SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
FILED BY THE REGISTRANT /X/
FILED BY A PARTY OTHER THAN THE REGISTRANT / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
NEW FRONTIER MEDIA, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<Page>
[New Frontier Media Logo]
NEW FRONTIER MEDIA, INC.
7007 Winchester Circle, Suite 200
Boulder, Colorado 80301
Tel. (303) 444-0900
July 23, 2004
Dear Fellow Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
New Frontier Media, Inc., a Colorado corporation (the "Company"), to be held at
10:00 a.m., Mountain Daylight Time, on August 24, 2004, at the Omni Interlocken
Resort, 500 Interlocken Boulevard, Broomfield, Colorado 80021.
At this meeting, you will be asked to consider and vote, in person or by
proxy, on the following matters:
* Election of six directors to the board of directors for the following
year and until their successors are elected. The board of directors
unanimously recommends a vote FOR election of the nominees on the
enclosed proxy card.
* Ratification of the appointment of Grant Thornton LLP as the Company's
independent auditors. The board of directors unanimously recommends a
vote FOR this proposal.
* Transaction of such other business as may properly come before the
meeting or any adjournment.
The official notice of meeting, proxy statement, and proxy card are
included with this letter. The matters listed in the notice of meeting are
described in detail in the accompanying proxy statement. We are also providing
you with a copy of the Company's annual report on Form 10-K for the Company's
fiscal year ended March 31, 2004.
Whether or not you expect to attend, the board of directors urges you to
vote your shares by signing, dating, and returning the enclosed proxy card in
the envelope provided, which is postage paid if mailed in the United States.
Very truly yours,
/s/ Michael Weiner
Michael Weiner
Chief Executive Officer and
Secretary
<Page>
NEW FRONTIER MEDIA, INC.
7007 Winchester Circle, Suite 200
Boulder, Colorado 80301
Tel. (303) 444-0900
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of New Frontier Media, Inc.:
We hereby notify you that the annual meeting of shareholders of New
Frontier Media, Inc., a Colorado corporation (the "Company"), will be held on
August 24, 2004 at 10:00 a.m., Mountain Daylight Time, at the Omni Interlocken
Resort, 500 Interlocken Boulevard, Broomfield, Colorado 80021 for the following
purposes:
* to elect six directors to the board of directors to hold office for the
following year and until their successors are elected;
* to ratify the appointment of Grant Thornton LLP as the Company's
independent auditors; and
* to transact such other business as may properly come before the meeting
or any adjournments.
The matters listed in this notice of meeting are described in detail in the
accompanying proxy statement. The board of directors has fixed the close of
business on July 21, 2004, as the record date for determining those shareholders
who will be entitled to notice of and to vote at the meeting and any
adjournment. You may examine a list of the shareholders of record as of the
close of business on July 21, 2004, for any purpose germane to the meeting
during the ten-day period preceding the date of the meeting at the offices of
the Company, located at 7007 Winchester Circle, Suite 200, Boulder, Colorado
80301.
YOUR VOTE IS IMPORTANT
Even if you plan to attend the meeting, please sign, date and return the
enclosed proxy card in the envelope provided so that your vote will be counted
if you later decide not to attend the meeting. No postage is required if the
proxy card is mailed in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael Weiner
Michael Weiner
Chief Executive Officer and Secretary
Boulder, Colorado
July 23, 2004
<Page>
NEW FRONTIER MEDIA, INC.
7007 Winchester Circle, Suite 200
Boulder, Colorado 80301
Tel. (303) 444-0900
------------------------
PROXY STATEMENT
------------------------
GENERAL INFORMATION
INFORMATION ABOUT PROXY SOLICITATION
This proxy statement is being furnished to holders of shares of common
stock, $.0001 par value per share, of New Frontier Media, Inc., a Colorado
corporation (the "Company"), in connection with solicitation of proxies on
behalf of the board of directors of the Company for use at the annual meeting of
shareholders to be held on August 24, 2004 at 10:00 a.m., Mountain Daylight
Time, at the Omni Interlocken Resort, 500 Interlocken Boulevard, Broomfield,
Colorado 80021, and at any adjournment. The purpose of the meeting and the
matters to be acted on are stated in the accompanying notice of annual meeting
of shareholders. The board of directors currently knows of no other business
that will come before the meeting.
The notice of annual meeting, proxy statement, and proxy card are being
mailed to shareholders on or about July 23, 2004. The Company will bear the cost
of its solicitation of proxies. The original solicitation of proxies by mail may
be supplemented by personal interview, telephone, and facsimile by the
directors, officers, and employees of the Company. Arrangements will also be
made with brokerage houses and other custodians, nominees, and fiduciaries for
the forwarding of solicitation material to the beneficial owners of stock held
by any such persons, and the Company may reimburse those custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them in doing
so.
The board of directors is soliciting votes FOR the Company's slate of
nominees for election to the board of directors and FOR ratification of the
appointment of the firm of Grant Thornton LLP as the Company's independent
auditors.
