As filed with the Securities and Exchange Commission on February 7, 2000
Registration No. 333-4319
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
ON FORM S-3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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K2 DESIGN, INC.
(Name of Small Business Issuer in its Charter)
Delaware 7389 13-3886065
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Number)
organization)
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Lynn Fantom, President
K2 DESIGN, INC. K2 Design, Inc.
30 Broad Street, 16th Floor 30 Broad Street, 16th Floor
New York, NY 10004 New York, NY 10004
(212) 301-8800 (212) 301-8800
(Name, address and telephone number (Name, address and
of principal executive offices and telephone number
principal place of business) of agent for service)
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Copy to:
Neil S. Belloff, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
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Approximate Date of Proposed Sale to the Public: As soon as practicable
after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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PROSPECTUS
K2 Design, Inc.
100,000 Shares of Common Stock
and
100,000 Redeemable Common Stock Purchase Warrants
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This Prospectus relates to the sale by Donald & Co. Securities, Inc., the
selling securityholder, of 100,000 shares of our common stock and 100,000
redeemable common stock purchase warrants, issuable upon exercise of the
Representative's Warrants received by the selling securityholder in connection
with our initial public offering in July 1996 . Two warrants entitle the holder
thereof to purchase one share of common stock at a price of $7.50 per share
until July 25, 2001. The warrants are redeemable at a price of $.05 per warrant
if the closing price of our common stock equals or exceeds $10.50 for 20
consecutive trading days.
We will not receive any proceeds from the sale of securities by the
selling securityholder other than the exercise price of any warrants that are
exercised.
Our common stock and warrants are each quoted on the Nasdaq SmallCap
Market under the symbols "KTWO" and "KTWOW", respectively. On February 3, 2000,
the closing sale price of our common stock and warrants were $7.375 and $1.3125,
respectively.
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These are speculative securities and an investment in these securities
involves a high degree of risk. Please refer to "Risk Factors" beginning on page
4 .
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Neither the Securities and Exchange Commission nor any state securities
commission has approved these securities or determined if this Prospectus is
truthful or complete. Any statement to the contrary is a crime.
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February 7, 2000
PROSPECTUS SUMMARY
Our Business
We provide interactive marketing and communications services to commercial
organizations over the Internet and World Wide Web. We also provide development
of CD-ROM discs, media placement on Web sites, live Internet broadcasts and the
development of brand and direct response strategies and offline media services.
Our services are used by our clients to create a new medium for advertisement,
promotion and technical support of such customer's products and services. We
have designed and created more than 80 Web sites, including MCI
Telecommunications Corporation, a subsidiary of MCI Communications Corporation,
and for Waterhouse Securities Corporation, Bell Communications Research, Inc.,
American Express Company, Bayer Corporation, Wavephore, Inc. and Lexis-Nexis.
We commenced operations in 1993. Our principal offices are located at 30
Broad Street, New York, New York 10004 and our telephone number is (212)
301-8800. Our Web site is located at http://www.k2design.com, however, nothing
contained on our Web site is incorporated into or a part of this Prospectus.
THE OFFERING
Securities offered 100,000 shares of common stock and
by selling securityholder 100,000 redeemable common stock
purchase warrants.
Terms of warrants Each warrant is exercisable at any
time until July 25, 2001. Two warrants
entitle the holder thereof to purchase
one share of common stock at an
exercise price of $7.50 per share
(subject to adjustment in the event of
stock splits or similar events). We
may redeem the warrants, upon at least
30 days prior written notice, at $.05
per warrant, if the closing price of
our common stock equals or exceeds
$10.50 per share for 20 consecutive
trading days.
Common stock outstanding 3,498,170 shares
prior to exercise of warrants (1)
Common stock outstanding 3,548,170 shares
after exercise of warrants
Use of proceeds We will not receive any proceeds from
the sale of the securities offered by
the selling securityholder. However,
we will receive proceeds upon the
exercise of the warrants. We
2
expect to use the net proceeds of any
such exercise for working capital and
general corporate purposes.
Nasdaq symbols:
Common Stock "KTWO"
Warrants "KTWOW"
Risk factors Investment in the common stock and
warrants involves significant risk.
