As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
THCG, INC.
(Exact name of registrant as specified in its charter)
Utah 7320 87-0415597
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
650 Madison Avenue, 21st Floor
New York, New York 10022
(212) 223-0440
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
JOSEPH D. MARK
650 Madison Avenue, 21st Floor
New York, New York 10022
(212) 223-0440
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
COPIES TO:
PETER S. KOLEVZON, ESQ.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
(212) 715-9100
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration
Statement.
If the 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, as amended (the "Securities Act"), 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 the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------- ------------ -------------- -------------------- --------------
Proposed
Title of Shares Amount Maximum Proposed Maximum Amount of
to be Registered to be Offering Aggregate Registration
Registered Price Offering Price Fee
Per Share (1)
- ---------------------------------------------------------- ------------ -------------- -------------------- --------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share................ 907,556 $16.06 $14,575,349 $3,847.89
- ---------------------------------------------------------- ------------ -------------- -------------------- --------------
</TABLE>
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act, based on the average
of the high and low sales prices for THCG common stock as reported on
the Nasdaq National Market on .March 30, 2000.
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 or until this Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION
MARCH 31, 2000
907,556 SHARES
[LOGO]
THCG, INC.
COMMON STOCK
__________________________________
The stockholders of THCG listed on pages 14 to 16 of this prospectus
are offering and selling a total of 907,556 shares of our common stock under
this prospectus. We will not receive any of the proceeds from the sale of the
shares offered by these selling stockholders.
Our common stock is traded on the Nasdaq National Market under the
symbol "THCG." On March 24, 2000, the last sale price for our common stock, as
reported on the Nasdaq National Market, was $17.375 per share.
__________________________________
Investing in our common stock involves certain risks. See "Risk
Factors" beginning on page 2.
__________________________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information in this prospectus is not complete and may be changed.
The selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
__________________________________
The date of this prospectus is _____, 2000.
<PAGE>
TABLE OF CONTENTS
About THCG.....................................................................1
Risk Factors...................................................................2
Forward-Looking Statements....................................................13
Use of Proceeds...............................................................14
Selling Stockholders..........................................................14
Plan of Distribution..........................................................17
Legal Matters.................................................................18
Experts.......................................................................18
Where You Can Find More Information...........................................18
<PAGE>
SUMMARY
This summary highlights selected information from this prospectus and
may not contain all of the information that is important to you. To understand
this offering fully, you should read the entire prospectus carefully, including
"Risk Factors" beginning on page 2. In addition, you should also read the
documents we have referred you to in "Where You Can Find More Information" on
page 18 for information about our company and our financial statements.
ABOUT THCG
We are an Internet incubator company that provides venture funding,
venture development and venture banking services to companies in which we
acquire direct or indirect equity interests, also referred to throughout this
prospectus as our "partner companies." We are penetrating new markets by
developing our international operations and by expanding our global coverage of
the Internet industry. Our partner companies include Internet-based businesses,
established "brick and mortar" companies implementing an Internet-based strategy
and advanced technology and service companies. By providing our partner
companies with capital and a combination of enterprise-enhancing venture
development and venture banking services, we believe that we help our partner
companies focus on their core strengths, so that they may bring their products
and services to market more rapidly.
Our goal is to build dominant Internet-based businesses with a global
presence that are highly differentiated and have viable business models, and to
acquire equity interests in those businesses. To date, we have, and we continue
to acquire equity interests in our partner companies through a venture fund that
is managed by one of our wholly-owned subsidiaries and in which we own a 9.9%
interest. On certain occasions, we have also acquired direct equity interests in
our partner companies. In the future, our venture funding strategy is to acquire
direct equity interests of at least 25% in our partner companies. Although we do
not intend to engage in short-term sales of our equity interests in our partner
companies, we hope to realize gains through the selective sale of our equity
interests over a period of time.
We seek to build our partner companies and to maximize the value of our
equity interest in them by providing venture development and venture banking
services to our partner companies and by promoting innovation and collaboration
among them. Our venture development services include strategic and management
consulting services, as well as business infrastructure services. Our venture
banking services include general advisory services, as well as advising our
partner companies on capital raising transactions, mergers and acquisitions and
recapitalizations and refinancings. By providing these venture development and
venture banking services, together with our venture funding activities, we
believe we are able to provide critical services to our partner companies at
every stage of their development.
We believe that our ability to finance, build and advise our partner
companies differentiates us from our competitors, who typically provide services
designed to address more specific needs of Internet-based businesses. We also
believe that our global focus will differentiate us from our competitors who
tend to have more regional focuses.
We are a Utah corporation formerly known as Walnut Financial Services,
Inc. Our executive offices are located at 650 Madison Avenue, 21st Floor, New
York, New York 10022. Our phone number is (212) 223-0440. References in this
prospectus to "THCG" or "us" or "our" mean THCG and its subsidiaries on a
consolidated basis, unless the context otherwise requires.
-1-
<PAGE>
RISK FACTORS
You should be aware that there are various risks involved in an
investment in our common stock. Before investing in our common stock, you should
carefully consider the following risk factors and other information in this
prospectus.
Risk Factors Affecting Our Business
Our business, as currently conducted, has a limited operating history, and it is
difficult to predict whether our business will be successful.
On November 1, 1999, we withdrew our election to be regulated as a
business development company under the Investment Company Act. At the same time,
we shifted our business focus from that of investing in securities to that of an
operating company actively engaged in providing venture funding, venture
development and venture banking services to both Internet-based businesses and
partner companies while actively participating in the management, financing and
operation of those companies. As a result, our business, as currently conducted,
has a limited operating history. Our prospects must be considered in light of
the risks and uncertainties frequently encountered by companies expanding into a
new and rapidly evolving area such as the Internet. Many of the risks,
uncertainties, delays and difficulties associated with providing venture
funding, venture development and venture banking services to and operating
Internet-based businesses are beyond our control. We cannot assure our
stockholders that we will be successful in meeting the challenges and addressing
the risks that we face in this new and rapidly changing market.
Our business is capital intensive and we may not be able to secure additional
capital when we need it in the future to support our growth.
Our business is capital intensive. In the future, we expect
periodically to raise funds to acquire equity interests in and establish new
partner companies, to support our operations and expand our venture development
and venture banking services and to support the operations and growth of our
partner companies. Our future capital requirements will depend in large part on
the number of partner companies in which we acquire equity interests and which
we establish, the amounts of capital we provide to these companies and the
timing of these payments. Our plans and the related capital requirements will be
dependent on various factors, such as developments in our markets and the
availability of acquisition and entrepreneurial opportunities. If we are
successful in selling additional equity securities, our then existing
stockholders may suffer significant dilution. However, we may not be able to
obtain financing on acceptable terms, or at all, when we need it. If we require,
but are unable to obtain, additional financing in the future on acceptable
terms, or at all, we will not be able to continue our business strategy, respond
to changing business or economic conditions, withstand adverse operating results
or compete effectively, and our business, financial condition and operating
results may be materially and adversely affected as a result.
Our investments in our partner companies are risky.
A portion of our assets include equity interests which we have directly
and indirectly acquired in our partner companies. As of March 30, 2000, our
venture fund had acquired interests in eight companies, with its equity stakes
in these companies ranging from 1.7% to 22.7%. As of March 30, 2000, the
aggregate cost of our venture fund's investments totaled approximately $16.6
million. In the future, we expect to acquire direct equity interests of at least
25% in our partner companies. Decreases in the value of our partner companies
will have an adverse effect on our business, financial condition and operating
results. Even though we intend to be actively involved in the affairs of our
partner companies, because we own or will own less than a majority of the shares
of our partner companies, we may not be able to control the policies or
directions that these companies take.