INFORMATION ABOUT VOTING
Q: WHY AM I RECEIVING THESE MATERIALS?
A: The board of directors is providing these proxy materials for you in
connection with the Company's annual meeting of shareholders, which will
take place on August 24, 2004. As a shareholder, you are invited to attend
the annual meeting and to vote on the items of business described in this
proxy statement.
Q: WHAT INFORMATION IS CONTAINED IN THESE MATERIALS?
A: The information included in this proxy statement relates to the proposals
to be voted on at the annual meeting, the voting process, the compensation
of directors and the most highly paid executive officers, and certain other
required information. A copy of our annual report on Form 10-K is also
enclosed.
<Page>
Q: WHAT ITEMS OF BUSINESS WILL BE VOTED ON AT THE ANNUAL MEETING?
A: The two items of business scheduled to be voted on at the annual meeting
are (1) election of directors and (2) ratification of the independent
auditors. We will also consider any other business that properly comes
before the annual meeting.
Q: HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE?
A: The board of directors recommends that you vote your shares FOR each of the
nominees to the board on the proxy card included with this proxy statement
and FOR ratification of the independent auditors.
Q: WHAT SHARES CAN I VOTE?
A: You may vote all shares owned by you as of the close of business on July
21, 2004, the record date. These shares include (1) shares held directly in
your name as a shareholder of record and (2) shares held for you, as the
beneficial owner, through a broker or other nominee, such as a bank.
Q: WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD
AND AS A BENEFICIAL OWNER?
A: Most shareholders of the Company hold their shares through a broker or
other nominee rather than directly in their own name. As summarized below,
there are some distinctions between shares held of record and those owned
beneficially.
If your shares are registered directly in your name with the Company's
transfer agent, Corporate Stock Transfer, you are considered, with respect
to those shares, the shareholder of record and these proxy materials are
being sent directly to you by the Company. As the shareholder of record,
you have the right to grant your voting proxy directly to the board of
directors or to vote in person at the meeting. The board of directors has
enclosed or sent a proxy card for you to use.
If your shares are held in a brokerage account or by another nominee, you
are considered the beneficial owner of shares held in "street name," and
these proxy materials are being forwarded to you by your broker or nominee
together with a voting instruction card. As the beneficial owner, you have
the right to direct your broker or nominee how to vote and are also invited
to attend the annual meeting. However, since you are not the shareholder of
record, you may not vote these shares in person at the meeting unless you
obtain a "legal proxy" from the broker or nominee that holds your shares,
giving you the right to vote the shares. Your broker or nominee has
enclosed or provided voting instructions for you to use in directing the
broker or nominee how to vote your shares.
Q: HOW CAN I ATTEND THE ANNUAL MEETING?
A: You are entitled to attend the annual meeting only if you were a
shareholder of the Company or joint holder as of the close of business on
July 21, 2004, or you hold a valid proxy for the annual meeting. You should
be prepared to present photo identification for admittance. If you are not
a record holder but hold shares through a broker or nominee (that is, in
"street name"), you should provide proof of beneficial ownership on the
record date, such as your most recent account statement prior to July 21,
2004, a copy of the voting instruction card provided by your broker or
nominee, or other similar evidence of ownership. If you do not provide
photo identification or comply with the other procedures outlined above
upon request, you will not be admitted to the annual meeting. The annual
meeting will begin promptly at 10:00 a.m. Mountain Daylight Time. Check-in
will begin at 9:00 a.m., and you should allow ample time for the check-in
procedures.
Q: HOW CAN I VOTE MY SHARES IN PERSON AT THE ANNUAL MEETING?
A: You may vote in person at the annual meeting any shares that you hold as
the shareholder of record. You may only vote in person shares held in
street name if you obtain from the broker or nominee that holds your shares
a "legal proxy" giving you the right to vote the shares.
2
<Page>
Q: HOW CAN I VOTE MY SHARES WITHOUT ATTENDING THE ANNUAL MEETING?
A: Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may without attending the meeting direct
how your shares are to be voted. If you are a shareholder of record, you
may vote by granting a proxy. If you hold shares in street name, you may
vote by submitting voting instructions to your broker or nominee. Each
record holder of Company common stock may submit a proxy by completing,
signing, and dating a proxy card and mailing it in the accompanying
pre-addressed envelope. Each shareholder who holds shares in street name
may vote by mail by completing, signing, and dating a voting instruction
card provided by the broker or nominee and mailing it in the accompanying
pre-addressed envelope.
Q: CAN I CHANGE MY VOTE?
A: You may change your vote at any time prior to the vote at the annual
meeting. For shares held directly in your name, you may accomplish this by
granting a new proxy bearing a later date (which automatically revokes the
earlier proxy) or by attending the annual meeting and voting in person.
