Cherokee Inc – ‘424B3’ on 12/3/96

As of:  Tuesday, 12/3/96   ·   Accession #:  944209-96-603   ·   File #:  333-15545

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Prospectus   —   Rule 424(b)(3)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B3       Cherokee Inc. Prospectus                               7     39K 

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424B3
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                                                FILED PURSUANT TO RULE 424(b)(3)
                                                      REGISTRATION NO. 333-15545

P R O S P E C T U S                                            November 14, 1996

CHEROKEE INC. 
Common Stock  
($0.02 Par Value) 
____________________  

  This Prospectus relates to 536,663 shares of the Common Stock, par value
$0.02 per share, of Cherokee Inc. (the "Company"), which may be offered from    
time to time by certain shareholders of the Company (the "Selling               
Stockholders"). The Company has been advised by the Selling Shareholders that   
they or their successors may sell all or a portion of the securities offered    
hereby from time to time in the over-the-counter market, in privately negotiated
transactions, or otherwise, including sales through or directly to a broker or  
brokers. Sales will be at prices and terms then prevailing or at prices related 
to the then current market prices or at negotiated prices. In connection with   
any sales, any broker or dealer participating in such sales may be deemed to be 
an underwriter within the meaning of the Securities Act of 1933, as amended (the
"Act"). See "Plan of Distribution." The Company will receive no part of the     
proceeds of such sales .                                                        

________________________________  

  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR      
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL   
OFFENCE.                                                                        

________________________________  

FOR INFORMATION REGARDING CERTAIN RISKS 
RELATING TO THE COMPANY, SEE "RISK FACTORS" ON PAGE 4 

__________________________  

          All expenses incurred in connection with this offering, which expenses
are not expected to exceed $9,000, are being borne by the Company.              

    The Common Stock of Cherokee Inc. is traded on the Nasdaq Small Cap Issues
Market (NASDAQ Symbol: CHKE). On October 29, 1996, the last sale price of the   
Company's Common Stock was $5.75                                                

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 

The following documents heretofore filed by the Company under the     
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the      
Securities and Exchange Commission (the "Commission") are incorporated herein by
reference: the Company's Annual Report on Form 10-K for the fiscal year ended   
June 1, 1996; and the Company's Quarterly Report on Form 10-Q for the fiscal    
quarter ended August 31, 1996.                                                  

    All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act, subsequent to the date of this Prospectus and  
prior to the termination of the offering of the securities under this Prospectus
shall be deemed to be incorporated by reference herein and to be a part thereof 
from the date of filing of such documents, except as to any portion of any      
future Annual or Quarterly Report to Stockholders which is not deemed to be     
filed under said provisions or any portion of a Proxy Statement not deemed      
incorporated herein by reference. Any statement made in a document incorporated 
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that such statement is replaced or modified by a  
statement contained in a subsequently dated document incorporated by reference  
or contained in this Prospectus. 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 such person, a
copy of any or all of the documents referred to above which have been or may be 
incorporated in this Prospectus by reference, other than exhibits to such       
documents. Written or oral requests for such copies should be directed to Carol 
Gratzke, Chief Financial Officer, 6835 Valjean Avenue, Van Nuys, California     
91406 (Telephone: (818) 908-9868).                                              

AVAILABLE INFORMATION 

  The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other       
information with the Commission. These reports, proxy statements and other      
information can be inspected and copied at prescribed rates at the public       
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional   
Offices of the Commission: The Chicago Regional Office, Northwest Atrium Center,
500 West Madison Street, Suite 1400, Chicago Illinois 60661-2511 and the New    
York Regional Office, 7 World Trade Center, Suite 1300, New York, New York      
10048. Such reports, proxy statements and other information filed by the Company
can also be inspected at the offices of the National Association of Securities  
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. Copies of such      
materials can also be obtained by mail at prescribed rates upon written request 
addressed to the Public Reference Section of the Commission at Judiciary Plaza, 
450 Fifth Street, N.W., Washington, D.C. 20549 or through the Commission's web  
site at http://www. sec. gov.                                                   