See "Risk Factors."
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(1) Does not include (a) shares of common stock issuable upon exercise of
outstanding options and warrants to purchase shares of common stock and
(b) shares of common stock reserved for issuance under our stock option
plan.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Those reports, proxy statements and other
information may be obtained:
o At the Public Reference Room of the SEC, Room 1023 -- Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
o At the public reference facilities at the SEC's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York
10048 or Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661;
o At the offices of the Nasdaq Stock Market, Inc., Reports Section,
1735 K Street, N.W., Washington, D.C. 20006; or
o From the Internet site maintained by the SEC at http://www.sec.gov,
which contains reports, proxy statements and other information
regarding issuers that file electronically with the SEC.
Some locations may charge prescribed rates or modest fees for copies. For
more information on the public reference rooms, call the SEC at 1-800-SEC-0330.
This Prospectus is part of a registration statement that we filed with the
SEC. The registration statement contains more information than this Prospectus
regarding our business and our common stock and warrants, including certain
exhibits. You can get a copy of the registration statement from the SEC at the
addresses listed above or from its Internet Web site.
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RISK FACTORS
Our securities are highly speculative and subject to significant risk of
loss. You should participate only if you can bear the risk of the entire loss of
your investment. In analyzing this offering, you should carefully consider the
following factors.
If we are unable to obtain sufficient funds to grow, and incur a cash flow
deficit, your investment could be lost.
Our focus is on increasing the volume of all of our services. In order to
enhance and expand our operations, we have hired and will continue to hire
additional personnel and have incurred and will continue to incur substantial
expenses for:
o administration
o production
o technical resources
o marketing
o customer support
o infrastructure
We had an operating cash flow deficit of $(792,000) in fiscal 1997, an
operating cash flow of $474,000 in fiscal 1998 and at September 30, 1999, an
operating cash flow deficit of $(2,977,000). We may require additional sources
of financing in order to satisfy our working capital needs, which may be
unavailable or prohibitively expensive. Should such financing be unavailable or
prohibitively expensive when we require it, we would not be able to finance any
expansion of our business and may not be able to satisfy our working capital
needs, either of which would have a material adverse effect on our business,
operating results and financial condition.
We have a short operating history, have incurred recent operating losses and
expect future operating losses.
Our revenues for the nine months ended September 30, 1999 and the years
ended December 31, 1998 and 1997 were $3,972,000, $6,420,000 and $7,501,000,
respectively, with income (losses) from continuing operations of $373,000,
$(1,672,000) and $(1,241,000), respectively. Net income was $373,000 for the
nine months ended September 30, 1999, $1,237,000 for fiscal 1998 and a net loss
of $(1,703,000) for fiscal 1997. Our net income in fiscal 1998 was due to the
gain on the sale of discontinued operations and our net income for the nine
months ended September 30, 1999 was primarily due to the gain on the sale of
investment securities. There can be no assurance that we will be profitable in
the future or that revenue growth, if any, can be sustained.
Our prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets and
especially those in Internet and other computer related markets. There can be no
assurance that we will be successful in addressing these risks.
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We may be unable to continue managing successive rapid growth.
We have experienced substantial growth in services to our customers and
the number of our employees, which has resulted in:
o increased responsibility of management;
o strain on management, administrative, operational, financial
and technical resources; and
o increased demands on our management information systems and
controls.
There can be no assurance that we will effectively develop and implement
systems, procedures or controls adequate to support our operations or that
management will be able to achieve the rapid execution necessary to fully
exploit all opportunities for our services. To manage our business and growth,
we must continue to implement and improve our operational and financial systems
and continue to expand, train and manage our employees. If we are unable to
manage our business effectively, our business, operating results and financial
condition will be materially adversely affected.
Our business may be adversely affected if we do not continue developing our
market strategy.
Our marketing efforts have expanded as the range of services which we
offer has increased. In addition to developing strategic relationships with
other companies and channel sources that seek to augment their businesses by
directly or indirectly offering to their clients Web site services provided by
us and other third parties, we also directly market our core creative services
as well as the services of our media group.