Attendance at the meeting will not cause your previously granted proxy to
be revoked unless you specifically so request. For shares you hold
beneficially, you may change your vote by submitting new voting
instructions to your broker or nominee or, if you have obtained a "legal
proxy" from your broker, or nominee giving you the right to vote your
shares, by attending the meeting and voting in person. You may also change
your vote by sending a written notice of revocation to Mr. Michael Weiner,
Chief Executive Officer and Secretary, New Frontier Media, Inc., 7007
Winchester Circle, Suite 200, Boulder, Colorado 80301.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have any questions about the annual meeting or how to vote or revoke
your proxy, you should contact Ms. Karyn Miller at New Frontier Media,
Inc., 7007 Winchester Circle, Suite 200, Boulder, Colorado 80301, tel.
(303) 786-8700, e-mail kmiller@noof.com.
If you need additional copies of this proxy statement or voting materials,
you should contact Ms. Miller as described above.
Q: HOW ARE VOTES COUNTED?
A: In the election of directors, you may vote FOR all of the six nominees or
you may direct your vote to be WITHHELD with respect to one or more of the
six nominees. With respect to ratification of the independent auditors, you
may vote FOR, AGAINST or ABSTAIN. If you vote ABSTAIN, it has the same
effect as a vote AGAINST. If you provide specific instructions, your shares
will be voted as you instruct. If you sign your proxy card or voting
instruction card with no further instructions, your shares will be voted in
accordance with the recommendations of the board of directors (FOR all of
the Company's nominees and FOR ratification of the independent auditors
and, in the discretion of the proxy holders, on any other matters that
properly come before the meeting). If any other matters properly arise at
the meeting, your proxy, together with the other proxies received, will be
voted at the discretion of the proxy holders.
Q: WHAT IS A QUORUM AND WHY IS IT NECESSARY?
A: Conducting business at the meeting requires a quorum. The presence, either
in person or by proxy, of the holders of one third of the Company's shares
of capital stock outstanding on July 21, 2004 is necessary to constitute a
quorum. Under the Colorado Business Corporation Act and the Company's
articles of incorporation and by-laws, abstentions and broker non-votes
(when your shares are held in "street name" and you do not tell the nominee
how to vote your shares) are treated as present for purposes of determining
whether a quorum exists.
3
<Page>
Q: WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
A: In the election of directors, the six persons receiving the highest number
of FOR votes at the annual meeting will be elected. Accordingly,
abstentions and broker non-votes do not have the effect of a vote for or
against the election of any nominee. You do not have the right to cumulate
your votes.
All other proposals require the affirmative FOR vote of a majority of those
shares present in person or represented by proxy and entitled to vote on
that proposal at the annual meeting. Accordingly, abstentions on other
proposals will have the same effect as a vote against the proposal. Broker
non-votes will not have the effect of a vote for or against other
proposals.
Q: WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?
A: You may receive more than one set of voting materials, including multiple
copies of this proxy statement and multiple proxy cards or voting
instruction cards. For example, if you hold your shares in more than one
brokerage account, you will receive a separate voting instruction card for
each brokerage account in which you hold shares. If you are a shareholder
of record and your shares are registered in more than one name, you will
receive more than one proxy card. Please complete, sign, date, and return
each proxy card and voting instruction card that you receive.
Q: WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
A: We intend to announce preliminary voting results at the annual meeting and
publish final results in our Quarterly Report on Form 10-Q for the fiscal
quarter ending September 30, 2004.
Q: WHAT HAPPENS IF ADDITIONAL MATTERS ARE PRESENTED AT THE ANNUAL MEETING?
A: Other than the two items of business described in this proxy statement, we
are not aware of any other business to be acted upon at the annual meeting.
However, if you grant a proxy, the persons named as proxy holders, Michael
Weiner, the Company's Chief Executive Officer and Secretary, and Karyn
Miller, the Company's Chief Financial Officer, will have the discretion to
vote your shares on any additional matters properly presented for a vote at
the meeting. If for any unforeseen reason any of our nominees is not
available as a candidate for director, the persons named as proxy holders
will vote your proxy for any one or more other candidates nominated by the
board of directors.
Q: WHAT SHARES ARE ENTITLED TO BE VOTED?
A: Each share of the Company's common stock issued and outstanding as of the
close of business on July 21, 2004, the record date, is entitled to be
voted on all items being voted at the annual meeting, with each share being
entitled to one vote. On the record date, 21,959,408 shares of common stock
were issued and outstanding.
Q: WHO WILL COUNT THE VOTES?
A: One or more inspectors of election will tabulate the votes. We expect that
each inspector of election will be a representative of Corporate Stock
Transfer, Inc.
Q: IS MY VOTE CONFIDENTIAL?
A: Proxy instructions, ballots, and voting tabulations that identify
individual shareholders are handled in a manner that protects your voting
privacy. Your vote will not be disclosed, either within the Company or to
anyone else, except (1) as necessary to meet applicable legal requirements,
(2) to allow for the tabulation of votes and certification of the vote, or
(3) to facilitate a successful proxy solicitation.