All of our partner companies are in the early stages of development,
and we cannot assure you that these companies will be able to successfully
achieve their business goals in a timely manner or at all. Our strategy is to
realize a return on our equity interests in these companies by liquidating these
investments through sales of equity or otherwise. We cannot assure you that we
will realize any return on any of these investments. Moreover, the trading price
of our common stock may be adversely affected if we do not realize any return on
these investments, or if that return is lower than the market expects. The
failure of one or more of the companies in which we have invested, and
-2-
<PAGE>
the timing of any dispositions of our investments in these companies, could have
a material adverse effect on our business, financial condition and operating
results and on the market price of our common stock.
We will not be able to successfully execute our business strategy if we are
deemed to be an investment company under the Investment Company Act of 1940.
We are not currently required to be registered under the Investment
Company Act. Generally, a company must register under the Investment Company Act
and comply with significant restrictions on operations and transactions if: (1)
its investment securities exceed 40% of its total assets, or (2) it holds itself
out as being "primarily engaged" in the business of investing, owning or holding
securities. At this time, less than 40% of our total assets are investment
securities. If, in the future, our investment securities exceed 40% of our total
assets, we believe that we will not be required to register under the Investment
Company Act because we believe that we are "primarily engaged" in a
non-investment company business through our wholly-owned subsidiaries and that
we do not otherwise meet the requirements for registering under the Investment
Company Act. However, if more than 40% of our total assets are investment
securities and we are no longer "primarily engaged" in a non-investment company
business through our wholly-owned subsidiaries, we believe that we will be
"primarily engaged" in a non-investment company business through our
majority-owned subsidiaries and controlled subsidiaries and we will then
promptly file with the Securities and Exchange Commission an exemptive
application under Section 3(b)(2) of the Investment Company Act to have the
Securities and Exchange Commission so declare. If we do not receive exemptive
relief, then we may be required to register under the Investment Company Act.
Registration under the Investment Company Act would be inconsistent with our
present business strategy and would have a material and adverse effect on our
business, financial condition and operating results. Moreover, we might be
subject to civil and criminal penalties for failure to register, certain of our
contracts might be voidable and a court-appointed receiver could take control of
our company and liquidate our business.
To avoid regulation under the Investment Company Act, we would have to
attempt to reduce our investment securities to less than 40% of our total
assets. This reduction can be attempted in a number of ways, including the
disposition of investment securities and the acquisition of non-investment
security assets. If we were required to sell investment securities, we may sell
them sooner than we otherwise would. These sales may be at depressed prices, and
we may not realize anticipated benefits from, or may incur losses on, these
investments. Some investments may not be sold due to contractual or legal
restrictions or the inability to locate a suitable buyer. Moreover, we may incur
tax liabilities when we sell assets. We may also be unable to purchase
additional investment securities that may be important to our operating
strategy. If we decide to acquire non-investment security assets, we may not be
able to identify and acquire suitable assets and businesses.
If we are deemed to be, and required to register as, an investment
company, we will be forced to comply with the numerous and burdensome
substantive requirements of the Investment Company Act, including:
o limitations on our ability to borrow;
o limitations on our capital structure;
o restrictions on acquisition of equity interests in partner
companies;
o prohibitions on transactions with affiliates;
o restrictions on specific investments; and
o compliance with reporting, record keeping, voting, proxy
disclosure and other rules and regulations.
If we were forced to comply with the rules and regulations of the
Investment Company Act, our operations would significantly change, and we would
be prevented from successfully executing our business strategy. As a result, our
business, financial condition and operating results would be materially and
adversely affected.
-3-
<PAGE>
The price of our common stock has been volatile.
The market price of our common stock has been, and is likely to
continue to be, volatile, experiencing wide fluctuations. In recent years, the
stock market has experienced significant price and volume fluctuations which
have particularly affected the market prices of equity securities of many
companies providing Internet-related products and services. Some of these
fluctuations appear to be unrelated or disproportionate to the operating
performance of these companies. Future market movements may materially and
adversely affect the market price of our common stock.
Fluctuations in our financial performance could adversely affect the trading
price of our common stock.
Our operating results may fluctuate as a result of a variety of
factors, many of which are beyond our control, including:
o the number of our partner companies with which we have
established relationships and the size and scope of the
venture funding, venture development and venture banking
services which we are engaged to provide;
o reductions, cancellations or completions of major engagements
to provide venture development, venture banking and/or venture
funding services;
o the loss of significant partner companies or a change of scope
in the venture funding, venture development and venture
banking services that we are providing to them;
o the efficiency with which we utilize our professionals, plan
and manage our existing and new partner companies and manage
our future growth;
o variability in market demand for venture funding, venture
development and venture banking services;
o our ability to retain and attract qualified professionals;
o our ability to provide our venture funding, venture
development and venture banking services within the budgets
established by our partner companies;
o costs related to expansion of our business;
o sales of equity interests in our partner companies;
o significant acquisitions;
o increased competition; and
o general economic conditions.
As a result of these possible fluctuations, period-to-period
comparisons of our operating results may not be reliable indicators of future
performance. A significant percentage of our expenses, including those related
to employee compensation and facilities, are fixed. If the number of our partner
companies and the scope of the venture funding, venture development and venture
banking services that we provide to them decreases in any period, then our
revenues and operating results may also decrease. In some quarters, our
operating results may fall below the expectations of securities analysts and
investors due to many factors, including those described above. As a result, the
trading price of our common stock would likely decline, and the decline could be
significant.
-4-
<PAGE>
We are dependent on our ability to recruit, train and retain highly skilled and
experienced professionals who are in short supply.
Our ability to provide our partner companies with venture funding,
venture development and venture funding services depends in large part on our
ability to identify, hire, train and retain highly skilled and experienced
professionals who have industry specific expertise and who are proficient in a
broad range of technological and business skills. There is a shortage of these
highly skilled and experienced personnel and we must compete with other
companies for this limited pool of people. We may be unable to attract, train or
retain qualified personnel. Failure to do so could have a material adverse
effect on our business, financial condition and operating results.
We compete against other larger companies that may be better able to provide
Internet-based businesses with the services that we offer.
We compete against numerous public companies such as CMGI, Inc.,
Internet Capital Group, Inc., Rare Medium Group, Inc. and Softbank Corp., as
well as private companies such as Idealab! and Divine Interventures, Inc., that
provide some combination of the venture funding, venture development and venture
banking services which we provide. Many of these competitors have longer
operating histories, larger installed client bases, greater name recognition,
more experience and significantly greater financial, technical, marketing and
other resources than we do. We expect that competition from both private and
public companies in our markets will intensify. At any time, our current and
potential competitors could increase their resource commitments to our markets.
Among other adverse consequences, this competition may diminish our ability to
identify, attract and develop relationships with partner companies. As a result,
our business, financial condition and operating results could be materially and
adversely affected.
Competition for venture funding services is intense.
In providing venture funding services, we compete directly against
traditional venture capital and private equity firms and public and private
companies with venture funds, and many of these competitors have significantly
greater experience and financial resources than we have. In addition to these
competitors, numerous public companies such as CMGI, Inc., Internet Capital
Group, Inc., Rare Medium Group, Inc. Softbank Corp., as well as private
companies such as Idealab! and Divine Interventures, Inc., devote significant
resources to providing capital together with other resources to Internet
companies. Additionally, corporate strategic investors, including Fortune 500
and other significant companies, are developing Internet strategies and
capabilities. Many of these competitors have significantly greater financial
resources and brand name recognition than we do, and the barriers to entry for
companies seeking to provide capital and other resources to entrepreneurs and
their emerging technology companies are minimal. We expect that competition from
both private and public companies with business models similar to our own will
intensify. Among other adverse consequences, this competition may diminish the
pool of potential investment opportunities and raise the cost of making future
investments. As a result, our business, financial condition and operating
results could be materially and adversely affected .
Competition for venture development and venture banking services is intense.
