As filed with the Securities and Exchange Commission on November 25, 1997September 10, 1999
Registration No. 333-:
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SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CREATIVE BAKERIES, INC.
(Exact name of Registrantregistrant as specified in its charter)
NEW YORK 20 PASSAIC AVENUENew York 13-3832215
(State or other jurisdiction of FAIRFIELD, NEW JERSEY 07004 (I.R.S. Employer
incorporation or organization) 973-808-8248 Identification Number)
20 Passaic Avenue
Fairfield, New Jersey 07004
(973) 808-8248
(Address, including zip code, and telephone number,
including area code of Registrant's principal executive offices)
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Philip Grabow
Chairman of the Board,PHILIP GRABOW
President and Chief Executive Officer
Creative Bakeries, Inc.
20 Passaic Avenue
Fairfield, New Jersey 07004
973-808-8248
----------------(973) 808-8248
(Name, address, including zip code and telephone number,
including area code, of Registrant's agent for service)
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Copies of all communications, including communications
sent to agent for service, should be sent to:
Samuel F. Ottensoser,Copy To:
Richard S. Frazer, Esq.
Baer arksPryor Cashman Sherman & UphamFlynn LLP
805 Third410 Park Avenue
New York, New York 10022
(212) 702-5700
----------421-4100
Approximate date of commencement of proposed sale of the securities to the
public: From
time to timeAs soon as possible after this Registration Statement becomes effective.
If the only securities being registered on this Form are beingto be offered
pursuant to dividend or interest reinvestment plan,plans, please check the following
box. [ ]|_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]|X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act pleaseof 1933, check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]|_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]|_|
If delivery of the prospectusProspectus is expected to be ademade pursuant to Rule 434,
please check the following box.[ ] |_|
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CALCULATION OF REGISTRATION FEE
(see next page)Calculation Of Registration Fee
===================================================================================
Proposed Proposed
Maximum Maximum
Offering Aggregate
Title of Each Class of Amount to Price Per Offering Amount of
Securities to be Registered be Registered Share* Price* Registration Fee
- -----------------------------------------------------------------------------------
Common Stock, $.001 par
value ...................... 891,250 shares $0.44 $392,150.00 $200.00
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* Calculated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee (based on the average of the bid and
asked price of our common stock as quoted on the NASD OTC Bulletin Board
on September 3, 1999.)
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
rilefile a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Title of Each Class Proposed Maximum
of Securities Amount to be Offering Price Proposed Maximum Amount of
to be Registered Registered(2) Per Share(3) Aggregate Offering Price (Registration Fee
- -------------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value.... 2,872,500(1) $1.75 $5,026,875 $1,523.30
===============================================================================================================================
(1) Includes the registration for resale of: (a) 2,003,750 shares of Common
Stock issuable upon the exercise in full of warrants to purchase
1,996,250 shares of Common Stock (subject to adjustments), with an
exercise price of $2.50 per share; (b) 100,000 shares of Common Stock
issuable upon the exercise in full of warrants to purchase 100,000
shares of Common Stock (subject to adjustments), with an exercise price
of $1.8750 per share; and (c) 776,250 shares of Common Stock issued in
October 1997 upon the exercise of outstanding warrants.
(2) Pursuant to Rule 416 under the Securities Act of 1933, as amended, such
number of shares of Common Stock registered hereby shall include an
indeterminate number of additional shares of Common Stock which may be
issued upon the occurrence of certain events in accordance with the
applicable terms and provisions with respect to the Options or the
Warrants, including stock splits, stock dividends or similar
transactions or anti-dilution adjustments.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended,
based upon the average of the high and low sale prices of the Common
Stock on the Nasdaq SmallCap Market on November 19, 1997.
PROSPECTUS
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED November 25, 1997
2,872,500891,250 Shares of Common Stock
CREATIVE BAKERIES, INC.
ThisCommon Stock
(Par value $.001 Per Share)
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The shareholders listed in this prospectus (the "Prospectus") relatesare offering and selling up to
the offer and sale (the
"Offering") by the selling securityholders (the "Selling Securityholders") of891,250 shares (collectively, the "Shares") of common stock $0.001 par value per share
(the "Common Stock") of Creative Bakeries, Inc., a New York corporation (the
"Company"). The Shares offered hereby include 1,996,250 shares of Common Stock
(subject to adjustments) issuable upon exercise in full of warrants ("Warrants")
to purchase an aggregate of 1,996,250 shares of Common Stock, at an exercise
price of $2.50 per share, and 100,000 shares of Common Stock (subject to
adjustments) issuable upon the exercise in full of options ("Options") to
purchase 100,000 shares of Common Stock, at an exercise price of $1.8750 per
share. The Warrants expire December 31, 2000 and the Options expire December
1998. See "Selling Securityholders," "Plan of Distribution" and "Description of
Capital Stock."
The Company We will not receive
any proceeds from such sale.
Our common stock is quoted on the sale of the Shares
offered hereby, but will receive proceeds from the exercise, if any, of the
Warrants and the Options. The Company will bear the expenses of this Offering.
The Company estimates that it will incur an aggregate of approximately $16,900
in expenses in connection with this Offering. The Company is required to
effectuate this Offering pursuant to agreements between the Company and certain
of the Selling Securityholders. See "Description of Capital Stock."
The Common Stock is listed on The Nasdaq SmallCap MarketNASD OTC Bulletin Board under the symbol
"CBAK." On November 19, 1997,The last reported bid price for the closing salecommon stock on September 3, 1999,
was $0.38 per share (rounded to the nearest cent). The last reported ask price
offor the Common Stock
as reportedcommon stock on The Nasdaq SmallCap Marketsuch date was $1.75$0.50 per share.
The Shares offered hereby involve a high degreeselling shareholders may offer their shares of risk. Prospective
purchasers should carefully considercommon stock through
public or private transactions in the factors set forth underover-the-counter markets, on or off the
captionUnited States exchanges, at prevailing market prices or at privately negotiated
prices. The selling shareholders may engage brokers or dealers who may receive
commissions or discounts from the selling shareholders.
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See "Risk Factors" beginning onat page 25 of this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVEDprospectus for a discussion of
certain material factors which you should consider before investing in the
common stock offered by this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is September _, 1999.
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information provided or incorporated by reference in
this prospectus or any related supplement. We are not offering to sell or buy
the common stock offered in this document to any person unauthorized or
prohibited to do so. The selling shareholders 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.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities Exchange Commission (the "SEC"). You may
read and copy any document we file at the SEC's public reference room located
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of such public reference
room. You may also request copies of such documents, upon payment of a
duplicating fee, by writing to the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549 or obtain copies of such documents from the SEC's web site at
http://www.sec.gov.
INCORPORATION BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.REFERENCE
The Selling SecurityholdersSEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
considered to be 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 other person participating infuture filings we make with the
distribution of the Shares offered hereby will be subject to applicable
provisionsSEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amendedamended:
(1) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998; and
(2) Quarterly Report on Form 10-QSB for the fiscal quarter ended March
31, 1999;
(3) Quarterly Report on Form 10-QSB for the fiscal quarter ended June
30, 1999;
You may request a copy of these filings (excluding exhibits to such
filings that we have not specifically incorporated by reference in such
filings), at no cost, by writing or telephoning us at the following address:
Creative Bakeries, Inc.
20 Passaic Avenue
Fairfield, New Jersey 07004
Attn: Mr. Philip Grabow, President
(973) 808-8248
The following discussion and analysis contains forward-looking statements.
Such statements generally discuss future expectations. You can identify such
statements by the use of forward looking terminology as "may," "will," "expect,"
"anticipate" or other similar words.
You should be aware that any such forward-looking statements are not guarantees
of future performance and involve risks and uncertainties. Actual results may
differ materially from those in the forward-looking statements as a result of
various factors. Factors that might cause such a difference include, among
others, general economic and business conditions. See "Risk Factors."
ABOUT THE COMPANY
We, Creative Bakeries, Inc., through our two operating subsidiaries,
WGJ Desserts and Cafes, Inc. (the "Exchange
Act""WGJ Subsidiary") and Batter Bake-Chatterley
Inc. (the "BBC Subsidiary"), offer a broad line of premium quality pastries,
cakes, pies, cookies and other assorted desserts which are produced at our
baking facility. We market and distribute our baked goods on a wholesale basis
to supermarkets, restaurants and institutional dining facilities as well as by
mail order. Recently, we completed a corporate restructuring pursuant to which
we closed down our William Greenberg retail operations while consolidating into
the BBC Subsidiary the wholesale operations of JMS Specialities, Inc. ("JMS"),
which we acquired in January 1997, and Chatterley Elegant Desserts, Inc.
("Chatterley") which we acquired in August 1997. We continue to seek potential
acquisition or merger candidates to expand our existing product offerings and
geographic markets. However, we can offer no assurance that we will be able to
identify successfully such candidates on terms acceptable to us or at all.
Our Business Strategy
Retail. After carefully analyzing our retail operations, we concluded that
the William Greenberg stores we had recently opened were not generating the
sales revenue required to become profitable and that the resources required to
increase our retail sales would be better used to expand our wholesale division.
Therefore, we closed down all our of retail stores.
Institutional/Wholesale. We plan to increase our penetration in the
institutional/wholesale food market by expanding our marketing efforts to
restaurants, hotels and corporate dining facilities and by offering our products
to supermarkets on a national basis. We plan to expand both our product line and
geographic distribution through the following strategies:
o Expand geographic distribution by acquiring new food distributors in
the Connecticut and Philadelphia areas as well as key distributor
areas throughout the United States. To do this, we intend to appoint
food brokers in various states to handle sales on a commission-only
basis.
o Continue to expand the fat-free product line targeting existing
customers as well as new customers; and
o Enter into co-packing arrangements whereby we introduce private
label products of other bakery operations.
Mail Order. Our WGJ Subsidiary is offering its products through other
specialty food retailers and through its mail order catalogue business. Mail
order sales accounted for approximately 1% of total sales for each fiscal year
ended December 31, 1998, 1997 and 1996, respectively.