4
<Page>
Q: WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING?
A: The board of directors is making this solicitation and will pay the entire
cost of preparing, assembling, printing, mailing and distributing these
proxy materials. Certain of our directors, officers and employees, without
any additional compensation, may also solicit your vote in person, by
telephone or by electronic communication. On request, we will also
reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding proxy and
solicitation materials to shareholders.
Q: MAY I PROPOSE ACTIONS FOR CONSIDERATION AT NEXT YEAR'S ANNUAL MEETING OF
SHAREHOLDERS?
A: You may submit proposals for consideration at future shareholder meetings.
However, in order for a shareholder proposal to be considered for inclusion
in the Company's proxy statement for the annual meeting next year, the
written proposal must be received by the Company no later than April 26,
2005. Such proposals also will need to comply with Securities and Exchange
Commission regulations under Rule 14a-8 regarding the inclusion of
shareholder proposals in company-sponsored proxy materials.
PROPOSALS TO BE VOTED ON
PROPOSAL ONE:
ELECTION OF DIRECTORS
The board of directors, based on the recommendation of the nominating
committee of the board of directors, is proposing a slate of directors
consisting of six incumbent directors. THE BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE YOUR SHARES FOR EACH OF THESE NOMINEES.
THE NOMINEES
The nominees are listed below:
<Table>
<Caption>
NAME AGE POSITION DIRECTOR SINCE
- ---------------------------- --- --------------------------------------------- --------------
Michael Weiner (4).......... 63 Chief Executive Officer, Secretary and 1995
Director
Dr. Skender Fani (1)(4)..... 64 Director 2002
Melissa Hubbard (3)(4)...... 45 Director 2002
Alan Isaacman (4)........... 61 Director 1999
David Nicholas (1)(2)(4).... 50 Director 2002
Hiram J. Woo (2)(3)(4)...... 68 Director 2001
</Table>
- ---------------
(1) Member of the compensation committee
(2) Member of the audit committee
(3) Member of the nominating committee
(4) Member of the executive committee
It is the intention of the persons named in the accompanying proxy card to
vote all shares of common stock for which they have been granted a proxy for the
election of Michael Weiner, Dr. Skender Fani, Melissa Hubbard, Alan Isaacman,
David Nicholas, and Hiram J. Woo, each to serve as a director until the next
annual meeting of shareholders and until his or her successor shall have been
duly elected and qualified. All the nominees have consented to being named in
this proxy statement and to serve as a director if elected. At the time of the
annual meeting, if any of the nominees named above is not available to serve as
director (an event that the board of directors does not currently have any
reason to anticipate), all proxies will be voted for any one or more other
persons that the board of directors designates. The board of directors believes
that it is in the best interests of the Company to elect the above-described
slate of directors.
5
<Page>
INFORMATION ABOUT THE NOMINEES
No director or executive officer of the Company is related to any other
director or executive officer. Other than Dr. Skender Fani, none of the
Company's officers or directors hold any directorships in any other public
company. A majority of our board members are independent; the current
independent directors are Dr. Skender Fani, Melissa Hubbard, David Nicholas,
Hiram Woo, and Matthew Armstrong.
Stated below is the principal occupation of each nominee, the business
experience of each nominee for at least the past five years, and certain other
information relating to the nominees.
MICHAEL WEINER. In January 2004, Mr. Weiner was appointed to the position
of Chief Executive Officer of the Company. He co-founded the Company in 1995 and
held the title of Executive Vice President from 1995 until February 2003. As
Executive Vice President, Mr. Weiner oversaw content acquisitions, network
programming, and all contract negotiations related to the business affairs of
the Company. In February 2003, he was appointed President of the Company, a
position he held until January 2004. Prior to 1995, Mr. Weiner was in the real
estate business for 20 years, specializing in shopping center development and
redevelopment. He was involved as an owner, developer, manager, and syndicator
of real estate in excess of $250 million.
DR. SKENDER FANI. Dr. Fani is a leading European-based sports and
entertainment attorney, representing many of Europe's top athletes and
entertainers for over 20 years. In addition, he is a consultant to several major
media and television companies in Europe. Dr. Fani is also the personal advisor
to several major international soccer teams and their owners, including teams
such as FC Barcelona, Juventus Torino, Dynamo Kiev, and MAGNA Austria. Dr. Fani
is a member of the board of directors of Consulier Engineering, Inc., a
Florida-based company listed on the Nasdaq SmallCap Market.
MELISSA HUBBARD. Ms. Hubbard currently serves as outside general counsel to
several investment banking and technology-related companies based in Colorado,
advising them on corporate, securities, licensing, and compliance issues. In
addition, she serves as an arbitrator for matters administered by the American
Arbitration Association and the National Association for Securities Dealers. She
was recently selected by the Federal Communications Commission to serve on a
special panel that will arbitrate matters relating to retransmission consent and
programming agreements. From 1992 through June 2001, Ms. Hubbard was Senior Vice
President and general counsel of Daniels & Associates, L.P., and also served as
an advisor to its executive committee. Located in Denver, Colorado, Daniels &
Associates, L.P. is a leader in mergers-and-acquisitions and financial services
to the cable, telecommunications, media, and Internet industries worldwide.