The individual markets for venture development and venture banking
services are intensively competitive and characterized by an increasing number
of entrants because the barriers to entry in these markets are relatively low.
In providing venture development services, we compete directly against strategy
consulting firms and management consulting firms.
In providing venture banking services, we compete directly with other
investment banking and merchant banking firms which vary in size from small,
privately-owned firms to very large, publicly-held corporations. We also face
increasing competition from other sources, such as commercial banks, insurance
companies and consulting firms offering financial services.
-5-
<PAGE>
Many of our current and potential competitors in the venture
development and venture banking markets have longer operating histories, larger
installed clients bases, greater name recognition and more experience and have
significantly greater financial, technical, marketing and other resources than
we do. As a result, our competitors may be more attractive partners to
Internet-based businesses. In addition, our competitors may be able to respond
more quickly to changes in client needs, service more clients simultaneously and
undertake more extensive marketing campaigns. We cannot assure you that we will
be able to compete successfully against our current or future competitors or
that competitive pressures will not have a material adverse effect on our
business, financial condition and operating results.
We may fail to successfully establish partner companies or properly identify
partner companies in which to acquire equity interests and effectively complete
these transactions.
Our success depends on our ability to identify opportunities to acquire
equity interests in or establish partner companies that will become successful
in the future and to successfully negotiate the terms of any acquisitions we
make. Our management has sole and absolute discretion in identifying and
selecting partner companies in which to acquire equity interests or to establish
and in structuring, negotiating, undertaking and divesting of equity interests
in our partner companies. Our stockholders will not be able to evaluate the
merits of the acquisition of an interest in, or the establishment of, any
particular partner company before we make the acquisition or establish the
company. In addition, in making decisions to acquire equity interests in or
establish partner companies, we will rely, in part, on financial projections
developed by our management and the management of potential partner companies.
These projections will be based on assumptions and subjective judgments. The
actual results of our partner companies may differ significantly from these
projections. If we have established or acquired equity interests in partner
companies that fail to meet their projections or otherwise fail to generate
income, our business, financial condition and operating results could be
materially and adversely affected.
Even if we identify a company that complements our strategy, we may be
unable to acquire an interest in that company for many reasons, including:
o our inability to agree on the terms of an acquisition or to
acquire an interest of at least 25% in the company;
o a lack of capital to acquire an interest in the company; and
o incompatibility between us and management of the company.
The failure to acquire equity interests in potential partner companies
that we have identified could adversely affect our business, financial condition
and operating results.
We have potential conflicts of interest with our venture fund.
Some of our senior executive officers and directors have been actively
involved in the venture funding decisions of THCG Venture Partners I, one of our
executive officers is the President and Chief Executive Officer of the sole
manager of THCG Venture Partners I, and several of our officers and directors
are indirect investors in THCG Venture Partners I. Many of our officers are also
actively involved in providing ongoing venture funding, venture development and
venture banking services to partner companies in which THCG Venture Partners I
has invested. These individuals may have conflicting fiduciary duties to our
stockholders and to the investors in THCG Venture Partners I, including
themselves in some cases. In addition, they may have conflicts between our
interests and their own indirect personal financial interests in THCG Venture
Partners I and our partner companies in which THCG Venture Partners I has
invested.
We have not adopted a conflicts of interest policy to govern these
situations.
-6-
<PAGE>
Our acquisition strategy may result in increased expenses, difficulties in
integrating acquired companies and diversion of management's attention.
A key component of our growth strategy is to pursue acquisitions of
businesses that complement our business strategy. We expect the competition for
acquisition candidates to continue to increase. We cannot assure you that we
will be able to identify and compete successfully for attractive acquisition
candidates or complete acquisitions at reasonable purchase prices, in a timely
manner or at all.
Some of the other risks that we may encounter in our acquisition growth
strategy include:
o expenses and difficulties in identifying potential targets and
the costs associated with uncompleted acquisitions;
o expenses, delays and difficulties of integrating acquired
companies into our existing organization;
o diversion of management's attention;
o expenses of amortizing acquired companies' intangible assets;
o issuance of equity securities to pay for acquisitions that
will dilute existing stockholders;
o possible adverse impact on our financial condition due to the
timing of an acquisition; and
o expense of any undisclosed or potential legal liabilities of
acquired companies.
If realized, any of these risks could have a material adverse effect on
our business, financial condition and operating results.
We may face difficulties managing our growth.
Our recent growth has required a great amount of our managerial and
operational resources. In the future, we intend to develop the infrastructure
necessary to implement our business strategy of acquiring equity interests in
additional partner companies and penetrating new markets by developing our
international operations and by expanding our global coverage of the Internet
industry. To manage this growth, our management must continue to:
o improve our operational and financial systems;
o expand our information technology systems;
o lease more space, including a larger facility in New York City, to
accommodate our operations and some of our partner companies; and
o expand, train, retain and manage our employee base.
If our systems, procedures and controls are inadequate to support our
operations, our expansion would be impaired. Our inability to manage our growth
effectively could have a material adverse effect on our business, financial
condition and operating results.
We may have difficulty in managing our international operations and expansion,
which could adversely affect our operating results and business.
A key element of our strategy is to penetrate new markets by developing
our international operations and by expanding our global coverage of the
Internet industry. Once developed, our management may have difficulty in
managing our international operations because of distance, as well as language
and cultural differences. We also may be unable to market and operate our
services successfully in foreign markets.
-7-
<PAGE>
Other risks related to international operations include:
o fluctuations in currency exchange rates;
o difficulties arising from staffing and managing foreign
operations;
o state-imposed restrictions on the repatriation of funds;
o legal and regulatory requirements of different countries, such
as differing tax, intellectual property or labor laws; and
o potential political and economic instability.
If any of these risks materialize, we may not be able to successfully
promote our services or perform client engagements in international markets. As
a result, our growth and ability to compete effectively may be hindered and our
business, financial condition and operating results could be materially and
adversely affected.
Our success, and the success of our partner companies, depends on the continued
expansion of e-commerce.
Our success, and the success of our partner companies, depends on the
continued expansion of business-to-business and business-to-consumer e-commerce.
The e-commerce market is still in its early stages of development. If widespread
commercial use of the Internet by individuals and businesses does not continue
to expand, or if the Internet does not continue to develop as an effective
medium for the provision of products and services, our business, financial
condition and operating results, and those of our partner companies, will be
materially and adversely affected.
Factors that may adversely affect the expansion of the Internet and
e-commerce include:
o actual or perceived lack of security of information;
o congestion of Internet traffic or other usage delays;
o inconsistent quality of service;
o increases in Internet access costs;
o increases in government regulation of the Internet;
o uncertainty regarding intellectual property ownership;
o reluctance to adopt new business methods;
o costs associated with the obsolescence of existing
infrastructure; and
o economic viability of e-commerce models.
Governmental regulation of the Internet could adversely impact our business and
operations and the business and operations of our partner companies.
Currently, few laws or regulations are directly applicable to the
Internet. Due to the increasing popularity and use of the Internet, it is likely
that a number of new laws and regulations may be adopted at the local, state,
national or international levels with respect to the Internet, including
Internet laws regarding privacy, taxation, pricing, content, copyrights,
distribution and quality of products and services. The enactment of any new laws
or regulations, including international laws and regulations, could inhibit the
growth in use of the Internet and decrease the acceptance of the Internet as a
communications and commercial medium, which could in turn decrease the demand
for our services and those of our partner companies, or otherwise have a
material adverse effect on our business, financial condition and operating
results, and those of our partner companies.
-8-
<PAGE>
The loss of executive management or other key personnel may adversely affect our
business and operations and our ability to compete effectively.
Our business and operations depend largely on the skills of our key
management and technical personnel. Many of our executive officers have recently
joined us, and many of our key personnel have worked together for a relatively
short period. If one or more members of our executive management or other key
personnel were unable or unwilling to continue in their present positions, these
persons would be very difficult to replace. In addition, if any of these persons
joined a competitor or formed a competing company, some of our clients might
choose to use the services of that competitor or new company instead of ours.