Kosher Foods. We are also seeking to benefit from the growth of the kosher
food
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industry. According to Prepared Foods, the kosher food industry generated
approximately $33 billion in sales in 1994 and has been growing at a rate of
approximately 15% per annum. The WGJ Subsidiary and the rulesBBC Subsidiary each have
a kosher certification and regulations promulgated thereunder,we believe that we can benefit from the projected
growth of this market.
Our Business Philosophy
High Quality Ingredients. We believe that developing and maintaining
premium quality products is the key to our future success. We use fresh
ingredients in our products, including Rules 101
through 104,AA creamy butter, fresh eggs, premium
fruits, nuts, and such provisions may limitchocolates blended for our unique recipes. We seek to maintain
rigorous standards of freshness, quality and consistency.
Customer Service. Our goal is to provide our customers with warm,
courteous and efficient service. We depend on and enjoy a high rate of repeat
business. We believe that the timing of purchases and salesquality of the Shares.relationship between our employees
and our customers is critical to our success. We strive to hire and train
well-qualified, highly motivated employees committed to providing superior
levels of customer service.
Our Products
Baked Goods. Our BBC Subsidiary markets a full line of premium quality
baked products such as cheese cakes, mousse cakes and tart shells. Additionally,
we have expanded our offerings to include a line of frozen batter and baked
products, including a variety of Gourmet Frozen Muffin Batter products, No Sugar
Added Batters, as well as, a selection of Fully Baked Thaw & Sell muffins and
cakes. We continue to develop new products and welcome customer requests.
Kosher Foods. The Shares offered hereby may be offeredKosher Foods industry is a rapidly growing segment of
the prepared foods industry. Both our WGJ Subsidiary and our BBC Subsidiary have
kosher certifications and we believe that we can capitalize on the projected
growth of this market. We believe that our kosher certification will enable us
to better penetrate certain market areas. Our products are not kosher for
Passover.
Customers
Retail. Our WGJ Subsidiary has licensed the "William Greenberg Jr." name
to a retail operator who sells our products directly to individual consumers.
The retailer also sells our specialty desserts to customers for parties,
weddings, bar mitzvahs and other specialty occasions.
Institutional/Wholesale. This market is mainly served through the BBC
Subsidiary. With the acquisition of Chatterley, we now offer our institutional
and wholesale customers an expanded line of baked goods, batter and
frozen-finished cakes, brownies and muffins.
The BBC Subsidiary sells its products through food distributors to hotels,
hospitals and institutional feeders such as coffee shops, Marriott, Restaurants
Associates, etc. The products are also sold from timeretail through food distributors and
direct to time
pursuantsupermarket distribution centers.
Mail Order. The WGJ Subsidiary sells select products through mail order.
These products are shipped via overnight delivery and second day delivery
throughout the United States and internationally. We have a toll free number
(800) 564-2470 for our mail order operations.
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Distribution and Marketing
Recently, we decided to Rule 415close four retail stores operated by our WGJ
Subsidiary in New York City, including the commissary located at Macy's Herald
Square. As an alternative to the operation of retail stores, the WGJ Subsidiary
has licensed its name to an operator who runs retail and wholesale operations.
The BBC Subsidiary bakes all of its products at its 30,000 square foot
facility in Fairfield, New Jersey. Although utilization of the facility varies
based on seasonal fluctuation, the facility is operated on the basis of two
shifts, five days a week. We believe that the BBC Subsidiary has the capacity to
meet future requirements, including those arising out of the consolidation with
Creative Bakeries, Inc. The BBC Subsidiary delivers 90% of its products by truck
to its institutional/wholesale customers. About 10% of its customers pick up
their orders directly at the bakery and utilize their own distribution networks.
Historically, we have relied upon word-of-mouth and customer satisfaction
to market our products to new customers and to make existing customers aware of
new products.
Executive Offices
Creative Bakeries, Inc. was incorporated under the Securities Actlaws of 1933, as amended (the
"Securities Act"), by the Selling SecurityholdersNew York in
one or more transactions on
The Nasdaq SmallCap Market, in negotiated transactions, or a combination of such
transactions. The Shares may be soldNovember 1993. Our executive offices are located at market prices prevailing20 Passaic Avenue,
Fairfield, New Jersey 07004 and our telephone number at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Securityholders may effect such transactions by selling the
Shares directly to purchasers or through underwriters or broker-dealers who may
effect such transactions by selling the shares directly to purchasers or through
underwriters or broker-dealers who may act as agents or principals. Underwriters
or broker-dealers may receive compensation in the form of discounts, concessions
or commissions from the Selling Securityholders or the purchasers of the Shares
for whom the underwriters or broker-dealers may act as agent or to whom they
sell as principal or both.
The date of this Prospectusthat address is _______________ , 1997
(973)
808-8248.
4
RISK FACTORS
The Common Stock being offered herebypurchase of our common stock involves a high degree of risk. Prior to making any investment decision, prospective investorsYou
should carefully consider the following risk factors in addition to theand other information presented
in
this Prospectus relatingprospectus before deciding to the business of the Company and the Offering.
HISTORY OF LOSSES.invest in such stock.
Historical Losses
For the fiscal years ended December 31, 19961998 and 1997, we generated
consolidated revenues from continuing operations in the aggregate amount of
$3,814,440.00 and $5,014,558.00, respectively, a decrease of 24%. For the fiscal
years ended December 31, 1995,1998 and 1997, our costs of goods sold were
$3,137,519.00 and $4,224,113.00, respectively, a decrease 26%, due to the
Companyoverall decrease in sales. Operating expenses were $1,300, 317.00 and
$1,867,242.00 for 1998 and 1997, respectively, a decrease of 31%, mainly
attributable to the termination of certain management and other personnel. As a
result, the loss from continuing operations was $576,796.00 and $1,464,235.00
for 1998 and 1997 respectively, a decrease of 61%.
In the six months ended June 30, 1999, we generated net salesconsolidated revenues
from continuing operations in the aggregate amount of $4,232,616$2,036,252.00. During the
same period last year, our consolidated revenues were $1,959,341.00. Our cost of
goods sold during the first six months of 1999 and $1,741,014,
respectively,1998 were $1,611,200.00 and
incurred net losses of $4,978,127 and $1,861,221,$1,646,774.00, respectively. For at leastOur operating expenses also decreased for the current fiscal year, the Companysame
period from $614,680.00 in 1998 to $529,842.00 in 1999. As a result, our loss
from continuing operations was reduced from $279,801.00 in 1998 to $60,610 in
1999.
Management attributes this positive trend to its overrall restructuring
efforts. Although we anticipate that this positive trend will continue, we can
not offer assurance that we will become profitable or, if we become profitable,
that we will be able to incur substantial losses from operations as a resultsustain our profitability.
Success of among other things, its
expansion efforts. ThereRevised Business Strategy
We intend to re-focus our business strategy on our institutional/wholesale
and mail order operations; and recently, we have closed down all of our retail
operations. Having recently embarked on such strategy, there can be no assurance
that the Company's operationswe will achieve profitability at any timesuccessfully implement our strategy or that our strategy will
result in the future or, if achieved, sustain such
profitability.
EXPLANATORY PARAGRAPH IN INDEPENDENT AUDITOR'S REPORT. The Company's
independent auditors included an explanatory paragraphNeed For Additional Financing; Increase in their report on the
Company's financial statements asOperating Costs; Availability of
December 31, 1996 and 1995 and for the
years then ended incorporated by reference in this Prospectus stating that
certain factors raise substantial doubt about the Company's ability to continue
as a going concern. The Company's continuation as a going concern is dependent
upon its ability to obtain additional financing and to generate sufficient cash
flow to meet its obligations on a timely basis. The Company anticipates that it
will continue to incur operating losses for the foreseeable future. There can be
no assurance that the Company can continue as a going concern.
NEED FOR ADDITIONAL FINANCING; INCREASE IN OPERATING COSTS; AVAILABILITY
OF SUPPLIES. The Company had a working capital deficiency at September 30, 1997
of approximately $1,129,729. The Company believes it hasSupplies.
Although we believe we have adequate capital to fund current operations
for the next 12 months. However, the Companymonths, we may be required to obtain additional financing
earlier in order to continue itsour operations and expansion strategy and maintain the listing of its Common Stock
on The Nasdaq SmallCap Marketstrategy. We can offer
no assurances that we will be able to obtain additional funds, or otherwise. There can be no assurance thatif we are able
to obtain additional funds, such funds will be available when needed, or if available, will beobtainable on
favorable terms or in the
amounts required by the Company.required. If adequate fundswe are not availableable to the Company when needed, itraise additional funding, we may be
required to delay, scale back or eliminate some or all of its efforts or other
operations, which will have a material adverse effect on the Company'sour business, results
of operations and prospects. Any future issuancesissuance of the Company'sour securities will cause
dilution todilute
the Company'scommon stock of our then existing stockholders, which in certain
circumstances could be substantial.
In January 1997, the Company acquiredCurrently, we purchase all of the outstanding capital
stock of J.M. Specialties, Inc. ("JMS") and in August 1997, the Company acquired
all of the outstanding capital stock of Chatterley Elegant Desserts, Inc.
("Chatterley"). The continuation of the Company's expansion strategy will, at
least initially with respect to each acquisition, result in an increase in
operating costs which, in turn, could adversely affect the Company's business,
financial condition or results of operations. In addition, factors such as
inflation, increased food costs, construction cost overruns, increased labor and
employee benefit costs and the retention of qualified management and hourly
employees may increase its operating costs.
The Company currently purchases all of itsour ingredients, such as butter, eggs, sugar
and flour, from three suppliers. The costs of such items, like other
commodities, isare subject to fluctuations due to changes in economic conditions,
weather, demand and other factors, many of which are beyond the Company'sour control.
The Company historically hasHistorically, we have been able to pass significant price increases through
5
to itsour customers. However, we can offer no assurance can be givenassurances that itwe will be able to do
so in the future. In addition, increasesan increase in coffee prices could have a
material adverse effect on the Company'sour results of operations. The
Company believesWe believe that
alternative sources for itsour ingredients are readily available and doeswe do not
believe that the loss of any of itsour current suppliers would have a material
adverse effect on itsour business, financial condition or results of operations.