Prior to that, she was a partner in the corporate/securities group of Holland &
Hart, L.L.P., the largest law firm in the Rocky Mountain region. She received
her A.B. with high honors from Stanford University in 1980 and attended
Georgetown Law School and the University of Colorado Law School, from which she
received her J.D. in 1983.
ALAN ISAACMAN. Mr. Isaacman is a senior partner of Isaacman, Kaufman &
Painter, a Los Angeles, California law firm. Mr. Isaacman is a renowned
litigation attorney representing general corporate clients as well as clients
from the media and entertainment industries. He is considered an expert on First
Amendment rights and has experience in areas of copyright, antitrust,
securities, right to privacy and general entertainment law. Mr. Isaacman has
successfully defended clients on First Amendment cases throughout the judicial
system up to and including the Supreme Court of the United States. Mr. Isaacman
received his undergraduate at Penn State University and received his law degree
from Harvard University Law School. He is a Fellow of the American College of
Trial Lawyers and is included in the Best Lawyers in America.
DAVID NICHOLAS. Since February 2004, Mr. Nicholas has been Vice President
of Sales for N2 Broadband, Inc., a company based in Duluth, Georgia, that is the
leading provider of open-platform solutions that allow cable network operators
and content providers to offer on-demand services like video-on-demand (VOD).
From January 2000 until February 2004, Mr. Nicholas was Vice President of
Concurrent Computer Corporation in charge of worldwide sales of VOD; in that
position, he was responsible for creating and implementing VOD business
strategies, overseeing sales and support
6
<Page>
services, and negotiating contracts with Concurrent's major customers, such as
Comcast Corporation, Time Warner, Inc., and Charter Communications, Inc. Prior
to joining Concurrent, Mr. Nicholas was from 1995 to 1999 Executive Vice
President of the Industrial Systems Division of Pioneer Electronics Corporation,
where he played a lead role in securing a major contract with Time Warner to
supply its digital set top boxes.
HIRAM J. WOO. Since February 2004, Mr. Woo has been President, Chief
Executive Officer, and director of Consolidated Food Service Corporation, owner
and operator of a small chain of steakhouse restaurants in Northern California.
From 1997 through 2002, Mr. Woo was President and director of Steakhouse
Partners, Inc., an operator of 65 full-service steakhouse restaurants located in
11 states. On February 15, 2002, Steakhouse Partners, Inc. filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code. From
1985 through 1996, Mr. Woo was President of Regal Financial & Development
Corporation, a real estate development and planning firm. While at Regal
Financial & Development Corporation, Mr. Woo was responsible for acquisitions,
feasibility analyses, financing and the overall coordination of all development
and construction projects with an emphasis on residential single-family homes
and multiple residential units. Mr. Woo managed over $300 million of real estate
development projects in the Western United States under this entity. Mr. Woo has
wide experience in accounting, taxes and management advisory services, actively
practicing in his mid-size CPA firm for a period of ten years. Mr. Woo graduated
form the University of California, Berkeley, with a Bachelor of Science Degree
in Accounting and Finance and is a licensed Certified Public Accountant in
California.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE
The audit committee, currently consisting of Messrs. Nicholas and Woo and
Matthew Armstrong, is responsible for recommending independent auditors and
reviewing management actions in matters relating to audit functions. The
committee reviews, with independent auditors, the scope and results of its audit
engagement, the system of internal controls and procedures and reviews the
effectiveness of procedures intended to prevent violations of laws. The report
of the audit committee for fiscal year 2004 can be found below under the heading
"Proposal Two: Ratification of Appointment of Independent Auditors."
The audit committee, consistent with the Sarbanes-Oxley Act of 2002 and the
rules adopted thereunder, meets with management and the auditors prior to filing
of officers' certifications with the SEC to receive information concerning,
among other things, significant deficiencies in the design or operation of
internal controls.
The audit committee has recommended the selection of Grant Thornton LLP as
the Company's independent auditors for the year ended March 31, 2005. Grant
Thornton reports directly to the audit committee.
All audit committee members are "independent" in accordance with rule
4200(a)(14) of the Nasdaq Marketplace Rules. Our board of directors has
determined that Mr. Woo qualifies as an "audit committee financial expert" as
that term is used in section 407 of the Sarbanes-Oxley Act of 2002.
The audit committee operates under a formal charter that governs its duties
and conduct. A copy of the charter is available on our website, www.noof.com.
The audit committee has adopted a non-retaliation policy and a
complaint-monitoring procedure to enable confidential and anonymous reporting to
the audit committee.