Furthermore, our clients or other companies seeking management talent may hire
some members of our executive management or other key personnel. This could
result in the loss of our client relationships or new business opportunities and
materially and adversely affect our ability to implement our business strategy.
Our partner companies could make business decisions that are not in our best
interests or that we do not agree with, which could impair the value of our
partner company interests.
Because neither we nor the venture fund in which we own a 9.9% interest
owns a majority voting interest in any of our partner companies, we do not have
complete control over any of them. While we plan to acquire direct equity
interests of at least 25% in our partner companies in the future, we will
continue to acquire less than majority voting interests in most of our partner
companies. Further, we may not maintain our current ownership levels in our
partner companies if we sell portions of our equity interests or our partner
companies issue additional equity to other parties.
Our ownership of equity interests in partner companies over which we do
not exercise complete control involves additional risks that could cause our
equity interests, and therefore our business, financial condition and operating
results to be materially and adversely affected, including:
o management of a partner company having economic or business
interests or objectives that are different than ours; and
o partner companies not taking our advice with respect to the
financial or operating difficulties that they encounter.
Our inability to control our partner companies completely could prevent
us from assisting them, financially or otherwise, or could prevent us from
liquidating our equity interests in them at a time or at a price that is
favorable to us. Additionally, to the extent we do not completely control them,
our partner companies may not act in ways that are consistent with our business
strategy and may compete with us or other partner companies. These factors could
hamper our ability to maximize returns on our equity interests, and cause us to
recognize losses on our equity interests in partner companies.
Failure to develop and strengthen the THCG brand could adversely affect our
business.
We believe that maintaining and strengthening the THCG brand is an
important aspect of attracting and maintaining clients. The importance of brand
recognition will increase as competition in the market for Internet services
increases. Building a brand requires a successful marketing effort and
successful delivery of products and services to clients. A single event
involving client dissatisfaction could tarnish our perception as a whole despite
our efforts to maintain and strengthen the THCG brand name. Consequently, the
strategy adopted and expenses incurred by us may not result in a stronger brand.
Ownership of our company is concentrated.
Joseph D. Mark and Adi Raviv, our co-chief executive officers and
directors, each beneficially owned approximately 17.5% of our outstanding common
stock as of March 24, 2000. As a result, Messrs. Mark and Raviv possess
significant influence over our company on business matters, including the
election of directors, the appointment of new management and the approval of any
other action requiring the approval of our stockholders. Greenwich Street
Capital Partners II, L.P. and its affiliates beneficially owned approximately
35.7% of our outstanding common
-9-
<PAGE>
stock as of March 24, 2000. In addition, pursuant to a voting agreement between
us and Greenwich Street Capital Partners, Greenwich Street Capital Partners has
the right to appoint one individual to our Board of Directors so long as
Greenwich Street Capital Partners is the holder of common stock or warrants to
purchase common stock which equal at least 5%, in the aggregate, of our
outstanding shares of common stock. Keith W. Abell, Co-President of Greenwich
Street Capital Partners, became a director on November 1, 1999.
The concentration of our share ownership may:
o delay or prevent a change in control of THCG;
o impede a merger, consolidation, takeover or other business
combination involving THCG; or
o discourage a potential acquiror from making a tender offer or
otherwise attempting to obtain control of THCG.
The broker-dealer activities of our wholly-owned subsidiary, Tower Hill
Securities, are subject to extensive regulation.
Our wholly-owned subsidiary, Tower Hill Securities, is a registered
broker-dealer and a member of the National Association of Security Dealers, or
NASD. As a result, Tower Hill Securities' principals, registered representatives
and other associated persons must comply with applicable state securities laws,
rules and regulations, and with the rules of the NASD. Broker-dealers are
subject to extensive regulations which cover all aspects of the securities
business, including sales methods, trade practices, capital structure, record
keeping and conduct of directors, officers and employees. In addition, Tower
Hill Securities is required to maintain a minimum regulatory net capital and a
specified ratio of aggregate indebtedness to net capital. The failure to comply
with, or adverse changes in, the laws or regulations to which Tower Hill
Securities' business is subject, or adverse changes in the interpretation
thereof, could have a material adverse effect on the business, financial
condition and operating results of Tower Hill Securities and us, as its parent.
The issuance of preferred stock or additional common stock may adversely affect
our stockholders.
Our board has the authority to issue up to 5,000,000 shares of our
preferred stock and to determine the terms, including voting rights, of those
shares without any further vote or action by our stockholders. The voting and
other rights of the holders of our common stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. Similarly, our board may issue additional shares of
common stock without any further vote or action by stockholders, which would
have the effect of diluting common stockholders. An issuance could occur in the
context of a public or private offering of shares of common stock or preferred
stock or in a situation in which the common stock or preferred stock is used to
acquire the assets or stock of another company. The issuance of common stock or
preferred stock could have the effect of delaying, deferring or preventing a
change in control.
Anti-takeover provisions could make a third-party acquisition of our company
difficult.
We are a Utah corporation. The Utah General Corporation Law contains
provisions that could make it more difficult for a third party to acquire
control of us. In addition, we have a classified board of directors, with each
board member serving a staggered three-year term. The existence of a classified
board could make it more difficult for a third-party to acquire control of us.
Shares eligible for future sale could cause our stock price to decline.
The market price of our common stock could decline as a result of
future sales of substantial amounts of our common stock, or the perception that
such sales could occur. Furthermore, certain of our existing stockholders have
the right to require us to register their shares, which may facilitate their
sale of shares in the public market.
-10-
<PAGE>
Risk Factors Affecting Our Partner Companies
Our partner companies' growth depends on their ability to retain their key
personnel.
Although we offer management guidance and support to our partner
companies, the growth of our partner companies will depend on their ability to
attract and retain their own senior management personnel. As they expand, our
partner companies will also need to continue to hire additional technical,
marketing, financial and other key personnel, unless they rely on us or third
parties to provide these services. A shortage in the availability of required
personnel could limit the ability of our partner companies to grow, sell their
products and services and launch new products and services.
Many of our partner companies may grow rapidly and may be unable to manage their
growth.
We expect many of our partner companies to grow rapidly. Rapid growth
often places considerable operational, managerial and financial strain on a
business. To successfully manage their rapid growth, our partner companies must:
o rapidly improve, upgrade and expand their business
infrastructures;
o deliver products and services on a timely basis;
o maintain levels of service expected by clients and customers;
o maintain adequate levels of liquidity; and
o expand and upgrade their technology, transaction processing
systems and network hardware or software or find third parties
to provide these services.
Our business, financial condition and operating results will be
materially and adversely affected if our partner companies are unable to
successfully manage their growth. In addition, many of our partner companies
have only recently begun to develop their financial reporting systems and
controls. As a result, these companies may not be able to provide us with their
financial results on a timely basis, making it difficult for us to monitor these
companies and assess our financial position.
If we are unable or unwilling to provide our partner companies with the
significant additional financing they will need, our equity interests in them
may be diluted or they may fail.
Most of our current partner companies are, and we expect that our
future partner companies will be, in the early stages of their development. Our
partner companies will require significant amounts of additional capital to
compete successfully, meet their business objectives and produce revenues and
profits. We may not be able to accurately predict these capital needs, and we
may decide not to provide the additional capital that our partner companies
require or we may not be given the opportunity to provide it. If our partner
companies receive capital from other sources, our ownership interest in them may
be diluted. If our partner companies are unable to obtain additional capital,
they may fail and their failure could have a material adverse effect on our
business, financial condition and operating results.
Our partner companies face intense competition in their product and service
markets, and if they cannot compete effectively, they will fail.