2
SUCCESS OF EXPANSION STRATEGY; RECENT ACQUISITIONS; CONTINUATION OF
LICENSE AGREEMENT WITH MACY'S. The Company intends to significantly increase its
institutional/wholesale and mail order operations. In January 1997, the Company
acquired all of the outstanding capital stock of JMS and in August 1997, the
Company acquired all of the outstanding capital stock of Chatterley. JMS and
ChatterleyDependence on Key Personnel
We are wholesale bakery operations. In addition, the Company presently
operates four retail stores in New York City under the name William Greenberg
Jr. Desserts and Cafes, including a cafe at Macy's Herald Square. Having
recently embarked on its expansion strategy, there can be no assurance that the
Company will successfully implement its strategy or that its strategy will
result in profitability. Consistent with its business strategy, the Company
anticipates entering into new geographic regions in which it has no previous
operating experience. No assurance can be given that Greenberg's will be
successful in geographic areas outside of the New York City area.
The Company is also party to a license agreement with Macy's East, Inc.
("Macy's") which is automatically renewable for successive one year periods.
Macy's or the Company has the right, at any time within 90 days of each renewal
term, to terminate the license. While the Company has no reason to believe that
the license will not be renewed annually, no assurance can be given that Macy's
or the Company will continue to renew the license. In the event the license is
not renewed, the Company's business, financial condition or results of
operations may be materially and adversely affected.
DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the experience, abilities and continued services of
Philip Grabow, the Company's Chairman of the
Board,our President and Chief Executive Officer, and David Abrahami, the Company's
Chief Operating Officer. The Company hasAlthough we have
entered into an employment agreementsagreement with each of these individuals. TheMr. Grabow, the loss of his services of any one of these individuals
or other key personnel
could have a material adverse effect on the Company'sour business, financial condition or
results of operations.
CONTROL OF COMPANY BY MANAGEMENT.Control of Company by Management
Philip Grabow owns 500,000 sharesof
Common Stock and Yona Abrahami,Gonen (formerly Abrahami), Chief Operating Officer
of the Company's
Chatterley, division and wife of David Abrahami, owns 1,300,000 shares of Common
Stock (subject to reduction in accordance with an agreement to be negotiated
between the Company and Ms. Abrahami), together representingown an aggregate of 1,000,000 shares of common stock,
representing approximately 35%19% of the issued and outstanding shares of Common Stock of the
Company (excluding warrants to purchase 300,000 shares of Common Stock owned by
Mr. Grabow, and 100,000 Options and Warrants to purchase 140,000 shares of
Common Stock owned by Mr. Abrahami).common
stock. Accordingly, Mr. Grabow and Ms. AbrahamiGonen will be able to effectively control
the election of the Company'sour Board of Directors and in general to effectively determine
the outcome of any corporatecorporation transaction or other matters submitted to the Company'sour
shareholders for approval including mergers, acquisitions, consolidations or the
sale of all or substantially all of the Company'sour assets. See "Description of Securities."
POTENTIAL LIABILITY; AVAILABILITY OF INSURANCE. The Company, fromPotential Liability; Availability of Insurance
From time to time, iswe are subject to lawsuits as a result of its businessour business;
and currently, maintainswe maintain insurance relating to personal injury and product
liability in amounts that it considerswe consider adequate and customary for the food
industry. While the
Company haswe have been able to obtain such insurance in the past, no
assurances can be given that itwe will be able to maintain these insurance
policies in the future. In addition, any successful claim against the Company,us, in an
amount exceeding itsour insurance coverage, could have a material adverse effect on
itsour business, financial condition or results of operations.
GOVERNMENT REGULATION; MAINTENANCE OF LICENSES AND CERTIFICATION. The
Company isRisks of Acquisition Strategy
We intend to develop and expand our business. Among the risks associated
with such strategy, which could materially adversely affect our business,
financial condition, results of operations and profitability, are the following:
o we may not be able to identify, acquire or profitably manage
such additional businesses;
o we may incur substantial costs, delays or other operational or
financial problems in integrating acquired businesses;
o such acquisitions may adversely affect our operating results;
o such acquisitions may divert management's attention;
o we may not be able to retain acquired key personnel;
o we may encounter unanticipated events, circumstances or legal
liabilities; and
o the value of acquired intangible assets could decrease.
6
Government Regulation; Maintenance of Licenses and Certification
We are subject to numerous state regulations relating to the preparation
and sale of food. It isWe are also subject to federal and state laws governing the
Company'sour
relationship with employees, including minimum wage requirements, overtime,
working and safety conditions, and citizenship requirements. The failure to
obtain or retain the required food licenses or to be in compliance with
applicable governmental regulations, or any increase in the minimum wage rate,
employee benefits costs (including costs associated with mandated health
3
insurance coverage) or other costs associated with employees, could adversely
affect theour business, financial condition or results of operations of the
Company.operations. Changes in
the laws regarding the minimum wage rate and other employee benefits and the
preparation and sale of food could adversely affect the
Company'sour operations as well as
the food industry in general. In addition, the
Company'sour products are certified as kosher
by independent entities. The Company
believesWe believe that itwe will continue to meet the kosher
certification requirements.
However,requirements; however, to the extent that the Company relieswe rely on itsour kosher
clientele, the failure to retain or obtain such certification in the future
could have a material adverse effect on the Company'sour business, financial condition or
results of operations.
RISKS ASSOCIATED WITH FOOD SERVICE INDUSTRY.Risks Associated With Food Service Industry
The results of operations of food service businesses are affected by,
among other things, changes in consumer tastes, national, regional and local
economic conditions, demographic trends, traffic patterns and the type, number,
and location of competing units. Food service companies also can be
substantially adversely affected by publicity resulting from poor food quality,
illness, injury, health concerns, methods of food preparation or operating
difficulties. ThereWe can be nonot offer assurance that the
Companywe will be able to maintain the
quality of its foodour products or avoid adverse publicity in the event of an illness,
injury or the like. In addition,
the Company isWe are dependent on frequent deliveries of fresh
ingredients and is
thereforeingredients. Therefore, we are subject to the risk that shortages or
interruptions in supply caused by adverse weather or other conditions which could
adversely affect the availability, quality, and cost of such ingredients. To the
extent that the
Company supplieswe supply baked goods to various restaurants and caterers, the Company iswe are
subject to frequent menu changes by such customers adding and deleting items.
Accordingly, the Company iswe are subject to the additional risk of order cancellations and
increases, often on short notice.
COMPETITION.Competition
The baking industry is a highly competitive and highly fragmented
industry. Competition in both the retail and institutional/wholesale baking
industry is based on product quality, brand name loyalty, price and customer
service. The Company competesWe compete with national, regional and local retail and wholesale
bakeries as well as supermarket chains that have in-store bakeries. Many of theseour
competitors are larger, more established and have greater financial and other
resources than the Company.we do. The specialty coffee/cafe business has become increasingly
competitive and relatively few barriers exist to entry. Some of the Company'sour major
competitors include Au Bon Pain, Karps, Pillsbury, Country Muffins and
Bake-N-Joy. CompetitorsOur competitors with significant economic resources in the baking
industry or existing non-specialty and specialty coffee/cafe businesses could,
at any time, enter the wholesale or retail bakery/cafe business.
QUARTERLY FLUCTUATIONS; SEASONALITY; POSSIBLE VOLATILITY OF STOCK PRICE.
The Company's7
Quarterly Fluctuations; Seasonality; Possible Volatility of Stock Price
Our operating results are subject to seasonal fluctuations. Historically,
the Company haswe have realized itsour highest level of sales in the second and fourth quarters
due to increased sales during the Thanksgiving, Christmas, Chanukah, Easter and
Passover seasons. In addition, the Company'sour operating results could be subject to
quarterly fluctuations due to the timing of the opening of additional cafes and
kiosks. Such quarterly variations could cause the market price of the Common Stockour common
stock to fluctuate substantially. In addition, the stock markets in the United
States have, from time to time, experienced significant price and volume
fluctuations that are unrelated or disproportionate to the operating
performanceperformances of individual companies. Such fluctuations may adversely affect the
price of the Company's Common Stock.
CONTINUED QUOTATION ON THE NASDAQ SMALLCAP MARKETS; STRICT MAINTENANCE
CRITERIA. The Company'sour common stock.
Lack of Liquidity of Common Stock
has been listed onOur common stock was delisted from the Nasdaq SmallCap Market in September
1998 and since October 1995. The maintenance criteria for continued quotationwe were delisted, our common stock has been traded on the Nasdaq SmallCap Market have recently become more strict. Recent rule changes
have increased certain quantitative and qualitative thresholds that issuers
(including the Company) must satisfy. No assurance can be given that the Company
will be able to continue to meet such criteria following this Offering. Failure
to meet the maintenance criteria in the future may result in the delisting of
the Common Stock. In such event,NASD
OTC Bulletin Board. Accordingly, an investor will likely find it more difficult
to dispose of, or to obtain accurate quotations as to the market value of, the
Common Stock.our
common stock. In addition, any delistingour common stock may cause the Common Stock to become subject to "penny stock"
4
regulations promulgated by the Securities and Exchange Commission. Under such
regulations, broker-dealersbrokers-dealers are required, among other things, to comply with
disclosure requirements and special investor suitability determinations prior to
a sale. If the Common Stockour common stock becomes subject to these regulations, the market
price of the Common Stockour common stock and liquidity thereof would be adversely affected. See
"Description of Securities."
STATE REGISTRATION REQUIRED FOR SALES OF SHARES.State Registration Required for Sales of Shares
Under the securities laws of certain states, the Sharesour securities may not be
sold unless they are qualified for sale or are exempt from registrationregulation under the
state securities laws of the state in which the prospective purchaser resides.