To avoid any conflict with a channel source, we do not offer services to
clients referred by a particular channel source that could be provided to those
clients by that channel source. Since we do not expect to offer our full range
of services to these clients, projects for them may be less profitable than
full-service production projects for other clients. Conflicts of interest may
jeopardize the stability of revenues generated from existing clients and channel
sources and preclude access to business prospects, either of which could have a
material adverse effect on our business, financial condition and operating
results.
Should a channel source favor other providers of similar services, fail to
effectively market our services as a result of the channel source's competitive
position or otherwise, or not utilize our services to the extent anticipated,
our business will be adversely affected. Our inability to recruit, manage or
retain additional channel sources, or to provide services to even indirect
competitors of existing clients or channel sources, or their inability to market
our services effectively or provide timely and cost-effective customer support
and service, could materially adversely effect our business, operating results
and financial condition.
5
Project-oriented clients dominate our revenue base, which may adversely affect
our ability to generate revenue.
Since many of our clients engage us on a single project basis, clients
from whom we generated substantial revenue in one period have not necessarily
been a substantial source of revenue in a subsequent period. Additionally, costs
are significantly higher with respect to single projects as compared to
servicing a client on a multiple project or continuous basis. Due to our limited
operating history and the emerging nature of the Internet, we cannot be sure
whether our future relationships with clients will be on a project basis or on a
longer term relationship basis. To the extent we do not generate repeat or
ongoing business from our clients, we will incur higher sales and marketing
expenses associated with attracting new clients as compared to lower expenses in
obtaining additional business from existing clients.
Failure of our computer systems may disrupt our operations.
Our success largely depends on the uninterrupted operation of our computer
and communications hardware systems. Our systems and operations are vulnerable
to damage or interruption from fire, flood, power loss, telecommunications
failure, break-ins, earthquake and similar events. We presently have very
limited redundant systems. We do not have a formal disaster recovery plan and we
carry limited business interruption insurance to compensate for any losses that
may occur. Our servers are also vulnerable to computer viruses, physical or
electronic break-ins, and similar disruptions, which could materially and
adversely affect us.
Our business may not grow if the Internet, as a medium of commerce and
communications, does not continue to develop.
Demand and market acceptance for recently introduced services and products
like those offered by us are subject to a high level of uncertainty. The use of
the Internet in marketing, advertising and commerce, particularly by those
individuals and enterprises that have historically relied upon traditional means
of marketing and advertising, generally requires the acceptance of a new way of
conducting business and exchanging information. Enterprises that have already
invested substantial resources in other means of conducting business and
exchanging information may be particularly reluctant or slow to adopt a new
strategy that may make their existing resources and infrastructure less useful.
There can be no assurance that the market for our services will develop and if
it fails to develop, develops more slowly than expected or becomes saturated
with competitors, or if our services do not achieve market acceptance, our
business, operating results and financial condition will be materially adversely
effected.
Our ability to derive revenues will also depend upon a robust industry and
the infrastructure for providing Internet access and carrying Internet traffic.
The Internet may not prove to be a viable commercial marketplace because of
inadequate development of the necessary infrastructure or timely development of
complementary products, such as high speed modems and bandwidths. Moreover,
other critical issues concerning the commercial use of the Internet (including
security, reliability, cost, ease of use and access, and quality of service)
remain unresolved and may impact the growth of Internet use. Because global
commerce and online exchange of information on the Internet and other similar
open wide area networks are
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new and evolving, it is difficult to predict with any assurance whether the
Internet will prove to be and remain a viable commercial marketplace. If the
infrastructure necessary to support the Internet's commercial viability is not
developed, or if the Internet does not become a viable marketplace, our
business, operating results and financial condition would be materially and
adversely effected.
Technological change may render our service obsolete.
Our services, and the services and products we expect to offer in the
future, are impacted by rapidly changing technology, evolving industry
standards, emerging competition and frequent new service, software and other
product introductions. There can be no assurance that we can successfully
identify new business opportunities and develop and bring new services or
products to market in a timely and cost-effective manner, or that services,
products or technologies developed by others will not render our services or
products noncompetitive or obsolete. In addition, there can be no assurance that
services, products or enhancements introduced by us will achieve or sustain
market acceptance or be able to effectively address compatibility, inoperability
or other issues raised by technological changes or new industry standards. Our
pursuit of technological advances may also require us to seek assistance from
third parties.