Competition for Internet-related products and services is intense. As
the market for e-commerce grows, we expect that competition will intensify.
Barriers to entry are minimal, and competitors can offer products and services
at a relatively low cost. Furthermore, our partner companies' competitors may
develop Internet products or services that are superior to, or have greater
market acceptance than, the solutions offered by our partner companies. Many of
our partner companies' competitors have greater brand recognition and greater
financial, marketing and other resources than our partner companies. This may
place our partner companies at a disadvantage in responding to their
competitors' pricing strategies, technological advances, advertising campaigns,
strategic partnerships and
-11-
<PAGE>
other initiatives. If our partner companies are unable to compete successfully,
they will fail and their failure may have a material adverse effect on our
business, financial condition and operating results.
Our partner companies may fail if they do not adapt to the rapidly changing
e-commerce marketplace.
If our partner companies fail to adapt to the rapid changes in
technology and customer and supplier demands, they may not generate revenues or
become or remain profitable. The e-commerce market is characterized by:
o rapidly changing technology;
o evolving industry standards;
o frequent new product and service introductions;
o shifting distribution channels; and
o changing customer demands.
Our future success will depend on our partner companies' ability to
adapt to this rapidly evolving marketplace. They may not be able to adapt their
products and services adequately or economically, develop new products and
services or establish and maintain effective distribution channels for their
products and services. Our partner companies' businesses will also depend on the
efficient and uninterrupted operation of their computer and communications
hardware systems to enable them to continuously provide their products and
services over the Internet. If our partner companies are unable to meet these
challenges, they may be unable to sell their products and services and generate
revenues. Therefore, their businesses may become or remain unprofitable which,
in turn, will have a material adverse effect on our business, financial
condition and operating results.
Our partner companies may not be able to attract a loyal base of customers to
their web sites or develop relationships with distribution partners, which will
negatively affect their ability to generate revenues.
Our success is related to the ability of our partner companies to
deliver compelling Internet content, products or services to their targeted
customers. Internet users can freely navigate and instantly switch among a large
number of web sites. Many of these web sites offer original content, products or
services, which may make it difficult for our partner companies to distinguish
the content on their web sites sufficiently to attract a loyal base of users. If
any partner company fails to differentiate itself from other Internet industry
participants, the value of its brand name could decline, and its prospects for
future growth would diminish. In addition, our partner companies will need to
develop relationships with entities, such as Internet service providers,
Internet portals and e-commerce web sites, typically called distribution
partners, that can guide or deliver customers to visit our partner companies'
web sites. There is intense competition for these distribution partners.
Accordingly, maintaining a strong base of distribution partners may be difficult
and costly for our partner companies.
Our partner companies may be at a competitive disadvantage if they are unable to
protect their proprietary rights or if they infringe on the proprietary rights
of others, and any related litigation could be time consuming and costly.
Because all our partner companies operate or will operate their
businesses through web sites and rely on hardware and software to conduct
e-commerce, proprietary rights, particularly in the form of trade secrets,
copyrights and patents, will be critical to the success and competitive position
of most of our partner companies.
The actions that our partner companies take to protect their
proprietary rights may be inadequate. In addition, effective copyright and
trademark protection may be unenforceable or limited in certain countries and
our partner companies may be unable to control the dissemination of their
content and products and use of their services due to the global nature of the
Internet. A substantial majority of our partner companies license content and
technology which they include in their product or service offerings from third
parties, and they could become subject to infringement actions as a result. In
addition, third parties may claim that our partner companies have
-12-
<PAGE>
violated their intellectual property rights. For example, companies have
recently brought claims regarding alleged infringement of patent rights relating
to methods of doing business over the Internet. To the extent that any of our
partner companies violates a patent or other intellectual property right of a
third party, it may be prevented from operating its business as planned, and it
may be required to pay damages, to obtain a license, if available, to use the
patent or other right or to use a non-infringing method, if possible, to
accomplish its objectives. Any of these claims, with or without merit, could
subject our partner companies to costly litigation and the diversion of their
technical and management personnel. If our partner companies incur costly
litigation and their personnel are not effectively deployed, the expenses and
losses incurred by them will increase, and their profits, if any, will decrease.
Concerns regarding security of transactions or the transmissions of confidential
information over the Internet or security problems experienced by our partner
companies may prevent them from expanding their businesses or subject them to
legal exposure.
If a partner company does not offer sufficient security features in its
online product and service offerings, its products and services may not gain
market acceptance, and it could be exposed to legal liability. Despite the
measures that may be taken by our partner companies, the infrastructure of each
of them will be potentially vulnerable to physical or electronic break-ins,
viruses or similar problems. If a person circumvents the security measures of
our partner companies, that person could misappropriate proprietary information
or cause interruptions in the operations of the partner company. Security
breaches that result in access to confidential information could damage the
reputation of any one of our partner companies and expose it to a risk of loss
or liability. All of our partner companies will be required to make significant
expenditures, either for internal development efforts or payments to us or other
third parties providing security-related services, to protect against or remedy
security breaches. Additionally, as e-commerce becomes more widespread, our
partner companies' customers may become more concerned about security. If our
partner companies are unable to adequately address these concerns, they may be
unable to sell their products and services.
FORWARD-LOOKING STATEMENTS
This prospectus contains a number of forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Specifically, all statements other than
statements of historical facts included in this prospectus, or incorporated
herein by reference, regarding our financial position, business strategy and
plans and objectives of management for future operations are forward-looking
statements. These forward-looking statements are based on the beliefs of
management, as well as assumptions made by and information currently available
to management. When used in this prospectus, including the information
incorporated by reference, the words anticipate, believe, estimate, expect, may,
will, continue, intend and plan and words or phrases of similar import, as they
relate to our financial position, business strategy and plans, or objectives of
management, are intended to identify forward-looking statements. These
cautionary statements reflect our current view regarding future events and are
subject to risks, uncertainties and assumptions related to various factors which
include but may not be limited to those listed under the heading "Risk Factors"
and other cautionary statements in this prospectus and in the information
incorporated herein by reference.
Although we believe that our expectations are reasonable, we cannot
assure you that our expectations will prove to be correct. Based upon changing
conditions, should any one or more of these risks or uncertainties materialize,
or should any underlying assumptions prove incorrect, actual results may vary
materially from those described in this prospectus as anticipated, believed,
estimated, expected, intended or planned. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by these cautionary statements.
-13-
<PAGE>
USE OF PROCEEDS
The selling stockholders will receive all of the net proceeds from the
sale of common stock offered by this prospectus, and we will receive none of
these proceeds.
SELLING STOCKHOLDER
The selling stockholders are offering and selling a total of 907,556
shares of common stock under this prospectus. The following table sets forth:
o the number of shares of common stock beneficially owned by
each selling stockholder as of the date of this prospectus;
o the number of shares being offered by each selling stockholder
under this prospectus; and
o the number of shares of common stock which will be owned by
each selling stockholder after the completion of the offering
(assuming that all of the shares offered by each selling
stockholder are sold).
The information set forth in the table below is based on 12,579,635
shares of common stock outstanding as of March 24, 2000, which includes all of
the shares being offered by the selling stockholders by this prospectus. All
information with respect to share ownership has been provided by the selling
stockholders. The shares offered under this prospectus may be offered from time
to time, in whole or in part, by the selling stockholders or their transferees.
Except as indicated in the footnotes, none of the selling stockholders has been
an officer, director or employee of THCG for the past three years.