DILUTION.Dilution
As of the date of this Prospectus, there are outstanding (i) Optionsoptions to
purchase 100,000 shares of Common Stock,common stock and (ii) Warrants to purchase
1,996,250 shares of Common Stock and (iii) other warrants to purchase 1,276,3052,485,000
shares of Common Stock.our common stock. The exercise of all or a substantial portion of all
of the outstanding Optionsoptions and warrants (including the Warrants)warrants), and the
issuance of any additional securities which are exercisable for or convertible
into shares of Common Stock,our common stock, will have a dilutive effect, which could be
substantial, on the value of the then outstanding shares of Common Stock.
POSSIBLE ADVERSE EFFECT OF ISSUANCE OF PREFERRED STOCK. The Company'sour common stock.
Possible Adverse Effect of Issuance of Preferred Stock
Our Restated Certificate of Incorporation authorizes the issuance of
2,000,000 shares of Preferred Stock,preferred stock, with designations, rights and preferences
as determined from time to time by the Board of Directors. As a result of the
foregoing, the Board of Directors can issue, without further shareholder
approval, Preferred Stockpreferred stock with dividend, liquidation, conversion, voting or
other rights that could adversely affect the voting power or other rights of the
holders of the Common Stock.common stock. The issuance of Preferred Stockpreferred stock could, under
certain circumstances, discourage, delay or prevent a change in control of the
Company.control.
Although the Company haswe have no plans to issue any shares of Preferred
Stock,preferred stock, there can be
no assurance that itwe will not issue Preferred Stockpreferred stock at some future date.
SHARES ELIGIBLE FOR FUTURE SALE.Shares Eligible for Future Sale
As of the date of this Prospectus, there are 5,231,7505,305,250 shares of Common Stockour
common stock outstanding. Of such shares, approximately 2,860,7522,608,252 shares of Common Stockour common stock
are "restricted securities"
8
under Rule 144 of which 500,000 shares will be eligible for sale under Rule 144 in
January 1998, 30,000 shares will be eligible for sale under Rule 144 in June
1998, 40,000 shares will be eligible for sale under Rule 144 in July 1998,
1,300,000 shares will be eligible for sale under Rule 144 in August 1998, and
706,250 shares will be eligible for sale under Rule 144 in October 1998.144. Of such shares, 776,250891,250 are being registered herein. The
remaining 284,5021,717,002 outstanding restricted securities may be sold only pursuant
to a registration statement under the Securities Act of 1933, as amended
(the "Securities("Securities Act"), or an applicable exemption, including pursuant to Rule 144.
Under Rule 144, a person who has owned Common Stock for at least one year may,
under certain circumstances, sell within any three-month period, a number of
shares of Common Stock that does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly trading volume during
the four calendar weeks prior to such sale. In addition, a person who is not
deemed to have been an affiliate of the Company at any time during the three
months preceding a sale, and who has beneficially owned the restricted
securities for the last two years, is entitled to sell all such shares without
regard to the volume limitations, current public information requirements,
manner of sale provisions and notice requirements. Sales or the expectation of
sales of a substantial number of shares of Common Stock in the public market
following this Offeringoffering could adversely affect the prevailing market price of
the Common Stock.
5Dividend Policy
Generally. We expect to retain earnings, if any, to finance the expansion
and development of our business and we do not anticipate making any cash
dividend payment in the foreseeable future.
Effect of Certain Charter Provisions.
Authority of Board of Directors to Issue Preferred Stock. Pursuant to the
terms of our charter, our Board of Directors has the authority to issue up to
2,000,000 shares of preferred stock in one or more series. Our Board of
Directors may also determine the prices, rights, preferences, privileges and
restrictions, including voting rights, of the shares within each series without
any further shareholder vote or action. The rights of the holders of preferred
stock that our Board of Directors may issue may adversely affect the rights of
the holders of common stock. While the issuance of such preferred stock could
facilitate possible acquisitions and other corporate activities, it could also
impede a third party's ability to acquire control of our company.
Limitation of Liability of Directors. Pursuant to the terms of our charter
and to the extent New York law permits, we and our shareholders may not hold our
directors personally liable for monetary damages in the event of a breach of
fiduciary duty.
Impact of Year 2000
The Year 2000 issue is the result of computer-controlled systems using two
digits rather than four to define the applicable year. For example, computer
programs that have time sensitive software may recognize a date using "00" as
the year 1900 instead of the year 2000. This reading could result in a system
failure or miscalculations and cause a disruption in operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business activity.
Based on a recent assessment, we have determined that we will be required
to modify or replace portions of our software and hardware so that our systems
will function properly with respect to the dates in the year 2000 and
thereafter. We presently believe that with modifications to existing software
and hardware, the Year 2000 issue will not pose significant operational
9
problems for our systems.
Anti-takeover Effects of New York Law.
Certain anti-takeover provisions of New York law could delay or hinder a
change of control of our company. While such provisions generally facilitate our
Board of Directors' ability to maximize shareholder value, they may discourage
takeovers that could be in the best interest of certain shareholders. Such
provisions could adversely affect the market value of our stock in the future.
USE OF PROCEEDS
The Selling Securityholders will receive allshares of common stock offered hereby are being registered for the
account of the selling shareholders identified in this prospectus. See "Selling
Shareholders." All net proceeds from the sale of the Shares offered hereby. The Companycommon stock will go to the
shareholders who offer and sell their shares. Accordingly, we will not receive
any part of the proceeds from the salesuch sales of the Shares. However, 1,996,250 ofcommon stock.
SELLING SHAREHOLDERS
The selling shareholders have informed us that the Shares offered hereby are
issuable upon the exercise of outstanding Warrants to purchase shares of Common
Stock (subject to adjustments) at $2.50 per share and 100,000 of the Shares are
issuable upon the exercise of outstanding Options to purchase shares of Common
Stock at $1.8750 per share. If all of the Warrants and Options are exercised by
the Selling Securityholders, the Company estimates that it would receive
aggregate gross cash proceeds of approximately $5,178,125. The Company expects
to use the proceeds it receives from the exercise of the Warrants and the
Options, if any, for general corporate purposes.
SELLING SECURITYHOLDERS
The following Selling Securityholders beneficially own as of the date of
this Prospectus and may offer hereby thename, address, maximum
number of shares of Common Stock set
forth opposite their respective names (assuming the exercise of all of the
Warrantscommon stock to be sold and Options held by such holders into shares of Common Stock as of the
date of this Prospectus. The Shares offered pursuant to this Prospectus may be
offered from time to time by the Selling Securityholders named below or their
nominees. The Selling Securityholders are under no obligation to sell all or any
portion of the Shares pursuant to this Prospectus. In addition, because the
Selling Securityholders are not obligated to sell all or a portion of their
Shares pursuant to this Prospectus, the Company is unable to ascertain thetotal number of shares of Common Stockcommon
stock that each selling shareholder owns are as set forth in the following
table. The selling shareholders may sell all or part of their shares of common
stock pursuant to this prospectus. The offering of such shares of common stock
is not being underwritten on a firm commitment basis. As a result, we cannot
give you estimates as to the number and percentage of shares of common stock
each selling shareholder will be beneficially owned by each Selling
Securityholder following thehold upon termination of this offering. However,
we have assumed, for purposes of the Offering.
The Company will bear the expenses of this Offering. Except as provided
in this Prospectus, no Selling Securityholder has held any position or office or
had any other material relationship with the Company within the past three
years. The Selling Securityholders will receivefollowing table, that all of the proceeds from the
sale of the Sharesshares
being offered hereby. The Companyhereunder will not receive any proceeds
from the sale of such Shares. However, 1,996,250 of the Shares offered hereby
are issuable upon the exercise of outstanding Warrants to purchase shares of
Common Stock (subject to adjustments) at $2.50 per share and 100,000 of the
Shares are issuable upon the exercise of outstanding Options to purchase shares
of Common Stock at $1.8750 per share. If all of the Warrants and Options are
exercised by thebe sold.
Selling Securityholders, the Company estimates that it would
receive gross cash proceeds of approximately $5,178,125. See "Plan of
Distribution."
Except as otherwise indicated, to the knowledge of the Company, all
persons listed below have sole voting and investment power with respect to their
securities, except to the extent that such authority is shared by spouses under
applicable law or as otherwise noted below. The information in the table
concerning the Selling Securityholders is based on information provided to, or
known by, the Company. Information concerning the Selling Securityholders may
change from time to time after the date of this Prospectus. See "Risk Factors,"
"Plan of Distribution" and "Description of Capital Stock."Shareholders
SHARES OF SHARES OF
COMMON STOCK OWNED COMMON STOCK OFFERED
NAME OF SELLING SECURITYHOLDER PRIOR TO OFFERING(1) PURSUANT TO OFFERING(1)
- ------------------------------ -------------------- -----------------------No. of Shares of Maximum No. No. of Shares of Percentage of
Common Stock of Shares of Common Stock Common Stock
Beneficially Owned Common Stock to be Owned to be Owned
Name and Address Prior to Offering to be Offered After Offering After Offering (#)
---------------- ----------------- ------------- -------------- ------------------
Interequity Partners, L.P.(2)............... 30,000 30,000
Philip Grabow(3)............................ 300,000 300,000
Limor Beck(4)............................... 21,500 21,500
Eddy Ortega(5).............................. 1,000 1,000
August Jean Pierre(5)....................... 1,000 1,000
Wilson Pierre(5)............................ 1,000 1,000
Adjunct & Co. 500,000 500,000 0 *
Paine Webber Small Cap Fund
c/o Mitchell Hutchins Asset
Management Inc.