We may be unable to protect our intellectual property.
We believe that our success in our core business of interactive
advertising is not dependent upon patents, copyrights or trademarks and we do
not currently have any registered patents, copyrights or trademarks, although
applications for various trademarks have been made. Consequently, we rely
principally on a combination of common-law and statutory law to protect our
proprietary information and know-how. We also utilize technology owned by third
parties. There can be no assurance that licenses for any technology developed by
third parties that might be required for our services would be available on
reasonable terms, if at all.
Although we do not believe that our services infringe the proprietary
rights of any third parties, there can be no assurance that third parties will
not assert claims based on our services or that any of those claims would not be
successful. In addition, many of our competitors rely upon trade secret law.
Litigation may be necessary in the future to enforce our intellectual property
rights and to protect our proprietary information, to determine the validity and
scope of the proprietary rights of others, or to defend against claims of
infringement or invalidity. Litigation of this nature, whether or not
successful, could result in substantial costs and diversions of resources,
either of which could have a material adverse effect on our business, financial
condition and operating results. Furthermore, parties making claims against us
could secure a judgment awarding substantial damages, as well as injunctive or
other equitable relief which could directly or indirectly prohibit us from
providing certain services and products. A judgment of this nature could have a
material adverse effect on our business, financial condition and results of
operations.
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We may be unable to attract and retain qualified technical personnel.
Our success depends upon our key technical personnel and senior
management. The loss of the services of these persons could materially adversely
affect our ability to develop our business. Competition for qualified technical,
sales and marketing, customer support, financial and accounting, and managerial
personnel in the Internet industry is intense, and we cannot be certain that we
will be able to retain our key personnel or that we can attract, integrate or
retain other highly qualified personnel in the future. We have experienced in
the past, and may continue to experience in the future, difficulty in hiring and
retaining candidates with appropriate qualifications.
Arbitrary determination of exercise price of warrants.
The exercise price of the warrants was arbitrarily determined by us and
the underwriter of our IPO, and bears no relationship to our assets, book value,
results of operations or other established criteria of value. The factors
considered in determining the exercise price included prevailing estimates of
our business potential and earning prospects, the state of our development, an
assessment of our management and the consideration of the foregoing factors in
relation to market valuations of comparable companies. Such factors do not
necessarily bear any relationship to our assets, accounting results, book value
or other generally accepted criteria of value.
Absence of dividends.
We have not paid any cash dividends on our common stock and do not
anticipate paying any such cash dividends on our common stock in the foreseeable
future. Earnings, if any, will be retained to finance future growth. Our ability
to declare dividends on our common stock may be restricted by future financings
or lenders, if any.
The selling securityholder may have to cease market-making activities, which may
negatively impact the liquidity of our securities.
Under applicable rules and regulations under the Securities Exchange Act
of 1934, any person engaged in the distribution of securities may not
simultaneously engage in market-making activities with respect to such
securities during a specified period (which may be one or five days or such
other period as the Commission may provide) prior to the commencement of such
distribution. Accordingly, in the event the selling securityholder is engaged in
a distribution of the securities offered hereby, it will not be able to make a
market in our securities during the applicable restrictive period, which may
have a negative impact on the liquidity of our securities.
Volatility of trading market may affect your investment.
The market price for our securities has been and may continue to be highly
volatile. Factors such as our financial results, introduction of new products in
the marketplace, and various factors affecting the advertising industry and the
Internet generally may have a significant impact on the market price of our
securities, as well as price and volume volatility affecting small
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and emerging growth companies, in general, and not necessarily related to the
operating performance of such companies.
Current prospectus and state registration required to exercise warrants.