<TABLE>
<CAPTION>
- ------------------------------------------------ --------------------- ---------------- ------------------------------------------
Number of Shares of Common Stock Beneficially Owned After
Common Stock Number of the Offering
Beneficially Owned Shares of ------------------------------------------
Before the Common Stock
Selling Stockholders Offering Offered Number Percent
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
<S> <C> <C> <C> <C> <C>
212 Madison Corporation 1,458 1,458 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Murat and Ender Agirnasli 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Alliance Capital Investment Corporation 52,501 52,501 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Allied International Fund, Inc. 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Apparel Trading International, Inc. Retirement *
Trust 5,834 5,834 (1) 0
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Baystate Development Trust 17,500 17,500 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Ellis Belodoff 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Gary Berger 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Ivan Berkowitz 237,000 (2) 12,000 (3) 225,000 (2) 1.8%
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Kenneth and Lori Bernstein 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Theodore J. Burns 22,000 22,000 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Bud Clarke 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Commercial Reserve Corporation 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Corporate Funding Group 141,983 141,983 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Corsair/Kramer, Inc. 2,622 2,622 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Daleford Way Pty Ltd. 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Delaware Charter Guarantee & Trust FBO: Ronald
I. Heller, IRA 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Gerry Delisle 42,780 42,780 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Cyrus Diamond and Janet Diamond JTWROS 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------ --------------------- ---------------- ------------------------------------------
Number of Shares of Common Stock Beneficially Owned After
Common Stock Number of the Offering
Beneficially Owned Shares of ------------------------------------------
Before the Common Stock
Selling Stockholders Offering Offered Number Percent
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
<S> <C> <C> <C> <C> <C>
Victor J. DiGioia 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Mitchell and Randi Dobies 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Herbert and Janice Donica JTTEN 2,543 1,459 (1) 1,084 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Sheldon Erdman 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Gerald L. Facciani 10,168 5,834 (1) 4,334 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Vincent and Louise Ferrante 3,936 2,917 (1) 1,019 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Celeste Fierro 729 729 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
First Trust Corporation Trustee FBO: Robert
M. Marcus IRA 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Galaxy Investments, Inc. 72,028 11,668 (1) 60,360 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Gary and Debra Gallagher JTWROS 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Stanley R. Goldstein 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
The Steven J. Goodman Revocable Living Trust 1,750 1,750 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
The Steven J. Goodman Defined Benefit Pension
Plan 1,167 1,167 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Jay Gottlieb 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Michael I. Gottlieb 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Peter Graham, as trustee for the Peter Graham *
Money Purchase Trust 5,244 5,244 (4) 0
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Jay Haft 11,667 11,667 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Rachel Hemeli 1,167 1,167 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Investquest, Inc. 23,334 23,334 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Jasminville Corporation N.V. 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Kaiser Capital Fund L.P. 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Ruth Kanter 15,835 5,834 (1) 10,001 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Kanter Family Foundation (5) 61,334 5,834 (1) 55,500 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Andrew M. Kaplan 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Jerry Kaplan 3,917 2,917 (1) 1,000 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Lawrence Kaplan (6) 83,333 33,334 (1) 49,999 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Lawrence and Helaine Kaplan JTTEN 35,000 35,000 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Lorraine Kaplan 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Stanley A. Kaplan (6) 61,667 11,667 (1) 50,000 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Geraldine Kelly 13,368 5,834 (1) 7,534 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Kensington Investment Associates 10,488 10,488 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Helen Kohn 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Burton Koffman 20,625 20,625 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Kenneth J. Koock 17,835 11,667 (1) 6,168 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Randi Lambert 2,543 1,459 (1) 1,084 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Laurick Trust 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Melvin Lax 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Douglas B. Luce 17,500 17,500 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Lyon Share Venture Capital 14,159 14,159 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Laleh Mansouri 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Martan & Co. 8,750 8,750 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Mataponi Trust 41,248 41,248 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
David Melin 2,622 2,622 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Michael Miller 11,667 11,667 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Diani and Harry G. Mohrman, Jr. 1,959 1,459 (1) 500 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------ --------------------- ---------------- ------------------------------------------
Number of Shares of Common Stock Beneficially Owned After
Common Stock Number of the Offering
Beneficially Owned Shares of ------------------------------------------
Before the Common Stock
Selling Stockholders Offering Offered Number Percent
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
<S> <C> <C> <C> <C> <C>
M.S. Farrell Holdings Inc. 11,667 11,667 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Robert N. Murray 2,917 2,917 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
David S. Nagelberg 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Guy and June Padulo 2,125 1,459 (1) 666 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
George Patsis 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Joseph J. Papeo 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Jay Petschek 12,672 12,672 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Gerry Polakoff 42,780 42,780 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Gary O. Prescott 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Neil Ragin 8,750 8,750 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Alfred Romano 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Paul Savage 2,167 2,167 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Kenneth Schlacter 2,659 1,459 (1) 1,200 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Lawrence J. Schorr 874 874 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Schuyler Associates 41,248 41,248 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Jonathan D. Siegel 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Ronit Sucoff 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Fabian Talierco 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Michael Talierco 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
United Growth Fund Inc. Profit Sharing Plan 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Vestal Venture Capital 4,196 4,196 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Bruce H. Wallach 1,459 1,459 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Whitehorn Associates, Inc. 20,625 20,625 (4) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Windy City, Inc. (5) 111,063 6,125 (1) 104,938 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
Peter Wolf 5,834 5,834 (1) 0 *
- ------------------------------------------------ --------------------- ---------------- ------------------ -----------------------
</TABLE>
- ---------------------------------
* Less than 1%
(1) The selling stockholder acquired the shares of common stock being
offered by this prospectus upon the exercise of our Class A Warrants in
February 2000. The Class A Warrants were purchased by the selling
stockholder for $1.50 per share in a private placement transaction in
October 1997. In January 1999, we effected a one-for-six reverse split
of our common stock. As a result, the exercise price of the Class A
Warrants was increased to $9.00 per share and the number of shares of
common stock that could be purchased upon the exercise of the Class A
Warrant was divided by six. On February 25, 2000, we redeemed any Class
A Warrants that were not exercised on or before February 24, 2000.
(2) Includes 50,000 shares subject to options exercisable within 60 days.
(3) On December 29, 1999, we issued the selling stockholder 12,000 shares
of common stock pursuant to a finders agreement, dated December 29,
1999, between us and the selling stockholder. We entered into the
finders agreement with the selling stockholder in connection with our
acquisition of Mercury Coast Inc.
on December 29, 1999.
(4) The selling stockholder acquired the shares of common stock being
offered by this prospectus in connection with our purchase of shares of
common stock of Global Credit Services, Inc. from the selling
stockholder on February 7, 2000. In connection with that purchase, we
agreed to register these shares of our common stock under the
Securities Act of 1933.
-16-
<PAGE>
(5) Joel S. Kanter, a director of THCG, is the president of the selling
stockholder.
(6) On November 1, 1999, we issued the selling stockholder 50,000 shares of
common stock pursuant to an amended and restated finders agreement,
dated as of August 5, 1999, between us, Larry Kaplan, Stanley Kaplan
and Tower Hill Securities, Inc. We entered into the amended and
restated finders agreement in connection with our acquisition of Tower
Hill Securities, Inc. on November 1, 1999.
PLAN OF DISTRIBUTION
We are registering the shares of common stock offered by this
prospectus on behalf of the selling stockholders. As used herein, "selling
stockholders" includes donees and pledgees selling shares received from a named
selling stockholder after the date of this prospectus. We will pay all expenses
of registration of the shares offered hereby, other than commissions, discounts
and concessions of underwriters, dealers or agents. Brokerage commissions and
similar selling expenses, if any, attributable to the sale of the shares will be
borne by the selling stockholders. We will not receive any of the proceeds from
the sale of the shares by the selling stockholders.
The shares may be sold from time to time by the selling stockholders,
or by their pledgees, donees, distributees, transferees or other successors in
interest. Sales of the shares may be made in one or more types of transactions
(which may include block transactions) on one or more exchanges, in the
over-the-counter market, in negotiated transactions, through put or call options
transactions relating to the shares, through short sales of the shares, or a
combination of these methods of sale, at market prices prevailing at the time of
sale, or at negotiated prices. These transactions may or may not involve brokers
or dealers.