Attn: Don Jones
1285 Avenue of the Americas
15th Floor
New York, NY 10019
David Abrahami (1) 540,000 60,000 480,000 9%
c/o Rabinowiz, Trenk,
Lubetkin & Tully
200 Executive Drive
Suite 225
West Orange, NJ 07052-3303
6
10
SHARES OF SHARES OF
COMMON STOCK OWNED COMMON STOCK OFFERED
NAME OF SELLING SECURITYHOLDER PRIOR TO OFFERING(1) PURSUANT TO OFFERING(1)
- ------------------------------ -------------------- -----------------------No. of Shares of Maximum No. No. of Shares of Percentage of
Common Stock of Shares of Common Stock Common Stock
Beneficially Owned Common Stock to be Owned to be Owned
Name and Address Prior to Offering to be Offered After Offering After Offering (#)
---------------- ----------------- ------------- -------------- ------------------
Juan Hernandez(5)........................... 500 500
Stephen Fass(6)............................. 110,000 110,000
Maria Marfuggi(7)........................... 100,000 100,000
Raymond McKinstry(8)........................ 50,000 50,000
Andrew Kaplan(9)............................ 10,000 10,000
Lawrence Kaplan(9).......................... 10,000 10,000
Douglas Kaplan(9)........................... 10,000 10,000
Madeline Kaplan(9).......................... 10,000 10,000
Barry Kaplan(9)............................. 10,000 10,000
Geraldine P. Baileys, Trustee,TTEE 200,000 200,000 0 *
Baileys Family Trust
UTA(10)........................ 606,250 606,250
Adjunct & Co.(11)........................... 500,000 500,000
Fortuna Investment Partners, L.P.(12)....... 550,000 550,000
Murray Bacal(13)............................ 112,500 112,500Attn: Karen Brenner
1300 Bristol Street North
Suite 230
Newport Beach, CA 92660
Pearlman Family Revocable Trust(14)......... 56,250 56,250 Ed Herschenfeld(15)......................... 1,250 1,250
Crafted Cabinets Inc.(16)................... 20,000 20,000
Joseph Mafucci(17).......................... 1,250 1,250
Rozanne Teitelbaum(18)...................... 50,000 50,000
David Abrahami(19).......................... 280,000 280,000
Willa Rose Abramson(20)..................... 30,000 30,0000 *
Trust
c/o Al Pearlman
17 Barry Street
Randolph, MA 02368
Swan Alley (Nominees) Ltd. 175,000 75,000 100,000 2%
40 Queen Street
London, EC4R1DD
England
- --------------------------------
* Percentage of ownership after the offering is less than 1%.
(1) This table assumes that an aggregate of 1,996,250In 1998, Mr. Abrahami resigned as our Chief Operating Officer. In
connection with the resignation, we entered into a settlement agreement
pursuant to which we are required to register 60,000 shares of Common Stock
(subject to adjustments) are issuable upon the exercise of Warrants to
purchaseMr.
Abrahami's common stock owned by Mr. Abrahami.
PLAN OF DISTRIBUTION
The selling shareholders may offer their shares of Common Stock at an exercise pricecommon stock directly
or through pledgees, donees, transferees or other successors in interest in one
or more of $2.50 per share,
and 100,000the following types of transactions:
o in the over-the-counter market;
o on any stock exchange on which shares of Common Stock (subject to adjustments) are issuable
upon exercise of the Options to purchase an aggregate of 100,000 shares
of Common Stock at an exercise price of $1.8750 per share. See "Risk
Factors - Dilution," "Plan of Distribution" and "Description of Capital
Stock."
(2) In July 1995, in order to finance certain acquisitions, the Company
obtained a senior, secured term loan represented by two promissory notes
issued to InterEquity Capital Partners, L.P. ("InterEquity"). One
promissory note was in the original principal amount of $1,999,000 (the
"Amortizing Note") and the other was in the original principal amount of
$1,000 (the "Convertible Note"). The term loan was secured by
substantially all of the Company's assets. The Convertible Note was
convertible into shares of Common Stock or a warrant to purchase capitalcommon stock of the Company. Upon consummation of the Company's initial public
offering of 1,000,000 Common Shares (the "Public Offering"), which
occurred in October 1995, the Company used a portion of the net proceeds
of the Public Offering to pay the term loan in full, together with
accrued interest, and a prepayment penalty ($530,000). As a result, the
liens against the Company's assets and the collateral assignments were
terminated. In addition, upon consummation of the Public Offering,
InterEquity paid the Company $1,000 and converted the
7
Convertible Note into a six-year warrant exercisable to purchase, on one
occasion, 6% of the Company's issued and outstanding capital stock on a
fully diluted basismay be
listed at the time of exercise. In addition, the Company
has granted InterEquity an option to put those shares acquired by
InterEquity upon the conversionsale;
o in negotiated transactions; or
o in a combination of any of the warrant to the Company commencing
on July 10, 2000 through July 31, 2005 if the Common Shares have not
been listed or admitted to trading on a national securities exchange
and/or are not quoted on an automated quotations systemabove transactions.
The selling shareholders may offer their shares of common stock at the time the
put is exercised, at a price equal to a multiple of earnings as defined
in the loan agreement between the parties or a price established by
independent appraisal. In addition, pursuant to the termsany of
the loan
agreement, the Company has granted InterEquity certain "piggyback"
registration rights with respect to the shares of Common Stock issuable
upon exercise of the warrant. The Shares being offered hereby include
30,000 shares issuable upon exercise of such warrant.
(3) In January 1997, the Company entered into a stock purchase agreement
with Mr. Grabow, pursuant tofollowing prices:
o fixed prices which the Company purchased from Mr. Grabow
of all the outstanding shares of JMS in exchange for (i) $900,000 in
cash, (ii) 500,000 shares of the Common Stock of the Company and (iii)
350,000 warrants, each exercisable to purchase one share of Common Stock
of the Company at an exercise price of $2.50 per share until December
31, 2000. Includes 300,000 Shares issuable upon exercise of such
warrants. The Shares are being included herein in accordance with a
certain registration rights agreement. Mr. Grabow is Chairman of the
Board, President and Chief Executive Officer of the Company.
(4) Includes 21,500 Shares issuable upon the exercise of Warrants. The
Warrants are exercisable at $2.50 per share and expire December 31,
2000. Ms. Beck is Secretary of the Company.
(5) Includes Shares issuable upon exercise of Warrants granted to this
employee of the Company. The Warrants are exercisable at $2.50 per share
and expire December 31, 2000.
(6) Mr. Fass is a former officer and director of the Company. Includes
50,000 Shares issuable upon the exercise of Warrants issued to Mr. Fass
while he served as a director and 60,000 Shares issuable upon the
exercise of Warrants granted to Mr. Fass in connection with a settlement
agreement dated as of May 30, 1997 between the Company and Mr. Fass.
(7) Ms. Marfuggi is a former officer and director of the Company. Includes
50,000 Shares issuable upon the exercise of Warrants granted to Ms.
Marfuggi while she served as a director of the Company and 50,000 Shares
issuable upon exercise of Warrants granted to Ms. Marfuggi in connection
with a settlement agreement dated June 13, 1997 between the Company and
Ms. Marfuggi. The Warrants are exercisable at $2.50 per share and expire
December 31, 2000.
(8) Mr. McKinstry is a director of the Company. Includes 50,000 Shares
issuable upon the exercise of Warrants. The Warrants are exercisable at
$2.50 per share and expire December 31, 2000.
(9) Includes an aggregate of 50,000 Shares issuable upon the exercise of
Warrants granted to the Kaplans (Warrants to purchase 10,000 Shares
each) as finders' fees in connection with the Company's private
placement of securities in January 1997 (the "Private Placement"). The
Warrants are exercisable at $2.50 per share and expire December 31,
2000.
(10) Includes (i) 356,250 Shares issuable upon the exercise of Warrants
issued to the Trust in connection with the Private Placement; (ii)
50,000 Shares issuable upon the exercise of Warrants granted as a
finder's fee in connection with the Private Placement; and (iii) 200,000
Shares issued to the Trust upon the exercise in October 1997 of warrants
issued in the Private Placement at a reduced exercise price of $1.10 per
share. The Shares are being included herein in accordance
8
with a registration rights agreement. The Warrants are exercisable at
$2.50 per share and expire December 31, 2000.
(11) Includes: (i) 150,000 Shares issuable upon exercise of Warrants issued
in connection with the Private Placement; and (ii) 350,000 Shares issued
to Adjunct & Co. upon the exercise in October 1997 of warrants issued in
the Private Placement at a reduced exercise price of $1.10 per share.
The Shares are being included herein in accordance with a registration
rights agreement. The Warrants are exercisable at $2.50 per share and
expire December 31, 2000.
(12) Includes: (i) 450,000 Shares issuable upon exercise of Warrants issued
in connection with the Private Placement; and (ii) 100,000 Shares issued
to Fortuna Investment Partners LP upon the exercise in October 1997 of
warrants issued in the Private Placement at a reduced exercise price of
$1.10 per share. The Shares are being included herein in connection with
a certain registration rights agreement. The Warrants are exercisable at
$2.50 per share and expire December 31, 2000.
(13) Includes 112,500 Shares issuable upon exercise of Warrants issued in
connection with the Private Placement. The Warrants are exercisable at
$2.50 per share and expire December 31, 2000.
(14) Includes 56,250 Shares issued to the Trust upon the exercise in October
1997 of warrants issued in the Private Placement at a reduced exercise
price of $1.10 per share. The shares are being included herein in
connection with a certain registration rights agreement.
(15) Includes 1,250 Shares issuable upon the exercise of Warrants granted to
the holder, a supplier to the Company, in settlement of certain amounts
owing to the holder. The Warrants are exercisable at $2.50 per share and
expire December 31, 2000.
(16) Includes 20,000 Shares issuable upon the exercise of Warrants granted to
the holder, a supplier to the Company, in settlement of certain amounts
owing to the holder. The Warrants are exercisable at $2.50 per share and
expire December 31, 2000.
(17) Includes 1,250 Shares issuable upon the exercise of Warrants granted to
the holder, a supplier to the Company, in settlement of certain amounts
owing to the holder. The Warrants are exercisable at $2.50 per share and
expire December 31, 2000.
(18) Ms. Teitelbaum is an employee of the Company. Includes 50,000 Shares
issuable upon the exercise of Warrants issued to Ms. Teitelbaum as a
portion of her compensation for services rendered to the Company. The
Warrants are exercisable at $2.50 per share and expire December 31,
2000.