COMPENSATION COMMITTEE
The compensation committee, currently consisting of Messrs. Fani and
Nicholas, determines, approves, and reports to the board of directors on all
elements of compensation of our executive officers. The compensation committee
also has the power to prescribe, amend, and rescind rules relating to the
Company's stock option plans, to grant options and other awards under the stock
option plans, and to interpret the stock option plans.
7
<Page>
All members of the compensation committee are "independent" in accordance
with rule 4200(a)(14) of the Nasdaq Marketplace Rules.
The compensation committee operates under a formal charter that governs its
duties and standards of performance. A copy of the charter is available on our
website, www.noof.com.
NOMINATING COMMITTEE
The nominating committee was formed by the Company's board of directors on
August 20, 2002. It currently consists of Ms. Hubbard and Mr. Woo, each of whom
is independent. The nominating committee operates under a written charter, a
copy of which is available on our website, www.noof.com.
The nominating committee performs the following functions:
* It considers, and recommends to the board of directors, individuals for
appointment or election as directors.
* It recommends to the board of directors individuals for appointment to
vacancies on any committee of the board of directors.
* It makes recommendations to the board of directors regarding any changes
to the size of the board of directors or any committee.
* It assists management in preparing proxy statement disclosure regarding
the operations of the committee.
* It reports to the board of directors on a regular basis, not less than
once a year.
* It performs any other duties or responsibilities expressly delegated to
the committee by the board of directors relating to board or committee
members.
Candidates for director should have certain minimum qualifications,
including being able to understand basic financial statements, being over 21
years of age, having relevant business experience (taking into account the
business experience of the other directors), and having high moral character.
The committee retains the right to modify these minimum qualifications from time
to time.
In evaluating an incumbent director whose term of office is set to expire,
the nominating committee reviews that director's overall service to the Company
during that director's term, including the number of meetings attended, level of
participation, quality of performance, and any transactions with the Company
engaged in by that director during his or her term.
When selecting a new director nominee, the committee first determines
whether the nominee must be independent for Nasdaq purposes or whether the
candidate must qualify as an "Audit Committee Financial Expert," as that term is
used in section 407 of the Sarbanes-Oxley Act of 2002. The committee then uses
its network of contacts to compile a list of potential candidates, but may also
engage, if it deems appropriate, a professional search firm. The committee then
meets to consider the candidates' qualifications and chooses a candidate by
majority vote.
Shareholders wishing to directly recommend candidates for election to the
board of directors at an annual meeting must do so by giving notice in writing
to Chairman of the Nominating Committee, New Frontier Media, Inc., 7007
Winchester Circle, Suite 200, Boulder, Colorado 80301. Any such notice must, for
any given annual meeting, be delivered to the chairman not less than 120 days
prior to the anniversary of the preceding year's annual meeting. The notice must
state (1) the name and address of the shareholder making the recommendations,
(2) the name, age, business address, and residential address of each person
recommended, (3) the principal occupation or employment of each person
recommended, (4) the class and number of shares of New Frontier shares that are
beneficially owned by each person recommended and by the recommending
shareholder, (5) any other information concerning the persons recommended that
must be disclosed in nominee and proxy solicitations in accordance with
Regulation 14A of the Securities Exchange Act of 1934, and (6) a signed consent
of each person recommended stating that he or she consents to serve as a
director of the Company if elected.
8
<Page>
The nominating committee will consider and vote on any recommendations so
submitted. In considering any person recommended by a shareholder, the committee
will look for the same qualifications that it looks for in any other person that
it is considering for a position on the board of directors.
Any shareholder nominee recommended by the committee and proposed by the
board of directors for election at the next annual meeting of shareholders will
be included in the company's proxy statement for that annual meeting.
EXECUTIVE COMMITTEE
The executive committee, currently consisting of Ms. Hubbard and Messrs.
Weiner, Fani, Isaacman, Nicholas and Woo, has met or taken written action when
the board of directors was not otherwise meeting and has the same level of
authority as the board of directors, including the authority to form board
committees, except that it cannot amend the Company's by-laws, or take any other
action not permitted to be delegated to a committee under Colorado law. The
Company does not currently anticipate that the executive committee will hold any
meetings in fiscal year 2005.
COMMUNICATIONS FOR OUR SHAREHOLDERS TO THE BOARD OF DIRECTORS
Our board of directors recommends that shareholders direct to the Company's
assistant corporate secretary any communications intended for the board of
directors. Shareholders can send communications by e-mail to gsawicki@noof.com,
by facsimile to (303) 444-0848, or by mail to George Sawicki, Assistant
Secretary, New Frontier Media, Inc., 7007 Winchester Circle, Suite 200, Boulder,
Colorado 80301.