The selling stockholders may effect these transactions by selling their
shares directly to purchasers or to or through broker-dealers, which may act as
agents or principals. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling stockholders and/or
the purchasers of shares for whom these broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection
with the sale of the shares might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Consequently, any
commissions received by these broker-dealers and any profit on the resale of the
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act of 1933. We have
agreed to indemnify the selling stockholders against certain liabilities,
including liabilities arising under the Securities Act of 1933. The selling
stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act of 1933.
Because the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act of 1933, the selling
stockholders will be subject to the prospectus delivery requirements of the
Securities Act of 1933, which may include delivery through the facilities of the
Nasdaq National Market pursuant to Rule 153 under the Securities Act of 1933. We
have informed the selling stockholders that the anti-manipulative provisions of
Regulation M under the Exchange Act of 1934 may apply to their sales in the
market.
The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act
of 1933, provided that they meet the criteria and conform to the requirements of
that Rule.
We have agreed with the selling stockholders to keep the registration
statement, of which this prospectus is a part, effective for a period of up to
90 days after the effectiveness of the registration statement.
Except as noted in the next sentence, all of the selling stockholders
acquired their securities in the ordinary course of business and none of them
had any agreement or understanding, directly or indirectly, with any person to
distribute the securities at the time their securities listed above were
acquired. The following persons or entities are "underwriters" as defined in the
Securities Act of 1933 in connection with the sale of the shares offered by this
prospectus: 212 Madison Corporation, M.S. Farrell Holdings Inc. and Martan & Co.
Any broker-dealers or agents that participate with these persons or entities in
sales of the shares may be considered to be "underwriters" within the meaning of
the Securities Act in connection with sales in which they participate. If any
broker-dealers or agents
-17-
<PAGE>
are considered to be "underwriters," then any commissions they receive and any
profit on the resale of the shares purchased by them may be considered to be
underwriting commissions or discounts under the Securities Act 0f 1933.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock
offered by this prospectus have been passed upon for us by Stoel Rives LLP, Salt
Lake City, Utah.
EXPERTS
Richard A. Eisner & Company, LLP, independent public accountants,
audited our consolidated financial statements as of December 31, 1999 and for
the year then ended, which are included in our Annual Report on Form 10-K for
the year ended December 31, 1999 incorporated by reference in this prospectus
and elsewhere in this registration statement, as indicated in their report with
respect thereto. These documents are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
Cohen & Schaeffer, P.C., independent public accountants, audited our
Hambro America Securities Inc.'s consolidated financial statements as of
December 31, 1998 and March 31, 1998 and for the nine months and year,
respectively, then ended, and audited the consolidated financial statements of
Mercury Coast Inc. as of December 28, 1999 and for the period from March 11,
1999 (inception) to December 28, 1999, incorporated by reference in this
prospectus and elsewhere in this registration statement, as indicated in their
reports with respect thereto. These documents are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). Our
SEC filings are available to the public over the Internet at the SEC's web site
at http://www.sec.gov. You may also read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended, until the registration statement of which this prospectus is a part
is no longer effective:
The following documents are incorporated by reference into this
prospectus:
o Annual Report on Form 10-K, for the fiscal year ended December
31, 1999;
o Current Report on Form 8-K, filed January 6, 2000 pursuant to
Section 13 or 15(d) of the Exchange Act;
o Financial statements of Hambro America Securities, Inc. as of
March 31, 1998 and for the year then ended and as of December
31, 1998 and for the nine months then ended, together with the
reports thereon dated May 20, 1998 and January 26, 1999,
respectively, of Cohen & Schaeffer, P.C., and the unaudited
pro forma combined financial information of THCG, Inc.
included in our Current Report on Form 8-K/A, filed January
14, 2000 pursuant to Section 13 or 15(d) of the Exchange Act;
-18-
<PAGE>
o Registration Statement on Form 10, filed pursuant to Section
12(g) of the Exchange Act, which contains a description of our
common stock, including any amendment or report filed for the
purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Corporate Secretary
THCG, Inc.
650 Madison Avenue, 21st Floor
New York, New York 10022
Telephone number: (212) 223-0440
You should rely on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. The selling stockholders
will not make an offer of these shares in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
supplement is accurate as of any date other than the date on the front of those
documents.
-19-
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make representations other than those contained in this
prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by us or the selling stockholders.
Neither the delivery of this prospectus nor any sale hereunder shall, under any
circumstances, create an implication that the information herein is correct as
of any time subsequent to its date. This prospectus does not constitute an offer
or solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
907,556 SHARES
[LOGO]
THCG, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
__________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The Registrant estimates that expenses payable by the Registrant in
connection with the offering described in this Registration Statement will be as
follows:
Total
SEC registration fee (actual) .........................................$3,847.89
Accounting fees and expenses ...........................................$ 15,000
Legal fees and expenses.................................................$ 25,000
Printing and engraving expenses.........................................$ 20,000
Miscellaneous expenses..................................................$ 10,000
Total.......................................................$ 73,847.89
===========
Item 15. Indemnification of Directors and Officers
Reference is made to Section 16-10a-841 of the Utah Revised Business
Corporation Act (the "URBCA"), which permits a corporation in its articles of
incorporation or in its bylaws to eliminate or limit the personal liability of a
director to the corporation or to its shareholders for any actions taken or any
failure to take any action as a director, except for (a) the amount of a
financial benefit received by a director to which he is not entitled; (b) an
intentional infliction of harm on the corporation or the shareholders; (c) a
violation of Section 16-10a-842 (providing for liability of directors for
unlawful distributions to shareholders); or (d) an intentional violation of
criminal law. The Registrant's Articles of Amendment and Restatement contain
provisions permitted by Section 16-10a-841 of the URBCA.
Reference is made to Sections 16-10a-902 and 16-10a-907 of the URBCA,
which provide that a corporation may indemnify an individual made a party to a
proceeding because he is or was a director, against liability incurred in the
proceeding if (a) his conduct was in good faith; (b) he reasonably believed that
his conduct was in, or not opposed to, the corporation's best interests; and (c)
in the case of any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful. A director's conduct with respect to any employee
benefit plan for a purpose he reasonably believed to be in or not opposed to the
interests of the participants in and beneficiaries of the plan is conduct that
satisfies the requirement of clause (b) in the preceding sentence. The
termination of a proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendre is not by itself determinative that the individual did
not meet the standard of conduct required for indemnification. A corporation may
not indemnify a director: (a) in connection with a proceeding by or in the right
of the corporation in which the director was adjudged liable to the corporation;
or (b) in connection with any other proceeding charging that the director
derived an improper personal benefit, whether or not involving action in his
official capacity, in which proceeding he was adjudged liable on the basis that
he derived an improper personal benefit. Indemnification permitted under these
sections of the URBCA in connection with a proceeding by or in the right of a
corporation is limited to reasonable expenses incurred in connection with the
proceeding.
Reference is made to Section 16-10a-907 of the URBCA, which provides
that a corporation may indemnify an officer of the corporation to the same
extent as a director and, with respect to an officer who is not a director, to a
greater extent if not inconsistent with public policy.
The Registrant's Articles of Amendment and Restatement and Amended and
Restated By-laws provide for the indemnification of directors and officers of
the Registrant to the fullest extent permitted by the URBCA.
II-1
<PAGE>
The Registrant maintains liability insurance for each director and
officer for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of the Registrant.
Item 16. Exhibits
Exhibit No Description
5 Opinion of Stoel Rives LLP.
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Cohen & Schaeffer, P.C.
23.2 Consent of Stoel Rives LLP (contained in the opinion filed as Exhibit
5 hereto).
24.1 Power of Attorney (contained on the signature page of this Registration
Statement).