The Company has filed with the Commission in Washington, D.C., a      
Registration Statement on Form S-3 under the Securities Act of 1933, as amended,
with respect to the securities offered hereby (the "Registration Statement").   
This Prospectus does not contain all of the information set forth in the        
Registration Statement, certain parts of which are omitted in accordance with   
the rules and regulations of the Commission. For further information with       
respect to the Company and the securities offered hereby, reference is made to  
the Registration Statement, including the exhibits and financial statements and 
schedules, if any, filed therewith or incorporated therein by reference.        
Statements contained in this Prospectus or incorporated herein by reference as  
to the contents of any contract or other document are not necessarily complete, 
and in each instance, reference is made to the copy of such contract or other   
document filed as an exhibit to the Registration Statement or incorporated      
herein by reference, each statement being qualified in its entirety by such     
reference. The Registration Statement, including the exhibits thereto, may be   
inspected without charge at the Commission's principal office in Washington,    
D.C., and copies of any and all parts thereof may be obtained from such office  
after payment of the fees prescribed by the Commission or through the           
Commission's web site.                                                          

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THE COMPANY 

The Company's principal business is marketing and licensing of the    
Company's proprietary brand names and other brands it may acquire in the future 
to domestic and international licensees for a variety of apparel, footwear,     
accessories and other products. As of June 1, 1996, the Company had 29          
continuing license agreements with wholesalers and retailers. Wholesale         
licensees manufacture and import various categories of apparel, footwear and    
accessories, primarily under the Cherokee trademark, and sell the licensed      
products to retailers. The Company's primary emphasis for the past year has been
retail direct licensing, in which the Company grants retailers a license,       
usually on a nonexclusive basis, to use the Cherokee trademark on certain       
categories of merchandise, including those products that the Company previously 
manufactured prior to discontinuing such operations during 1995 and 1996. The   
retailer is responsible for designing and manufacturing the licensed            
merchandise. For a more detailed description of the Company's operations,       
including a description of the development and evolution of the Company's       
business through two Chapter 11 bankruptcy proceedings occurring prior to the   
Company's discontinuation of its manufacturing operations, see the Company's    
Annual Report on Form 10-K for the fiscal year ended June 1, 1996, which is     
incorporated herein by reference.                                               

The Company's offices are located at 6835 Valjean Avenue, Van Nuys,   
California 91406, and its telephone number is (818) 908-9868.                   

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RISK FACTORS  

IN ADDITION TO THE OTHER INFORMATION CONTAINED HEREIN OR INCORPORATED 
HEREIN BY REFERENCE, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY  
IN EVALUATING AN INVESTMENT IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS.     

     Competition: Cherokee brand footwear, apparel, and accessories -- which are
manufactured and sold by wholesalers and retail licensees -- are subject to     
extensive competition by numerous domestic and foreign companies. Such          
competitors include Levi Strauss & Co., Liz Claiborne, Guess?, Esprit de Corp., 
VF Corp., Bernard Chaus, and private labels developed for retailers. Factors    
which shape the competitive environment include quality of garment construction 
and design, brand name, style and color selection, price and the manufacturer's 
ability to respond quickly to the retailer on a national basis. In recognition  
of the increasing trend towards consolidation of retailers and greater emphasis 
by retailers on the manufacture of private label merchandise, the Company's     
business plan principally focuses on creating strategic alliances with major    
retailers for their sale of Cherokee products through the licensing of the      
Cherokee trademark directly to retailers. Therefore, the success of the Company 
is dependent on its licensees' ability to design, manufacture and sell Cherokee 
brand products and to respond to ever changing consumer demands. Other companies
owning established trademarks could also enter into similar arrangements with   
retailers.                                                                      

  Dependence on Single Licensee: Currently, 79% of the Company's licensing
revenues are generated from a single source, Target Stores ("Target"), a        
division of Dayton Hudson, pursuant to certain exclusive and non-exclusive      
licensing agreements (the "Target License Agreements"). Until and unless the    
Company is able to significantly expand its revenues from other licensing       
sources it will be dependent on revenues from the Target License Agreements for 
most of its revenues. Although the Target License Agreements provide for minimum
annual royalty payments based upon aggregate sales of no less than $575,000,000 
during the term thereof which expires on January 31, 2001, if for whatever      
reason, Target does not pay the minimum royalties under the Target License      
Agreements or elects not to renew the Target License Agreements upon their      
expiration, the Company's business and operations could be adversely affected.  
There can be no guarantee that the Company could be able to replace the Target  
royalty payments from other sources.                                            