(19) Includes: (i) 40,000 Shares issued to Mr. Abrahami in July 1997 pursuant
to an agreement dated April 30, 1997 in consideration of certain
services rendered to the Company; (ii) 100,000 Shares issuable upon
exercise of Options granted to Mr. Abrahami in July 1997 pursuant to an
agreement dated April 30, 1997 in consideration of certain services
rendered to the Company; and (iii) 140,000 shares issuable upon the
exercise of Warrants issued to Mr. Abrahami in accordance with an
employment agreement dated as of May 1, 1997 between the Company and Mr.
Abrahami. The Warrants are exercisable at $2.50 per share and expire
December 31, 2000. The Options are exercisable at $1.8750 per share and
expire December 1998. Mr. Abrahami is Chief Operating Officer of the
Company and the husband of Yona Abrahami, Chief Operating Officer of the
Chatterley division of the Company, a director and a principal
shareholder of the Company. Does not include 1,300,000 shares of Common
Stock beneficially owned by Ms. Abrahami (subject to reduction in
accordance with an agreement to be negotiated by the Company and Ms.
Abrahami), of which Mr. Abrahami disclaims beneficial ownership.
9
(20) Ms. Abramson is a former officer and director of the Company. Includes
30,000 shares issued to Ms. Abramson in lieu of certain cash payments
due under a certain settlement agreement dated April 1, 1996 between the
Company and Ms. Abramson.
10
PLAN OF DISTRIBUTION
All of the Shares offered hereby are being offered on behalf of the
Selling Securityholders. The Shares offered hereby include 1,996,250 shares of
Common Stock (subject to adjustments) issuable upon exercise in full of Warrants
to purchase 1,996,250 shares of Common Stock, at an exercise price of $2.50 per
share, and 100,000 shares of Common Stock (subject to adjustments) issuable upon
the exercise in full of the Options to purchase 100,000 shares of Common Stock,
at an exercise price of $1.8750 per share. See "Selling Securityholders" and
"Description of Capital Stock."
The Selling Securityholders have advised the Company that the sale of
the Shares may be effected directly to purchasers by the Selling Securityholders
as principals or through one or more underwriters, brokers, dealers or agents
from time to time in one or more transactions (which may involve block
transactions). Any sales of the Shares may be effected through the Nasdaq
SmallCap Market, in private transactions or otherwise. The Shares may be sold atchanged;
o market prices prevailing at the time of sale, atsale;
o prices related to such prevailing market pricesprices; or
o at negotiated prices.
If the Selling Securityholders
effect sales11
The selling shareholders may sell their shares of Shares through underwriters, brokers, dealerscommon stock by one or
agents, such
firms may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders or the purchasersmore of the Shares for
whom they may actfollowing methods, without limitation:
o a block trade in which the broker-dealer so engaged will
attempt to sell the shares as agent orbut may position and
resell a portion of the block as principal to facilitate the
transaction;
o a broker or both. Those persons who actdealer may purchase as principal and resell for
its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
o face-to-face transactions between the selling shareholders and
purchasers without a broker-dealer.
In effecting sales, brokers or dealers that the selling shareholders
engage may arrange for other brokers or dealers to participate. The selling
shareholders may give such brokers or dealers commissions or discounts in
amounts to be negotiated immediately prior to the sale. Such brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act in
connection with such sales.
In addition, any securities covered by this prospectus that qualify for
sale pursuant to Rule 144 might be sold under Rule 144 rather than pursuant to
this prospectus. The selling shareholders and any broker-dealers or underwritersacting in
connection with the sale of the Shares will be
selected by the Selling Securityholders and may have other business
relationships with, and perform services for, the Company. Any Selling
Securityholder, underwriter or broker-dealer who participates in the saleshares of the
Sharescommon stock hereunder may be deemed to be
an underwriter""underwriters" within the meaning of Section 2(l 1)2(11) of the Securities Act. AnyAct, and
any commissions received by any underwriter or
broker-dealerthem and any profit realized by them on anythe resale
of the Sharesshares of common stock as principalprincipals may be deemed to be underwriting discounts and commissionscompensation
under the Securities Act.
The anti-manipulation provisionsIf and when a selling shareholder notifies us of Rules 101that he or she has
entered into a material arrangement with a broker-dealer for the sale of shares
of common stock through 104a block trade, special offering or secondary
distribution or a purchase by a broker or dealer, we will file a supplemental
prospectus, if required pursuant to Rule 424(c) under the ExchangeSecurities Act,
may applydisclosing (1) the name of the selling shareholder and of the participating
broker-dealer(s); (2) the number of shares of common stock involved; (3) the
price at which such shares of common stock were sold; (4) the commissions paid
or discounts or concessions allowed to purchasessuch broker-dealer(s), where applicable;
(5) that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and (6)
other facts material to the transaction.
The selling shareholders reserve the sole right to accept and, together
with any agent of any selling shareholder, to reject in whole or in part any
proposed purchase of the shares of common stock. The selling shareholders will
pay any sales commissions or other seller's compensation applicable to such
transactions.
We have not registered or qualified offers and sales of Common Stock by the Selling
Securityholders. In addition, there are restrictions on market-making activities
by persons engaged in the distributionshares of the
Common Stock.
Undercommon stock under
12
the laws of any country, other than the United States. To comply with certain
states' securities laws, if applicable, the selling shareholders will offer and
sell their shares of certain states, the Shares may be soldcommon stock in such statesjurisdictions only through registered
or licensed brokers or dealers. In addition, in certain states the Sharesselling
shareholders may not be able to be soldoffer or sell shares of common stock unless the Common Stock
has beenwe have
registered or qualified such shares for sale in such statestates or we have complied
with an available exemption from registration or qualification is availablequalification.
Under applicable rules and is complied with.
The Company is requiredregulations under the Exchange Act, any person
engaged in a distribution of shares of the common stock may not simultaneously
engage in market-making activities with respect to such shares of common stock
for a period of two to nine business days prior to the commencement of such
distribution. In addition, the selling shareholders and any other person
participating in a distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including without
limitation, Rules 10b-2, 10b-6 and 10b-7. Such provisions may limit the timing
of purchases and sales of any of the shares of common stock by the selling
shareholders or any such other person. This may affect the marketability of the
common stock and the brokers' and dealers' ability to engage in market-marking
activities with respect to the common stock.
We will pay substantially all of the expenses incident to the registration
offering and sale of the Shares pursuant toshares of common stock by filing the registration statement of which this
Offering. The Company has also
agreed to indemnify certain of the Selling Securityholders and their controlling
persons against certain liabilities, including liabilities under the Securities
Act. The Company estimates that expenses of the Offeringprospectus is a part, estimated to be borne by it will
be approximately $16,900.
The Company has advised the Selling Securityholders that if a particular
offer of Shares is to be made on terms constituting a material change from the
information set forth above with respect to the Plan of Distribution, then to
the extent required, a Prospectus Supplement must be distributed setting forth
such terms and related information.
11
$6000.00.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's Restated Certificate of Incorporation, as amended,
authorizes the issuanceSECURITIES TO BE REGISTERED
Our authorized capital stock consists of 10,000,000 shares of Common Stockcommon
stock, par value $.001 per share, and 2,000,000 shares of preferred stock, par
value $0.001$.001 per share (the "Preferred Stock").share. As of the date of this Prospectus, 5,231,7505,305,250 shares of
Common Stock areour common stock were issued and outstanding, no shares of Preferred Stock arepreferred stock were
issued and outstanding and approximately 3,372,5552,585,000 shares of Common Stockcommon stock
(subject to adjustments) areadjustment) were issuable upon exercise of outstanding options and
warrants (including 1,996,250
Shares upon exercisewarrants.
Common Stock
Voting, Dividend and Other Rights. Each outstanding share of common stock
will entitle the Warrantsholder to one vote on all matters presented to the shareholders
for a vote. Holders of shares of common stock will have no preemptive,
subscription or conversion rights. All shares of common stock to be outstanding
following this offering will be duly authorized, fully paid and 100,000 Shares upon exercisenonassessable.
Our Board of Directors will determine if and when distributions may be paid out
of legally available funds to the Options). As ofholders. We have not declared any cash
dividends during the date of this Prospectus, there were approximately 30
stockholders of recordpast fiscal year with respect to the Company's outstanding Common Stock.
COMMON STOCK
Holderscommon stock. Our
declaration of Common Stock are entitledany cash dividends in the future will depend on our Board of
Directors' determination as to one vote for each share heldwhether, in light of record on all matters submittedour earnings, financial
position, cash requirements and other relevant factors existing at the time, it
appears advisable to a votedo so.
Rights Upon Liquidation. Upon liquidation, subject to the rights of any
holders of the stockholders. Holderspreferred stock, if any, to receive preferential distributions,
each outstanding share of Common
Stock docommon stock may participate pro rata in the assets
remaining after payment of, or adequate provision for,
13
all our known debts and liabilities.
Majority Voting. The holders of a majority of the outstanding shares of
common stock constitute a quorum at any meeting of the shareholders. A plurality
of the votes cast at a meeting of shareholders elects our directors. The common
stock does not have any cumulative voting rights. The rights, privilegesTherefore, the holders of a
majority of the outstanding shares of common stock can elect all of our
directors. In general, a majority of the votes cast at a meeting of shareholders
must authorize shareholders action other than the election of directors.
However, the Business Corporation Law of the State of New York provides that
certain extraordinary matters, such as a merger or consolidation in which we are
a constituent corporation, a sale or other disposition of all or substantially
all of our assets, and preferencesour dissolution, require the vote of the holders of
Common Stock are subordinatetwo-thirds of all outstanding voting shares. Most amendments to our certificate
of incorporation require the rightsvote of the holders of anya majority of all
outstanding voting shares.