This centralized process will assist the board in reviewing and responding
to shareholder communications in an appropriate manner. If a shareholder wishes
to direct any communication to a specific board member, the name of that board
member should be noted in the communication. The board of directors has
instructed the assistant corporate secretary to forward shareholder
correspondence only to the intended recipients, but the board has also
instructed the assistant corporate secretary to review all shareholder
correspondence and, in his discretion, not forward any items that he deems to be
of a commercial or frivolous nature or otherwise inappropriate for the board's
consideration. Any such items may be forwarded elsewhere in the Company for
review and possible response.
BOARD AND COMMITTEE MEETINGS
During the Company's fiscal year ended March 31, 2004, the board of
directors held four meetings and acted by unanimous written consent four times.
In addition, the independent members met in executive session without the
non-independent directors being present. Each director attended more than 75% of
the board meetings and meetings of the board committees on which he or she
served.
During the Company's fiscal year ended March 31, 2004, the compensation
committee met twice, the audit committee met five times, the nominating
committee met once, and the executive committee met three times and acted once
by unanimous written consent.
DIRECTOR ATTENDANCE AT ANNUAL MEETINGS
Our directors are encouraged, but not required, to attend the annual
meeting of shareholders. All of our directors attended the 2003 annual meeting
of shareholders.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Exchange Act, the Company's directors and executive
officers and beneficial owners of more than 10% of any class of equity
securities of the Company are required to file certain reports, within specified
time periods, indicating their holdings of and transactions in any class of
equity securities and derivative securities. Based solely on a review of any
such reports provided to the Company and written representations from such
persons regarding the necessity to file
9
<Page>
any such reports, the Company is not aware of any failures to file reports or
report transactions in a timely manner during the Company's fiscal year ended
March 31, 2004.
CORPORATE GOVERNANCE
The Company operates according to a comprehensive plan of corporate
governance for the purpose of defining responsibilities, setting high standards
of professional and personal conduct, and assuring compliance with those
responsibilities and standards. The Company regularly monitors developments in
the area of corporate governance. In July 2002, Congress passed the
Sarbanes-Oxley Act of 2002, which, among other things, establishes, or provides
the basis for, a number of new corporate governance standards and disclosure
requirements. In addition, the Nasdaq Stock Market, Inc. has made changes to its
corporate governance and listing requirements. The board of directors has
initiated numerous actions consistent with these new rules and will continue to
monitor developments in this area. Some are described below; others are
described elsewhere in this proxy statement.
STATEMENT OF POLICY
The Company has adopted a statement of policy relating to the duties and
responsibilities of the board of directors.
CODE OF ETHICS
The Company has adopted two codes of ethics, one relating to financial
management (for its principal executive officer and its senior financial
officers), the other relating to business conduct. A copy of each code of ethics
is available on our website. Violations of either code of ethics may be reported
to the audit committee.
PERSONAL LOANS TO EXECUTIVE OFFICERS AND DIRECTORS
The Company complies with and will operate in a manner consistent with
recently enacted legislation outlawing extensions of credit in the form of
personal loans to or for its directors and executive officers.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid to the
Company's chief executive officer and the three other most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
for the three fiscal years ended March 31, 2004, 2003 and 2002.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
ANNUAL COMPENSATION
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND COMPENSATION OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) SARS (#) ($)(1)
- ----------------------------------- ---- ---------- --------- ------------ ---------- ------------
Michael Weiner, ................... 2004 318,077 315,000 -- -- 6,637
Chief Executive Officer 2003 275,000 -- -- -- 6,635
2002 272,115 -- -- -- 8,299
Ken Boenish, ..................... 2004 298,077 250,000 -- -- 8,213
President of Colorado Satellite 2003 248,077 50,000 -- 100,000 7,917
Broadcasting, Inc. 2002 200,000 274,440 -- -- 4,556
Karyn Miller, ..................... 2004 159,231 100,000 -- -- 5,510
Chief Financial Officer 2003 144,808 10,000 -- -- 4,781
2002 131,154 50,000 -- -- 2,856
Bill Mossa, ...................... 2004 137,280 194,150 -- -- 6,469
V.P. Affiliate Sales & Marketing of 2003 136,671 109,991 -- -- 4,968
Colorado Satellite Broadcasting, 2002 127,192 147,671 17,657(2) 40,000 4,192
Inc.
</Table>
- ---------------
10
<Page>
(1) "All Other Compensation" includes amounts contributed to the Company's
401(k) plan on behalf of the Named Executive Officers.
(2) "Other Annual Compensation" for Mr. Mossa includes $12,457 of moving
expenses and an automobile allowance of $5,200. While each of the other
Named Executive Officers enjoy certain perquisites, those perquisites do not
exceed the lesser of either $50,000 or 10% of each Named Executive Officer's
salary and bonus.