   Dependence on Key Management: The overall business and marketing strategy
and current direction of the Company has been principally conceived and         
implemented by Robert Margolis, its current Chairman and Chief Executive        
Officer, Patricia Warren, its current President, and Carol Gratzke, its current 
Chief Financial Officer. Although the Company believes that it has sufficiently 
implemented the business plan set in motion by each of these individuals and    
that it could successfully continue to implement its business plans             
notwithstanding the departure of any of such individuals, it cannot state with  
certainty the degree of success, if any it would have if any of them were to    
leave the Company.                                                              

___________________ 

  The above risk factors should be considered carefully in addition to the
other information in this Prospectus and information incorporated herein by     
reference before purchasing the securities offered hereby. Except for the       
historical information contained herein or incorporated herein by reference, the
discussion in this Prospectus or incorporated by reference into this Prospectus 
contains certain forward-looking statements that involve risks and              
uncertainties, such as statements of the Company's plans, objectives,           
expectations and intentions. The cautionary statements made in this Prospectus  
and incorporated by reference herein should be read as being applicable to all  
related forward-looking statements wherever they appear in or are incorporated  
herein by reference into this Prospectus. The Company's actual results could    
differ materially from those discussed here or incorporated herein by reference.
Factors that could cause or contribute to such differences include those        
discussed above, as well as those discussed elsewhere herein or incorporated    
herein by reference.                                                            

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SELLING STOCKHOLDERS  

   The following table shows for the Selling Stockholders, (i) the number of
shares and percentage of Common Stock of the Company beneficially owned by them 
as of November 1, 1996, (ii) the number of shares covered by this Prospectus and
(iii) the percentage of ownership if all shares of Common Stock covered by this 
Prospectus are sold.                                                            

                                                        [Enlarge/Download Table]


                          Number of Shares              Number of Shares   Percent of
          Selling           Beneficially    Percent of  Covered by This   Class After
        Stockholder          Owned(1)         Class       Prospectus(2)     Offering 
        -----------       ----------------  ----------  ----------------  -----------
                                                                                     
Axicom Capital Group (3)      381,667          4.8%             366,667       *      

Michael Seyhun (4)             96,000          1.2%              96,000       *      

Douglas Weitman (3)           232,088          2.9%              73,996      2%      


______________________________                                                  
*    None or less than 1%.                                                      

(1)  Includes shares of Common Stock issuable upon exercise of options and      
warrants exercisable at November 1, 1996 or within sixty days thereof.

(2)  Includes shares of Common Stock issuable upon exercise of options and      
warrants whether or not currently exercisable.                        

(3)  Axicom Capital Group ("Axicom") is a British Virgin Islands limited        
     liability company; Mr. Avi Dan is President of Axicom and may be deemed the
beneficial owner of the shares held by Axicom, although he disclaims  
    beneficial ownership of such shares. Mr. Dan is a director of the Company.

(4)  Former Chief Operating Officer and Chief Financial Officer of the Company. 

The address of each Selling Stockholder is c/o Cherokee Inc, 6835 Valjean       
Avenue, Van Nuys, California 91406                                              

    Information set forth in the tables regarding the securities owned by each
Selling Stockholder is provided to the best knowledge of the Company based on   
information furnished to the Company by the respective Selling Stockholder      
and/or available to the Company through its stock transfer records.             

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PLAN OF DISTRIBUTION  

    The shares may be sold by the Selling Stockholders or by pledgees, donees,
transferees or other successors-in-interest. Such sales may be made in the over-
the-counter market, in privately negotiated transactions, or otherwise, at      
prices and at terms then prevailing, at prices related to the then current      
market prices or at negotiated prices. The shares may be sold by one or more of 
the following methods: (a) a block trade in which the broker or dealer so       
engaged will attempt to sell the shares as agent but may position and resell a  
portion of the block as principal in order to consummate the transaction; (b) a 
purchase by a broker or dealer as principal, and the resale by such broker or   
dealer for its account pursuant to this Prospectus, including resale to another 
broker or dealer; or (c) ordinary brokerage transactions and transactions in    
which the broker solicits purchasers. In effecting sales, brokers or dealers    
engaged by a Selling Stockholder may arrange for other brokers or dealers to    
participate. Any such brokers or dealers will receive commissions or discounts  
from a Selling Stockholder 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 the Securities Act of 1933,
as amended. Any gain realized by such a broker or dealer on the sale of shares  
which it purchases as a principal may be deemed to be compensation to the broker
or dealer in addition to any commission paid to the broker by a Selling         
Stockholder.                                                                    