Preferred Stock
Authority of Board of Directors to Create Series and Fix Rights. Under our
certificate of incorporation, as amended, our Board of Directors can issue up to
2,000,000 shares of Preferred Stock that may be issuedpreferred stock from time to time in one or more series. The
Board of Directors is authorized to fix by resolution as to any series the
Company indesignation and number of shares of the future. The holders of Common Stock are entitled to receive ratably such
dividends, ifseries, the voting rights, the dividend
rights, the redemption price, the amount payable upon liquidation or
dissolution, the conversion rights, and any other designations, preferences or
special rights or restrictions as may be declaredpermitted by law. Unless the nature of
a particular transaction and the rules of law applicable thereto require such
approval, the Board of Directors from timehas the authority to time outissue these shares of
funds legally available therefore, subjectpreferred stock without shareholder approval.
Potential Dilution of Share Value; Preferences. Any issuance of shares of
preferred stock could dilute the earnings per share and book value of existing
shares of common stock. Because our Board of Directors has the authority to among other things,
those factors described underfix
the heading "Risk Factors." Uponvoting rights for any liquidation,
dissolution or winding upseries of preferred stock, the Company, whether voluntary or involuntary, holders of Common Stock areshares of a
new series of preferred stock could be entitled to receive pro rata all assets available
for distribution to its stockholders after paymentvote separately as a class in
connection with the approval of certain extraordinary corporate transactions
where New York law does not require such class vote, or provision for paymentmight be given a
disproportionately large number of debts and other liabilitiesvotes. The issuance of the Company and payments, if any, due to any
holdersshares of anypreferred
stock could also result in a class of securities outstanding Preferred Stock. As of the date of this Prospectus,
there are no preemptive or other subscription rights or redemption or sinking
fund provisionsthat would have
certain preferences (for example, with respect to dividends or liquidation), or
would enjoy certain voting rights in addition to those of the Common Stock.
LIMITATION OF LIABILITY AND INDEMNIFICATIONcommon stock.
Potential Frustration in Change of Control . Although we currently have no
such intention, we could use authorized but unissued shares of preferred stock
to hinder a change in control of our company. Any issuance of shares of
preferred stock could dilute the stock ownership of persons seeking to gain
control. Shares of a new series of preferred stock could also be convertible
into a large number of shares of common stock or have other terms that might
make more difficult or costly the acquisition of a controlling interest in our
company. Under certain circumstances, such shares could be used to create voting
impediments or to frustrate persons attempting to effect a takeover or otherwise
gain control. Such shares could be privately placed with purchasers who might
side with the Board of Directors in opposing a hostile takeover bid. In
addition, the Board of Directors could authorize holders of a series of
preferred stock to vote as a class, either separately or with the holders of the
common stock, on any merger, sale or exchange of assets by us or any other
extraordinary corporate transactions. The
14
ability of the Board of Directors to take such actions might be considered as
having an effect of discouraging any attempt by another person or entity to
acquire control of our company.
Transfer Agent
The registrar and transfer agent for our common stock is American
Securities Transfer & Trust, Inc.
LEGAL MATTERS
ThePryor Cashman Sherman & Flynn LLP, New York, Business Corporation Law ("NYBCL"),New York, will pass upon
certain legal matters in general, allows
corporations to indemnify their officers and directors against any judgment,
fine, settlement or reasonable expenses incurred in any non-derivative civil or
criminal action, or against any settlement or reasonable expenses in any
derivative civil action, ifconnection with this offering, including the officer or director acted in good faith and for
a purpose that person reasonably believed to be in, or not opposed to, the best
interestsvalidity
of the corporation. In the case of a criminal action, the officer or
director must have had no reasonable cause to believe that that person's conduct
was unlawful. Partial indemnification is allowed in cases where the officer or
director was partially successful in defeating the claim. The NYBCL also
provides that it is not exclusive of any other rights to which an officer or
director may be entitled under the certificate of incorporation or by-laws or
pursuant to an agreement, resolution of shareholders or resolution of directors
which are authorized by the certificate of incorporation or by-laws; provided
that no indemnification may be made if a judgment or other final adjudication
adverse to the officer or director establishes that that person's acts were
committed in bad faith or were the result of active and deliberate dishonesty
and were material to the cause of action so adjudicated, or that that person
personally gained in fact a financial profit or other advantage to which such
person was not legally entitled.
The Company's Restated Certificate of Incorporation, as amended, and
Amended and Restated By-Laws provide that the Company shall indemnify its
directors and officers to the fullest extent permitted by New York law. The
Company also has entered into indemnification agreements with certain of its
directors and executive officers.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling personsissuance of the Company pursuant toshares of common stock offered by this prospectus.
EXPERTS
Our consolidated balance sheets as of December 31, 1998 and 1997, and the
foregoing provisions, or
12
otherwise,related consolidated statements of operations, stockholders' equity and cash
flows for the Company has been advised thattwo years ended December 31, 1998 appearing in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, filed by the Company with the Commission
pursuant to the Exchange Act, are incorporated by reference into this
Prospectus:
1. The Company'sour Annual Report
on Form 10-KSB for the year ended December 31, 1996, filed with the Commission on April 18, 1997.
2. The Company's amended Annual Report on Form 10-KSB/A for the
year ended December 31, 1996, filed with the Commission on May 28, 1997.
3. The Company's Current Report on Form 8-K dated on or about
June 3, 1997, filed with the Commission on June 3, 1997
4. The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1997, filed with the Commission on May 15, 1997.
5. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997, filed with the Commission on August 12, 1997.
6. The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997, filed with the Commission on November 14,
1997.
7. The Company's Current Report on Form 8-K dated on or about
September 11, 1997, filed with the Commission on September 11, 1997
8. The Company's Current Report on Form 8-K/A dated on or about
November 14, 1997, filed with the Commission on November 14, 1997
9. The Description of the Common Stock contained the Company's
Registration Statement on Form 8-A filed with the Commission on
September 28, 1995 (File No. 1-13984).
In addition, all documents filed1998, have been audited by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
ProspectusZeller
Weiss & Kahn, LLP, independent auditors, as set forth in their report thereon
included therein and prior to the termination of the Offering shall be deemed to be
incorporated herein by reference into this Prospectus and to be a part hereof from the
respective filing dates of such documents. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document,
which also is or is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated by reference herein
(excluding any exhibits to such documents). Requests for copies should be
directed to Creative Bakeries, Inc., 20 Passaic Avenue, Fairfield, New Jersey
07004, Attention: Secretary.
13
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Baer Marks & Upham LLP, New York, New York.
EXPERTSreference. The financial statements
as of December 31, 1996 and 1995 and for the
years then endedreferred to above are incorporated in this Prospectusherein by reference to the Annual
Report on Form 10-K of Creative Bakeries, Inc. for the year ended December 31,
1996, have been so incorporated in reliance on theupon such
report of Weinick, Sanders &
Co., LLP, independent accountants, given onupon the authority of saidsuch firm as experts in auditingaccounting and
accounting.
The financial statements of Chatterley Elegant Desserts, Inc. as of
December 31, 1996 and 1995 and for the years then ended incorporated in this
Prospectus by reference to the Current Report on Form 8-K/A of Creative
Bakeries, Inc. filed with the Securities and Exchange Commission on November 14,
1997, have been so incorporated in reliance on the report of H.J. Behrman &
Company, independent accountants, given on the authority of said firm as experts
in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed with the Commission under the Securities Act a
Registration Statement on Form S-3 (the "Registration Statement") with respect
to the Shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in the exhibits and
schedules thereto as permitted by the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete. With respect to each
contract, agreement or other document filed as an exhibit to the Registration
Statement or in a filing incorporated by reference herein, reference is made to
the exhibit for a more complete description of the matters involved, and each
statement shall be deemed qualified in its entirety by this reference.
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith files certain periodic reports, proxy
statements and other information with the Commission. Reports and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at its principal offices
located at Judiciary Plaza, 450 Fifth Street, N.W, Room 1024, Washington, D.C.
20549, and at the following regional offices of the Commission at Seven World
Trade Center, 13th Floor, New York, New York 10048, and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601. Copies of such material may be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W, Washington, D.C. 20549, at prescribed rates. In addition, material filed by
the Company can be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W, Washington, D.C. 20002. The
Commission maintains a worldwide web site on the Internet at http:\www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
14
auditing.
15
================================================================================
No dealer, salespersonsales representative, or any other person has been authorized to
give any information or to make any representation notrepresentations in connection with this
offering other than those contained or incorporated by
reference in this Prospectus, in connection with the offer made hereby, and if given or made,
such information or representation must not be relied upon as having been
authorized by the Company.Company or any Underwriter. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities other thanof the
securities specifically offered hereby or an offer to sell or a solicitation of
an offer to buyby anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person in any circumstances in whichto whom it is unlawful
to make such offer or solicitation is unlawful.solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create any implication
that there has been no change in the affairs of the Company since the date
hereof or that the information contained herein is correct as of any time
subsequent to the date hereof or that there has been no change in the affairs of the Company since the
date hereof.
-----------------------------
TABLE OF CONTENTS
Page
----
Risk Factors..................................................................................
The Company...................................................................................
Use of Proceeds...............................................................................
Selling Securityholders.......................................................................
Plan of Distribution..........................................................................
Description of Capital Stock..................................................................
Incorporation of Certain Information by
Reference...................................................................................
Legal Matters.................................................................................
Experts.......................................................................................
Available Information.........................................................................
2,872,500Page
Where You Can Find More Information .................................... 1
Incorporation of Certain Documents by Reference ......................... 1
About the Company ....................................................... 2
Risk Factors ............................................................ 5
Use of Proceeds ......................................................... 10
Selling Shareholders .................................................... 10
Plan of Distribution .................................................... 11
Description of Securities to be Registered .............................. 13
Legal Matters ........................................................... 15
Experts ................................................................. 15
================================================================================
================================================================================
891,250 Shares
Common Stock
CREATIVE BAKERIES, INC.
----------------------Common Stock
----------
PROSPECTUS
----------------------
, 1997----------
September __, 1999
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth theOther Expenses of Issuance and Distribution.
Estimated expenses to be paid by the Company in connection with the
saleissuance and distribution of the Shares offered hereby (other
than underwriting discountssecurities being registered are as follows:
Registration Fee .............................................. $
------------
Legal Fees and commissions). All amounts shown are estimates,
except for the SecuritiesExpenses ....................................... $ 5000.00
------------
Accounting Fees and Exchange Commission filing fee.