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the 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 Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
i. To include any prospectus required by Section
10(a)(3) of the Securities Act;
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 clauses (i) and (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 such clauses is contained in
periodic reports filed with or furnished to the Commission by
the Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement;
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
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 New York, State of New York, on March 30, 2000.
THCG, INC.
By: /s/ Joseph D. Mark
-----------------------------
Name: Joseph D. Mark
Title: Co-Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Joseph D. Mark and Adi Raviv, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully for 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 any of them or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title(s) Date
--------- -------- ----
/s/ Joseph D. Mark Co-Chief Executive March 30, 2000
- ------------------------------- Officer (Co-Principal
Joseph D. Mark Executive Officer) and
Director
/s/ Adi Raviv Co-Chief Executive March 30, 2000
- ------------------------------- Officer (Co-Principal
Adi Raviv Executive Officer) and
Director
/s/ Shai Novik Chief Financial Officer March 30, 2000
- ------------------------------- (Principal Financial and
Shai Novik Accounting Officer)
Director March 30, 2000
- -------------------------------
Keith Abell
/s/ Gene E. Burleson Director March 30, 2000
- -------------------------------
Gene E. Burleson
/s/ Burton W. Kanter Director March 30, 2000
- -------------------------------
Burton W. Kanter
/s/ Joel S. Kanter Director March 30, 2000
- -------------------------------
Joel S. Kanter
/s/ Henry Klein Director March 30, 2000
- -------------------------------
Henry Klein
II-4
<PAGE>
/s/ Evan Marks Director March 30, 2000
- -------------------------------
Evan Marks
/s/ Larry Smith Director March 30, 2000
- -------------------------------
Larry Smith
/s/ Stanley B. Stern Director March 30, 2000
- -------------------------------
Stanley B. Stern
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
5 Opinion of Stoel Rives LLP.
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Cohen & Schaeffer, P.C.
23.2 Consent of Stoel Rives LLP (contained in the opinion filed as Exhibit
5 hereto).
24.1 Power of Attorney (contained on the signature page of this Registration
Statement).
EXHIBIT 5
[LETTERHEAD OF STOEL RIVES LLP]
March 31, 2000
THCG, Inc.
650 Madison Avenue, 21st Floor
New York, New York 10022
Re: THCG, Inc. Registration Statement on Form S-3
---------------------------------------------
Ladies and Gentlemen:
We have acted as Utah counsel to THCG, Inc. (formerly known as
Walnut Financial Services, Inc. ("Walnut")), a Utah corporation (the
"Registrant"), in connection with certain matters related to the filing by the
Registrant of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933 as amended, covering the resale of up to 907,556
shares (collectively, the "Shares") of common stock, par value $0.01 per share,
of the Registrant by the holders thereof.
In connection with the preparation of this opinion letter and
as the basis for the opinion set forth below (the "Opinion"), we have made such
investigations of the laws of the State of Utah as we have deemed relevant and
necessary, and we have examined such documents as we have deemed relevant and
necessary, including the following:
(a) a photocopy of the resolutions of the board of directors
of the Registrant adopted on January 25, 2000;
(b) a photocopy of the Stock Purchase Agreement dated as of
February 7, 2000 by and among the Registrant and the stockholders of Global
Credit Services, Inc. listed on Schedule 1 thereto (the "Global Credit Stock
Purchase Agreement");
(c) a photocopy of the resolutions of the board of directors
of Walnut dated August 13, 1999 regarding the sale by Walnut of certain warrants
to purchase up to 1,000,000 shares of the common stock of Walnut (the
"Warrants");
(d) a photocopy of the Class A Warrant Agreement dated as of
October 15, 1997 between Walnut and Corporate Stock Transfer, Inc.;
(e) a photocopy of the Warrant Purchase Agreement dated as of
October 15, 1997 among Walnut and Lawrence Kaplan, Frank Shelley, Craig Gross,
Theodore Burns and Paul Savage;
<PAGE>
THCG, Inc.
March 30, 2000
Page 2
(f) a photocopy of the resolutions of the board of directors
of the Registrant adopted on March 29, 2000, certified as of March 31, 2000 by
Shai Novik, the corporate secretary of the Registrant;
(g) a photocopy of a Finder Agreement dated December 29, 1999
between the Registrant and Ivan Berkowitz; and
(h) a photocopy of the Registration Statement.
For purposes of this opinion letter, the following terms and
phrases have the following meanings:
(i) "internal laws of the State of Utah" means the laws
of the State of Utah, excluding any provisions or principles of Utah law
that might require the application of the law of any state or jurisdiction
other than the State of Utah.
(ii) "laws of the State of Utah" or "Utah law" means and
is limited to the present published statutes of the State of Utah, the
administrative rules and regulations of agencies of the State of Utah as
contained in the present published Utah Administrative Code, and the
present published decisions of the Utah Court of Appeals and the Utah
Supreme Court.
Based solely upon the examination describe above, and subject
to the assumptions, qualifications, limitations and exceptions set forth in this
opinion letter, we are of the opinion that (a) 863,856 of the Shares have been
duly authorized and are validly issued, fully paid and nonassessable, and (b)
the remaining 43,700 of the shares have been duly authorized and, when issued
and paid for in accordance with the applicable resolutions described above and
the Global Credit Stock Purchase Agreement, will be validly issued, fully paid
and nonassessable.
The Opinion is predicated upon and is limited by the matters
set forth in the Opinion and is further subject to the qualifications,
exceptions, assumptions, and limitations set forth below:
A. We have assumed that the issuance of the Warrants by Walnut
was duly approved by the shareholders of Walnut and that such issuance complied
in all respects with the Investment Company Act of 1940, as amended.
B. The Opinion is subject to the following:
(i) The opinion is limited to the laws of the State of
Utah. We express no opinion as to local laws, federal laws or the laws of
any other state or country.
(ii) Our duties and responsibilities with respect to
this opinion letter shall at all times and in all respects be governed by
and construed solely in accordance with the internal laws of the State of
Utah.
<PAGE>
THCG, Inc.
March 30, 2000
Page 3
C. We have not passed upon or considered, and for purposes of
the Opinion we have assumed (i) the genuineness of all signatures, (ii) the
conformity to the original documents of all photocopies or facsimile copies
submitted to us, whether certified or not, and the authenticity of the originals
of such copies and (iii) the authenticity of all documents submitted to us as
originals.
D. The opinion is limited to that expressly stated and no
other opinions should be implied.
We hereby consent to the filing of this opinion letter as
Exhibit 5 to the Registration Statement. In giving the foregoing consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ Stoel Rives LLP
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of our report dated march 16, 2000 on our audit of the consolidated
financial statements of THCG, Inc. as of December 31, 1999 and for the year then
ended included in THCG, Inc.'s Annual Report on Form 10-K, for the year ended
December 31, 1999. We also consent to the reference to our firm under the
caption "Experts."
/s/ Richard A. Eisner & Company, LLP
New York, New York
March 30, 2000
Exhibit 23.2
Consent of Independent
Certified Public Accountants
THCG, Inc.
New York, New York
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated May 20, 1998 and January 26, 1999,
appearing in the Current Report on Form 8-K/A of THCG, Inc. filed January 14,
2000 relating to the financial statements of Hambro America Securities, Inc. for
the year ended March 31, 1998 and the nine months ended December 31, 1998,
respectively, and of our report dated February 21, 2000 appearing in the Current
Report on Form 8-K/A of THCG, Inc. filed March 13, 2000 relating to the
financial statements of Mercury Coast Inc. as of December 28, 1999 and for the
period from March 11, 1999 (inception) to December 28, 1999, which reports are
incorporated by reference to THCG, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1999.
We also consent to the reference to us under the caption "Experts" in the
Registration Statement.
/s/ Cohen & Schaeffer, P.C.
New York, New York
March 31, 2000
