In addition, continued inclusion
requires two market-makers and a minimum bid price of $1.00 per share; provided,
however, that if the Company falls below such minimum bid price, it will remain
eligible for continued inclusion in Nasdaq if the market value of the public
float is at least $1,000,000 and the Company has $2,000,000 in capital and
surplus. Nasdaq has recently proposed new maintenance criteria which, if
implemented, would eliminate the exception to the $1.00 per share minimum bid
price and require, among other things, $2,000,000 in net tangible assets,
$1,000,000 market value of the public float and adherence to certain corporate
governance provisions. The failure to meet these maintenance criteria in the
future may result in the delisting of the Company's securities from Nasdaq. In
such event, trading, if any, in the securities of the Company would thereafter
be conducted in the over-the-counter markets through the so-called "pink sheets"
or the NASD's "Electronic Bulletin Board." Consequently, the liquidity of the
Company's securities could be impaired, not only in the number of securities
which could be bought and sold, but also through delays in the timing of
transactions, difficulty in obtaining accurate quotations as to the market value
of the securities and reductions in the security analysts' and the news media's
coverage of the Company. Delisting of the Company's securities may result in
lower prices for the Company's securities than might otherwise prevail.
In addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to fall below $5.00 per
share, trading in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Exchange Act which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a penny stock (generally, any non-Nasdaq equity security that has a
market price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers by such requirements
may discourage
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<PAGE>
broker-dealers from effecting transactions in the Common Stock and Public
Warrants, which could severely limit the market liquidity of the Common Stock
and Public Warrants, the ability of purchasers in this offering to sell the
Common Stock in the secondary market and the Company's ability to obtain
additional financing.
USE OF PROCEEDS
Any and all of the Shares which may be sold pursuant to this Prospectus
will be sold by the Selling Stockholder for its own account. The Company will
receive none of the proceeds from the sale of the Shares.
SELLING STOCKHOLDER
The number of shares of the Company's Common Stock owned beneficially by
the Selling Stockholder as of the date of this Prospectus, the number of shares
of the Company's Common Stock which may be offered by the Selling Stockholder
pursuant to this Prospectus and the amount and percentage of shares to be owned
by the Selling Stockholder assuming the sale of all such shares are as follows:
<TABLE>
<CAPTION>
SHARES TO BE OWNED AFTER
SALE OF SHARES REGISTERED FOR RESALE
SHARES -------------------------------------
BENEFICIALLY SHARES BEING PERCENT OF
NAME OF SELLING STOCKHOLDER OWNED REGISTERED FOR RESALE AMOUNT OUTSTANDING (1)
- --------------------------- ---------------- --------------------- ------ ---------------
<S> <C> <C> <C> <C>
Sharpy Corporation 360,000 360,000 -0- --
- ------------------------
(1) Based on 8,624,897 shares of Common Stock outstanding as of February 27, 1997.
</TABLE>
PLAN OF DISTRIBUTION
The Shares are being registered in order to facilitate their sale from time
to time by the Selling Stockholder, or by pledgees, donees, tranferees or other
successors in interest thereof, should the Selling Stockholder or any such other
party determine to make such sales. The Company is unable to predict whether or
when the Selling Stockholder or any such other party will determine to proceed
with sales of the Shares, as such determination will be made by the Selling
Stockholder or such other party. The sale of the Shares by the Selling
Stockholder, or by pledgees, donees, transferees or other successors in interest
thereof, may be effected from time to time in transactions (which may include
block transactions) on the Nasdaq Small-Cap Market, the over-the-counter market,
the BSE, in private sales or in negotiated transactions, through the writing of
options on Shares, or a combination of such methods of sale, at fixed prices
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. The Selling
Stockholder or such other party may effect such transactions by selling Shares
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the Selling
Stockholder and/or the purchasers of Shares for whom such broker-dealers may act
as agent or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). In
addition, any Shares covered by this Prospectus which qualify for sale pursuant
to Rule 144 promulgated under the Securities Act ("Rule 144") may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Selling Stockholder and any broker-dealers that act in connection with
the sale of the Shares hereunder might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities
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<PAGE>
Act and any commissions received by them and any profit on the resale of Shares
as principal might be deemed to be underwriting discounts and commissions under
the Securities Act.
The Company has agreed to pay all expenses of registration incurred in
connection herewith; provided, however, that all selling and other expenses
incurred by the Selling Stockholder will be borne by the Selling Stockholder.