You will be able to exercise the warrants offered under this Prospectus
only if a current prospectus relating to the common stock underlying the
warrants is then in effect, and only if such common stock is qualified for sale
or exempt from qualification under the applicable securities laws of the state
in which you reside. Although we will use our best efforts to maintain the
effectiveness of a current prospectus covering the common stock underlying the
warrants, there can be no assurance that we will be able to do so. We will be
unable to issue common stock to you if we do not keep effective a current
prospectus covering the common stock issuable upon the exercise of the warrants,
or if such common stock is not qualified nor exempt from qualification in the
state in which you reside.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the securities offered
by the selling securityholder. However, we will receive proceeds upon the
exercise of the warrants offered by the selling securityholder. We will also
receive $8.04 for each Representative's Warrant exercised (up to 100,000), which
will entitle the selling securityholder to one share of common stock and one
warrant, the securities offered hereby. We expect to use the net proceeds of any
such exercises for working capital and general corporate purposes.
SELLING SECURITY HOLDERS
This Prospectus relates to the sale by the selling securityholder of an
aggregate of 100,000 shares of common stock and 100,000 warrants issuable upon
exercise of the Representative's Warrants received in connection with our IPO.
With respect to the shares of common stock issuable upon exercise of the
warrants, this Prospectus also covers the issuance of the common stock upon such
exercise and the subsequent sale by the holders thereof.
The following table sets forth (i) the name of the selling securityholder,
(ii) the number of shares of common stock and warrants owned by the selling
securityholder prior to the offering, (iii) the number of shares of common stock
and warrants offered by the selling securityholder and (iv) the number of shares
of common stock and warrants owned by the selling securityholder after
completion of the offering. The selling securityholder acted as our underwriter
in connection with our IPO.
NUMBER OF SHARES AND
NUMBER OF SHARES WARRANTS OFFERED FOR NUMBER OF SHARES AND
AND WARRANTS OWNED ACCOUNT OF SELLING WARRANTS OWNED AFTER
PRIOR TO OFFERING SECURITYHOLDER OFFERING
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SELLING SECURITYHOLDER SHARES(1) WARRANTS SHARES WARRANTS SHARES WARRANTS
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Donald & Co. Securities, Inc. 100,000 100,000 100,000 100,000 0 0
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(1) Does not include 50,000 shares of common stock issuable upon exercise of
the warrants being offered by the selling securityholder.
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The selling securityholder has advised us that any sales of the shares of
common stock and warrants and any shares of common stock which are issuable upon
exercise of the warrants offered hereby may be effected from time to time by the
selling securityholder as a registered broker-dealer in the normal course of its
market-making activities or in transactions (which may include block
transactions by or for the account of the selling securityholder) on the Nasdaq
SmallCap Market or in negotiated transactions, a combination of such methods of
sale or otherwise. Sales may be made at fixed prices which may be changed, at
market prices or in negotiated transactions, a combination of such methods of
sale or otherwise.
The selling securityhholder may effect such transactions by selling such
securities directly to purchasers, through broker-dealers acting as agents for
the selling securityholder or to broker-dealers who may purchase warrants or
shares of common stock as principals and thereafter sell the securities from
time to time on the Nasdaq SmallCap Market, in negotiated transactions or
otherwise. Such broker-dealers, if any, may receive compensation in the form of
discounts, concessions or commissions from the selling securityholder and/or the
purchasers from whom such broker-dealer may act as agents or to whom they may
sell as principals or otherwise (which compensation as to a particular
broker-dealer may exceed customary commissions). Pursuant to the warrant
agreement governing the issuance of the securities offered by the selling
securityholder, we have agreed to pay all expenses of registration on behalf of
the selling securityholder.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of securities may not simultaneously engage in
market-making activities with respect to such securities during a specified
restricted period (which may be one or five days or such other period as the
Commission may provide) prior to the commencement of such distribution.
Accordingly, in the event the selling securityholder is engaged in a
distribution of the securities offered hereby, it will not be able to make a
market in our securities during the applicable restrictive period, which may
have a negative impact on the liquidity of our securities. In addition, if the
selling securityholder desires to sell securities, it will be subject to the
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M, which provisions may
limit the timing of the purchases and sales of the securities offered by the
selling securityholder.