Securities and Exchange Commission filing fee...............................$ 1,523.30
Nasdaq SmallCap Market additional share listing fee.........................$ 7,500
Legal fees and expenses.....................................................$ 5,000
Blue Sky fees and expenses..................................................$ 1,500
Printing and engraving expenses.............................................$ 900
Miscellaneous...............................................................$ 500
----------
Total fees and expenses.....................................................$16,923.30
==========
Expenses .................................. $1000.00
------------
Miscellaneous ................................................. $ 0
------------
Total $ 6000.00
------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The New YorkIndemnification of Directors and Officers
Reference is made to Sections 721 through 725 of the Business Corporation
Law ("NYBCL"of the State of New York (the "BCL"), which provides for indemnification of
directors and officers of New York corporations under certain circumstances.
Section 722 of the BCL provides that a corporation may indemnify directors
and officers as well as other employees and individuals against judgments,
fines, amounts paid in general, allows
corporations to indemnify their officerssettlement and directors against any judgment,
fine, settlement or reasonable expenses, incurredincluding attorneys'
fees, in any non-derivativeconnection with actions or proceedings, whether civil or criminal
(other than an action by or against any settlement or reasonable expenses in any
derivative civil action,the right of the corporation, a "derivation
action"), if the officer or directorthey acted in good faith and forin a purpose that personmanner they reasonably believed
to be in or not opposed to the best interests of the corporation. In the case of acorporation, and, with
respect to any criminal action the officer or director must haveproceeding, had no reasonable cause to believe
that that person'stheir conduct was unlawful. PartialA similar standard is applicable in the case of
derivative actions, except that indemnification only extends to amounts paid in
settlement and reasonable expenses (including attorneys' fees) incurred in
connection with the defense or settlement of such actions, and the statute does
not apply in respect of a threatened action, or a pending action that is allowed in casessettled
or otherwise disposed of, and requires court approval before there can be any
indemnification where the officer or
director was partially successful in defeatingperson seeking indemnification has been found liable
to the claim. The NYBCL alsocorporation. Section 721 of the BCL provides that itArticle 7 of the BCL is
not exclusive of any other rights to which an officer or
directorindemnification that may be entitled under thegranted by a corporation's
certificate of incorporation, disinterested director vote, shareholders vote,
agreement or by-lawsotherwise.
The Registrant's bylaws limit the indemnification that the Registrant
shall provide to judgments, fines, amounts paid in settlement and reasonable
expenses, including attorney's fees, actually and necessarily incurred as a
result of the action or pursuantproceeding. Notwithstanding such limitation, the
Registrant may pay in advance of final disposition expenses incurred by such
person in defending such action or proceeding. The Registrant's bylaws apply the
same limitation to an agreement, resolutionall actions or proceedings, including derivation actions.
Section 402(b) of shareholders or resolution of directors
which are authorized by the BCL provides that a corporation's certificate of
incorporation may include a provision that eliminates or by-laws;limits the personal
liability of the corporation's directors to the corporation or its shareholders
for damages for any breach of a director's duty, provided that no indemnification may be madesuch provision
does not eliminate or limit (1) the liability of any director if a judgment or
other final adjudication adverse to the officer or director establishes that that person'sthe director's
acts or omissions were
committed in bad faith or were the resultinvolved intentional misconduct or a
knowing violation of active and deliberate dishonesty
and were material to the cause of action so adjudicated,law or that that personthe director personally gained in fact a financial
profit or other advantage to which such
personthe director was not legally entitled.
The Company's Restatedentitled or that
the director's acts violated Section 719 of the BCL; or (2) the liability of any
director for any act or omission prior to the adoption of a provision authorized
by Section 402(b) of the BCL. Article Ninth of the Registrant's Certificate of
Incorporation, as amended, and
Amended and Restated By-Laws provideprovides that no director of the CompanyRegistrant shall indemnifybe
liable to the Registrant or its shareholders for any breach of duty in such
capacity except as provided in Section 402(b) of the BCL.
Any amendment to or repeal of the Registrant's Certificate of
Incorporation or by-laws shall not adversely affect any right or protection of a
director or officer of the Registrant for or with respect to any acts or
omissions of such director or officer occurring prior to such amendment or
repeal.
The Registrant maintains directors and officers insurance which, subject
to certain exclusions, insures the fullest extent permitteddirectors and officers of the Registrant
against certain losses which arise out of any neglect or breach of duty
(including, but not limited to, any error, misstatement, act, or omission) by
New York law. The
Company alsothe directors or officers in the discharge of their duties, and insures the
Registrant against amounts which it has entered intopaid or may become obligated to pay as
indemnification agreements with certain ofto its directors and executive officers.and/or officers to cover such losses.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers andor persons controlling persons of the
CompanyRegistrant pursuant to the foregoing, provisions, or otherwise, the CompanyRegistrant has been advisedinformed that in
the opinion of the Securities and Exchange CommissionSEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
II-1
ITEMItem 16. EXHIBITS.
The following is a listExhibits
Exhibit No. Description
----------- -----------
5 Opinion of Exhibits filedPryor Cashman Sherman & Flynn LLP
23.1 Consent of Pryor Cashman Sherman & Flynn LLP
(included as a part of Exhibit 5)
23.2 Consent of Zeller Weiss & Kahn, LLP
24 Powers of Attorney (included in the signature page
of this Registration Statement:
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
-------------- -----------------------
*5.1 Opinion of Baer Marks & Upham LLP (regarding the validity
of the shares of the Common Stock).
*23.1 Consent of Baer Marks & Upham LLP (included in Exhibit
5.1).
*23.2 Consent of Weinick, Sanders & Co., LLP, Independent
Accountants.
*23.3 Consent of H.J. Behrman & Company, Independent
Accountants
24.1 Power of Attorney (included on page II-3)
- ----------------------
* To be filed by amendment.
ITEMStatement)
Item 17. UNDERTAKINGS.Undertakings
(a) The undersigned Registrant hereby undertakes the following:undertakes:
II-2
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in thisthe Registration
statementStatement or any material change to such information in thisthe
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment that contains a form of
prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(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.
(4) Thatoffering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Company'sRegistrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in thisthe Registration Statement shall be deemed to be a
new registration statementRegistration 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.
(b)(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling persons
of the CompanyRegistrant pursuant to the foregoing provisions described in Item 15 of this
Registration Statement, or otherwise, the CompanyRegistrant has been advised that in
the opinion of the Securities and Exchange
CommissionSEC such indemnification is against public policy as
II-3
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
CompanyRegistrant of expenses incurred or paid by a director, officer or controlling
person of the CompanyRegistrant 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 CompanyRegistrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to II-2
a court of appropriate jurisdiction the question whether such
indemnification by it is against the public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
II-4
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 theThe City of New York, State of New York on November 21, 1997.this 9th day of
September, 1999.
CREATIVE BAKERIES, INC.
By: /s/ Philip Grabow
-------------------------------------------------
Philip Grabow
Chairman of the Board,
President and
Chief Executive Officer
By: /s/ Ashwin R. Shah
-----------------------
Ashwin R. Shah
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT'S, that each director and officerEach person whose signature appears below hereby constitutes and appoints Philip
Grabow, as his true and lawful attorney-in-fact and agent, with full powerspower to execute in the
name of substitutionsuch person, in the capacities stated below, and resubstitution, for him and in his name, place and stead, to sign in any and all
capacities any and allfile, such one or
more amendments (including post-effective amendments) to this Registration Statement as the Registrant deems
appropriate, and generally to do all such things in the name and on Form S-3 andbehalf of
such person, in the capacities stated below, to fileenable the same,Registrant to comply
with all exhibits
theretothe provisions of the Securities Act of 1933, and all other documents in connection therewith, withrequirements of the
Securities and Exchange Commission granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person,thereunder, hereby ratifying and confirming
all thatthe signature of such attorney-in-fact and
agents,person as may be signed by said attorneys-in-fact, or any
one of them, may lawfully do or cause to be done by virtue hereof.any and all amendments to this Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Philip Grabow
----------------------------- Chairman of the Board, President November 21, 1997
Philip Grabow and Chief Executive Officer
(Principal Executive Officer)
/s/ Ashwin Shah
----------------------------- Chief Financial Officer (Principal November 21, 1997
Ashwin Shah Financial and Accounting Officer)
/s/ Richard FechtorDated: September 9, 1999 /s/ Philip Grabow
-------------------------------------
(Philip Grabow)
President and Chief Executive Officer
Dated: September 9, 1999 /s/ Richard Fector
-------------------------------------
(Richard Fector)
Director
Dated: September 9, 1999 /s/ Raymond J. McKinstry
-------------------------------------
(Raymond J. McKinstry)
Director
Dated: September 9, 1999 /s/ Kenneth Sitomer
-------------------------------------
(Kenneth Sitomer)
Director
Dated: September 9, 1999 /s/ Karen Brenner
-------------------------------------
(Karen Brenner)
Director
Dated: September 9, 1999 /s/ Yona Gonen
-------------------------------------
(Yona Gonen)
Director November 21, 1997
-----------------------------
Richard Fechtor
/s/ Raymond McKinstry Director November 21, 1997
-----------------------------
Raymond McKinstry
/s/ Kenneth Sitomer Director November 21, 1997
-----------------------------
Kenneth Sitomer
/s/ Karen Brenner Director November 21, 1997
-----------------------------
Karen Brenner
/s/ Yona Abrahami Director November 21, 1997
-----------------------------
Yona Abrahami
II-4
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
-------------- -----------------------
*5.1 Opinion of Baer Marks & Upham LLP
*23.1 Consent of Baer Marks & Upham LLP (included in Exhibit 5.1).
*23.2 Consent of Weinick, Sanders & Co., LLP, Independent Accountants.
*23.3 Consent of H.J. Behrman & Company, Independent Accountants
24.1 Power of Attorney (included on page II-3).
- -------------------------------
* To be filed by amendment.