The Company has also agreed to use its best efforts to keep the Registration
Statement of which this Prospectus forms a part current for a period of 60 days
or until such earlier time as all of the Shares registered hereby have been sold
or the Selling Stockholder has agreed to terminate the offering of the remaining
Shares. If the Company is required to update this Prospectus during such
period, the Company may incur additional expenses.
DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
The Company and the Selling Stockholder have agreed to indemnify each other
against certain civil liabilities, including liabilities under the Securities
Act. In addition, Section 402(b) of the New York Business Corporation Law (the
state of incorporation of the Company) and the certificate of incorporation of
the Company, as amended, provide for the indemnification of directors and
officers under certain circumstances from certain liabilities. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Securities and Exchanges Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
EXPERTS
The financial statements of the Company as of December 31, 1995 and for the
two years in the period ended December 31, 1995 included in the Company's Annual
Report on Form 10-KSB and incorporated by reference in this Prospectus have been
included in reliance upon the reports of Goldstein Golub Kessler & Company,
P.C., independent certified public accountants, given upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares has been passed upon by Zimet, Haines, Friedman
& Kaplan, 460 Park Avenue, New York, New York 10022.
13
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- --------------------------------------------------------------------------------
NO 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------------
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION...................................................... 2
DOCUMENTS INCORPORATED BY REFERENCE........................................ 2
PROSPECTUS SUMMARY......................................................... 3
RISK FACTORS............................................................... 5
USE OF PROCEEDS............................................................ 12
SELLING STOCKHOLDER........................................................ 12
PLAN OF DISTRIBUTION....................................................... 12
DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES............................................ 13
EXPERTS.................................................................... 13
LEGAL MATTERS.............................................................. 13
360,000 SHARES
SEL-LEB MARKETING, INC.
COMMON STOCK
--------------------
PROSPECTUS
--------------------
March 4, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
The Company has agreed to bear the expenses in connection with the
registration by the Selling Stockholder of the shares being registered
hereunder. Such expenses are set forth in the following table. All of the
amounts are estimates except the Securities and Exchange Commission filing fee.
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee................................... $702.27
Accounting fees and expenses........................... 7,500.00
Legal fees and expenses................................ 15,000.00
Printing expenses...................................... 2,000.00
Miscellaneous.......................................... 797.73
----------
Total............................................... $26,000.00
----------
----------
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 402(b) of the New York Business Corporation Law ("New York Law")
permits a provision in the certificate of incorporation of each corporation
organized thereunder eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its stockholders for
monetary damages for certain breaches of fiduciary duty as a director. The
Certificate of Incorporation of the Registrant eliminates the personal liability
of directors to the fullest extent permitted by New York Law.
Section 722 of New York Law ("Section 722"), in summary, empowers a New
York corporation, within certain limitations, to indemnify its officers and
directors against judgments, fines, amounts paid in settlement and reasonable
expenses (including attorneys' fees) actually and necessarily incurred by them
in connection with any nonderivative suit or proceeding if they acted, in good
faith, for a purpose they reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to a criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
With respect to derivative actions, Section 722 permits a corporation to
indemnify its officers and directors against amounts paid in settlement and
reasonable expenses (including attorneys' fees) actually and necessarily
incurred in connection with the defense or settlement of such action, or in
connection with an appeal therein, provided such person meets the standard of
conduct described in the preceding paragraph, except that no indemnification is
permitted in respect of (i) a threatened action, or a pending action which is
settled or otherwise disposed of or (ii) any claim where such person has been
found liable to the corporation, unless the court in which the action was
brought approves such indemnification and determines that such person is fairly
and reasonably entitled to be indemnified.
Reference is made to Article Seventh of the Certificate of Incorporation,
as amended, of the Registrant for the provisions which the Registrant has
adopted relating to indemnification of officers and directors.
The Company and the Selling Stockholder have agreed to indemnify each other
against certain civil liabilities, including liabilities under the Securities
Act of 1933, as amended.
<PAGE>
Item 16. EXHIBITS
EXHIBIT DESCRIPTION
1 Not Applicable
2 Not Applicable
4 Instruments defining the rights of securityholders, including
indentures:
(A) Certificate of Incorporation, as amended (Incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1995).
(B) By-Laws (Incorporated by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1995).
(C) Specimen Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to Amendment No. 2 to the Company's
Registration Statement on Form SB-2 (Registration No.
33-88134), as filed with the Commission on June 28, 1995).