EXPERTS
The audited financial statements incorporated by reference to this
Prospectus and Registration Statement have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their reports with
respect thereto, and are referenced in this Prospectus and Registration
Statement in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We "incorporate by reference" into this prospectus the information we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and any information that we file
subsequently with the SEC will automatically update this prospectus. We
incorporate by reference:
(a) Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998 filed with the Commission on March 31, 1999;
(b) Proxy Statement on Schedule 14A dated April 29, 1999;
(c) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999
filed with the Commission on May 21, 1999;
(d) Quarterly Report on Form 10-QSB for the quarter ended June 30, 1999
filed with the Commission on August 16, 1999;
(e) Quarterly Report on Form 10-QSB for the quarter ended September 30,
1999 filed with the Commission on November 15, 1999; and
(f) The description of our common stock and warrants is contained in the
Registration Statement on Form SB-2, filed with the Commission on July 17, 1996
(File No. 333-4319).
All documents subsequently filed by us pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment hereto indicating that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Prospectus and to be a part of this Prospectus
from the respective dates of filings 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 herein by reference 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.
We undertake to provide, without charge, to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all of the documents incorporated
herein by reference (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference herein). Requests for such documents
should be directed to our Chief Financial Officer at 30 Broad Street, 16th
Floor, New York, New York 10004. Telephone requests for such copies should be
directed to the Chief Financial Officer at (212) 301-8800.
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You should rely on the information contained in this prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus. The selling securityholder is offering to sell,
and seeking offers to buy, shares of common stock and warrants only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of the common stock or
warrants.
----------------
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses in connection with
the offering described in the Registration Statement:
SEC Registration Fee............................................. $ *
Printing and Engraving Expenses.................................. $ 5,000
Legal Fees and Expenses.......................................... $ 15,000
State Securities Qualification Fees.............................. $ 10,000
Accounting Fees and Expenses..................................... $ 2,500
Miscellaneous.................................................... $ 5,000
Total........................................................ $ 37,500
========
*Previously paid in connection with the Registration Statement on Form SB-2
filed in July 1996 (File No. 333-4319).
Item 15. Indemnification of Directors and Officers
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
II-1
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section
145, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith; that indemnification provided for by
Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; that indemnification provided for by Section
145 shall, unless otherwise provided when authorized or ratified, continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of such person's heirs, executors and administrators, and
empowers the corporation to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Article SEVENTH of the Company's Certificate of Incorporation states that:
(a) A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent such exemption from liability or
limitation thereof is not permitted under the Delaware General Corporation Law.
(b)(1) Each person (and the heirs, executors or administrators of
such person) who was or is a party or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
by the Delaware General Corporation Law. The right to indemnification conferred
in this Article Seventh shall also include the right to be paid by the
Corporation the expenses incurred in connection with any such proceeding in
advance of its final disposition to the fullest extent permitted by the Delaware
General Corporation Law. The right to indemnification conferred in this Article
Seventh shall be a contract right.
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(2) The Corporation may, by action of its board of directors,
provide indemnification to such of the employees and agents of the Corporation
and such other persons serving at the request of the Corporation as employees or
agents of another corporation, partnership, joint venture, trust or other
enterprise to such extent and to such effect as is permitted by the Delaware
General Corporation Law and the board of directors shall determine to be
appropriate.
(c) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any expense, liability or loss
incurred by such person in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the Delaware General Corporation Law.
(d) The rights and authority conferred in this Article Seventh shall
not be exclusive of any other right which any person may otherwise have or
hereafter acquire.
(e) No amendment, modification or repeal of this Article Seventh,
nor the adoption of any provision of this certificate of incorporation or the
bylaws of the Corporation, nor, to the fullest extent permitted by the Delaware
General Corporation Law, any amendment, modification or repeal of law shall
eliminate or reduce the effect of this Article Seventh or adversely affect any
right or protection then existing hereunder in respect of any acts of omissions
occurring prior to such amendment, modification, repeal or adoption.
The Company also provides liability insurance for its directors and
officers which provides for coverage against loss from claims made against
directors and officers in their capacity as such, including liabilities under
the Securities Act of 1933, as amended. The Warrant Agreement contains
provisions for indemnification by the Registrant of the selling securityholder
against certain liabilities under the Act.