    The shares covered by this Prospectus may be sold under Rule 144 under the
1933 Act ("Rule 144") instead of under this Prospectus. None of such shares     
currently qualify for sale under Rule 144. The Company will not receive any     
portion of the proceeds of the shares sold by the Selling Stockholders, but will
receive funds upon the exercise of the options and warrants, which funds, if    
any, will be used for working capital. There is no assurance that the Selling   
Stockholders will sell any or all of the shares of Common Stock available under 
such options or warrants currently held by such person.                         

     The Selling Stockholders have advised the Company that during the time each
is engaged in distribution of Common Stock covered by this Prospectus, each will
comply with Rules 10b-5 and 10b-6 under the 1934 Act and pursuant thereto: (i)  
will not engage in any stabilization activity in connection with the Company's  
securities; (ii) will furnish each broker through which Common Stock covered by 
this Prospectus may be offered the number of copies of this Prospectus which are
required by each broker; and (iii) will not bid for or purchase any securities  
of the Company or attempt to induce any person to purchase any of the Company's 
securities other than as permitted under the 1934 Act. Certain of the Selling   
Stockholder may be "affiliated purchasers" of the Company as defined in Rule    
10b-6 and such persons have been further advised that pursuant to Securities    
Exchange Act Release 34-23611 (September 11, 1986), they must coordinate their  
sales under this Prospectus with each other and the Company for purposes of Rule
10b-6.                                                                          

LEGAL OPINION 

   The validity of the securities offered hereby will be passed upon for the
Company by Jeffer, Mangels, Butler & Marmaro LLP, Los Angeles, California.      

EXPERTS 

  The financial statements of Cherokee Inc. as of June 1, 1996 and June 3,
1995, and the related statements of operations, stockholders' equity (deficit)  
and cash flows for the fiscal year ended June 1, 1996, the three months ended   
June 3, 1995 and the nine months ended February 25, 1995 appearing in Cherokee  
Inc.'s Annual Report (Form 10-K) for the year ended June 1, 1996, have been     
audited by Coopers & Lybrand L.L.P., independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such      
financial statements are incorporated herein by reference in reliance upon such 
report given upon the authority of such firm as experts in accounting and       
auditing.                                                                       

   The consolidated financial statements of Cherokee Inc. for the year ended
May 28, 1994 appearing in Cherokee Inc.'s Annual Report (Form 10-K) for the year
ended June 1, 1996, have been audited by Ernst & Young LLP, independent         
auditors, as set forth in their report thereon (which contains an explanatory   
paragraph with respect to Cherokee Inc.'s ability to continue as a going        
concern) included therein and incorporated herein by reference. Such            
consolidated financial statements are incorporated herein by reference in       
reliance upon such report given upon the authority of such firm as experts in   
accounting and auditing.                                                        

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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY      
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE      
COMPANY.  THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF ANY OFFER TO BUY BY 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 TO WHOM IT IS UNLAWFUL  
TO MAKE SUCH OFFER OR SOLICITATION.  NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT  
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR 
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO   
ITS DATE.                                                                       

--------------------- 

TABLE OF CONTENTS 

                                                                [Download Table]

                                                                     Page
                                                                     ----
                                                                         
INCORPORATION OF CERTAIN DOCUMENTS BY                                    
        REFERENCE..................................................     2

AVAILABLE INFORMATION..............................................     2

THE COMPANY........................................................     3

RISK FACTORS.......................................................     4

SELLING STOCKHOLDERS...............................................     5

PLAN OF DISTRIBUTION...............................................     6

LEGAL OPINION......................................................     6

EXPERTS............................................................     6


CHEROKEE INC. 

COMMON STOCK  

_______________________ 

PROSPECTUS  
_______________________ 

November 14, 1996 

Dates Referenced Herein   and   Documents Incorporated by Reference

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Filed on:		12/3/96
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		11/1/96		5
		10/29/96		1
		8/31/96		2					10-Q
		6/1/96		2		6			10-K,  10-K/A
		6/3/95		6
		2/25/95		6
		5/28/94		6
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