5 Opinion of Zimet, Haines, Friedman & Kaplan, filed herewith.
8 Not Applicable
12 Not Applicable
15 Not Applicable
23.1 Consent of Goldstein Golub Kessler & Company, P.C., filed
herewith
23.2 Consent of Zimet, Haines, Friedman & Kaplan (included in the
opinion filed as Exhibit 5)
24 Power of Attorney (see page II-4)
25 Not Applicable
26 Not Applicable
27 Not Applicable
99 Not applicable
Item 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Act;
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of North Bergen, New Jersey, on this
4th day of March, 1997.
SEL-LEB MARKETING, INC.
By: /S/HAROLD MARKOWITZ
------------------------
Harold Markowitz
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints each of Harold Markowitz and Jan S.
Mirsky and each of them, as his true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for him and his name, place
and stead, in any and all capacities, to sign any and all amendments, including
post-effective amendments, to this registration statement, and to file the same,
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<S> <C> <C>
/s/ Harold Markowitz Chairman of the Board and Director March 4, 1997
- ----------------------
Harold Markowitz
/s/ Paul Sharp President, Chief Executive Officer and March 4, 1997
- ---------------------- Director (Principal Executive Officer)
Paul Sharp
/s/ Jan S. Mirsk Executive Vice President - Finance, March 4, 1997
- ---------------------- Chief Operating Officer and Director
Jan S. Mirsky (Principal Financial and Accounting
Officer)
/s/ Jack Koegel Vice Chairman and Director March 4, 1997
- ----------------------
Jack Koegel
/s/ Jorge Lazaro Executive Vice President, Secretary March 4, 1997
- -------------------- and Directo
Jorge Lazaro
/s/ Stanley R. Goodman Director March 4, 1997
- ----------------------
Stanley R. Goodman
/s/ Edward C. Ross Director March 4, 1997
- ----------------------
Edward C. Ross
/s/ Douglas L. Bailey Director March 4, 1997
- -----------------------
Douglas L. Bailey
</TABLE>
<PAGE>
Exhibit 5
[ZIMET, HAINES, FRIEDMAN AND KAPLAN LETTERHEAD]
March 4, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Sel-Leb Marketing, Inc.
REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have been requested by Sel-Leb Marketing, Inc., a New York
corporation (the "Company"), to furnish to you our opinion as to the
matters set forth below in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement") relating
to the registration under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, of the sale by the selling stockholder
named in the Registration Statement of up to 360,000 shares (the "Shares")
of Common Stock, par value $.01 per share, of the Company ("Common Stock").
We have examined the proceedings taken in connection with the
incorporation of the Company under the laws of the State of New York,
including the certificate of incorporation of the Company and any
amendments thereto which have been filed. We have also examined (i) the
by-laws of the Company and any amendments thereto, (ii) the Registration
Statement and (iii) such other documents, records, certificates of public
officials, certificates and/or statements of officers and representatives
of the Company and matters of law as we have considered relevant. In such
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity
to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents. As to all questions of fact material to this opinion that have
not been
<PAGE>
independently established, we have relied upon certificates and/or
statements of officers and representatives of the Company.
Based upon the foregoing, and subject to the qualifications stated
herein (and assuming that the Shares will be sold according to the
Registration Statement at a time when such is effective and that they will
be in compliance with all applicable securities laws involved in those
states in which said securities may be sold), we are of the opinion that
the Shares have been duly authorized and validly issued and are fully-paid
and non-assessable.
We are admitted to practice law only in the State of New York and we
are expert in, and express opinions only as to, the laws of the State of
New York and federal laws of the United States.
We consent to the use and filing of this opinion in connection with
the Registration Statement and to the use of our name in the Registration
Statement under the caption "Legal Matters".
Very truly yours,
/s/ Zimet, Haines, Friedman & Kaplan
ZIMET, HAINES, FRIEDMAN & KAPLAN
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors
Sel-Leb Marketing, Inc.
We hereby consent to the incorporation by reference in the accompanying
Prospectus constituting part of the Registration Statement on Form S-3 of our
report dated March 3, 1996, except for the first paragraph of Note 9, as to
which the date is March 12, 1996, on the financial statements of Sel-Leb
Marketing, Inc. as of December 31, 1995 and for each of the two years in the
period ended December 31, 1995 included in the Sel-Leb Marketing, Inc. Annual
Report on Form 10-KSB for the year ended December 31, 1995. We also consent to
the reference to our firm under the caption "Experts" in such Prospectus.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
March 4, 1997