Item 16. Exhibits
3.1 -- Certificate of Incorporation of the Registrant*
3.1(a) -- Form of Amendment to Certificate of Incorporation*
3.2 -- By-Laws of the Registrant*
3.2(b) -- Form of Amendment to By-Laws*
4.1 -- Form of Common Stock Certificate*
4.2 -- Form of Warrant Certificate*
4.3 -- Form of Representative's Warrant Agreement*
II-3
4.4 -- Form of Warrant Agreement by and between Continental Stock
Transfer & Trust Company and the Registrant*
5.1 -- Opinion of Sills Cummis Zuckerman Radin Tischman Epstein & Gross,
P.A.*
23.1 -- Consent of Arthur Andersen LLP**
23.2 -- Consent of Sills Cummis Zuckerman Radin Tischman Epstein & Gross,
P.A. (contained in Exhibit 5.1)*
24.1 -- Powers of Attorney to sign Registration Statement (set forth on page
II-6)
- --------------
* Previously filed in connection with the Registration Statement on
Form SB-2 filed in July 1996 (File No. 333-4319).
** Filed herewith.
Item 17. Undertakings
The Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement;
(iii) Include any additional or changed material information
on the plan of distribution.
(2) That, for determining liability under the Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing
II-4
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer 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 small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) For determining any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and the offering of the securities at that time as the initial bona fide
offering of these securities.
II-5
SIGNATURES
In accordance with 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 authorized this
Post-Effective Amendment No. 1 to Registration Statement on Form SB-2 to be
signed on its behalf by the undersigned, thereunto duly authorized, in New York,
New York on the 7th day of February 2000.
K2 DESIGN, INC.
By: /s/Lynn Fantom
-----------------------------
Lynn Fantom, President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Lynn Fantom and Seth Bressman, jointly
and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities to sign any amendments
(including post-effective amendments, exhibits thereto and other documents in
connection therewith) to this Registration Statement and any subsequent
Registration Statement filed by the registrant pursuant to Securities and
Exchange Commission Rule 462, which relates to this Registration Statement, and
to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Post-Effective Amendment No.1 to Registration Statement on Form SB-2 has been
signed by the following persons in the capacities and on the dates stated:
Signature Title Date
--------- ----- ----
/s/Lynn Fantom President, Chief Executive February 4, 2000
- --------------------------- Officer and Director
Lynn Fantom (Principal Executive Officer)
/s/Matthew G. de Ganon Chairman of the Board February 4, 2000
- ---------------------------
Matthew G. de Ganon
/s/Seth Bressman Chief Financial Officer February 4, 2000
- --------------------------- (Principal Financial and
Seth Bressman Accounting Officer)
II-6
/s/Douglas E. Cleek Executive Vice President February 4, 2000
- --------------------------- and Director
Douglas E. Cleek
/s/David R. Sklaver Director February 4, 2000
- ---------------------------
David R. Sklaver
/s/Steven N. Goldstein Director February 4, 2000
- ---------------------------
Steven N. Goldstein
/s/Scott Munro Director February 4, 2000
- ---------------------------
Scott Munro
II-7
EXHIBIT INDEX
Exhibit Number
3.1 -- Certificate of Incorporation of the Registrant*
3.1(a) -- Form of Amendment to Certificate of Incorporation*
3.2 -- By-Laws of the Registrant*
3.2(b) -- Form of Amendment to By-Laws*
4.1 -- Form of Common Stock Certificate*
4.2 -- Form of Warrant Certificate*
4.3 -- Form of Representative's Warrant Agreement*
4.4 -- Form of Warrant Agreement by and between Continental StockTransfer &
Trust Company and the Registrant*
5.1 -- Opinion of Sills Cummis Zuckerman Radin Tischman Epstein & Gross,
P.A.*
23.1 -- Consent of Arthur Andersen LLP**
23.2 -- Consent of Sills Cummis Zuckerman Radin Tischman Epstein & Gross,
P.A. (contained in Exhibit 5.1)*
24.1 -- Powers of Attorney to sign Registration Statement (set forth on page
II-6)
- --------------
* Previously filed in connection with the Registration Statement on
Form SB-2 filed in July 1996 (File No. 333-4319).
** Filed herewith.
II-8