No grants of stock options or stock appreciation rights were made during
the last fiscal year to any of the Named Executive Officers, but the following
table contains information relating to exercise of stock options by the Named
Executive Officers during the last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)(1)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- ----------- ----------- ----------- ----------- -----------
Michael Weiner....... -- -- 765,000 -- $4,113,750 --
Ken Boenish.......... 35,000 $ 236,250 200,000 -- $1,019,500 --
Karyn Miller......... 14,000 $ 76,895 141,000 -- $ 638,765 --
Bill Mossa........... 15,000 $ 107,250 61,400 13,600 $ 295,422 $57,528
</Table>
- ---------------
(1) The dollar value of each exercisable and unexercisable option was calculated
by multiplying the number of shares of common stock underlying the option by
the difference between the exercise price of the option and the closing
price of the Company's common stock at the Company's year end ($7.75).
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides certain information concerning our equity
compensation plans as of March 31, 2004.
EQUITY COMPENSATION PLAN INFORMATION
<Table>
<Caption>
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR
NUMBER OF SECURITIES FUTURE ISSUANCE UNDER
TO BE WEIGHTED-AVERAGE EQUITY COMPENSATION
ISSUED UPON EXERCISE EXERCISE PLANS
OF PRICE OF OUTSTANDING (EXCLUDING SECURITIES
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND REFLECTED IN COLUMN
PLAN CATEGORY WARRANTS AND RIGHTS RIGHTS (A))
- ---------------------- ---------------------- ---------------------- ----------------------
(a) (b) (c)
Equity compensation
plans approved by
security holders...... 2,395,550 $ 2.88 1,551,300
Equity compensation
plans not approved by
security holders...... 918,000 $ 5.63 --
---------------------- ---------------------- ----------------------
Total................. 3,313,550 $ 3.64 1,551,300
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
</Table>
MATERIAL FEATURES OF EACH PLAN NOT APPROVED BY SHAREHOLDERS
The 918,000 shares issuable under plans that were not approved by our
shareholders are all issuable on exercise of individual warrants granted outside
of a warrant plan. Each such grant was made in connection with agreements
entered into by the Company in connection with consulting services, debt
financing, or content licensing. All such warrants are due to expire no later
than 2009.
11
<Page>
COMPENSATION OF DIRECTORS
Company directors who are not also employees are reimbursed for reasonable
travel expenses related to attendance at board meetings and are paid $7,500
following attendance of each regular meeting of the board, $500 following
attendance at each special meeting of the board of directors, and $1,000
following attendance at each meeting of any committee on which they serve. In
addition, the Company awards each director 100,000 non-qualified options to
purchase the Company's common stock at fair market value or higher for his or
her first year of service as a director and 25,000 such options for each
successive term. Company directors who are employees are not compensated for
their services as director.
EMPLOYMENT CONTRACTS OF NAMED EXECUTIVE OFFICERS
The Company has an employment agreement with Michael Weiner that ends on
March 31, 2006. This agreement provides for the payment of an annual base salary
of $315,000 and such bonuses, if any, as may be determined by the Company's
compensation committee. The agreement provides that if Mr. Weiner terminates his
employment after a change in control of the Company or is terminated without
cause, the Company must pay Mr. Weiner an amount equal to his base salary for
the duration of the employment period. The agreement further provides that, upon
the occurrence of a change of control of the Company at a price equal to $5.00
per share or higher, the Company must pay Mr. Weiner a bonus, to be paid out
over a period of one year, equal to his annual base salary.
The Company has an employment agreement with Karyn Miller that ends on
March 31, 2006. The agreement provides for the payment of an annual base salary
of $150,000 for the first year of the agreement (starting August 2002), with
annual reviews thereafter, and such bonuses, if any, as may be determined by the
Company's compensation committee. The agreement provides that if Ms. Miller
terminates her employment in accordance with her employment agreement, or is
terminated without cause within six months after a change in control of the
Company, the Company shall pay Ms. Miller an amount equal to her base salary for
the duration of the employment period or for one year, whichever is less, and
the amount of bonus, if any, paid to Ms. Miller for the fiscal year preceding
the change in control.
The Company's wholly owned subsidiary Colorado Satellite Broadcasting, Inc.
has an employment agreement with Ken Boenish that ends on March 31, 2006. This
agreement provides for the payment of an annual base salary of $300,000, plus a
bonus of up to $75,000 per year, with the amount of the bonus depending on the
revenues Colorado Satellite Broadcasting receives from its agreement with On
Command. Mr. Boenish is also entitled to such bonuses, if any, as may be
determined by the Company's compensation committee. The agreement provides that
if Mr. Boenish terminates his employment after a change in control of the
Company or is terminated without cause, the Company must pay Mr. Boenish an
amount equal to his base salary for the duration of the employment period.
LIMITS ON LIABILITY AND INDEMNIFICATION
The Company's articles of incorporation eliminate the personal liability of
our directors to the Company and its shareholders for monetary damages for
breach of their fiduciary duties in certain circumstances. The articles of
incorporation further provide that the Company will indemnify its officers and
directors to the fullest extent permitted by law. The Company believes that this
indemnification covers at least negligence and gross negligence on the part of
the indemnified parties. Insofar as indemnification for liabilities under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Company under the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the compensation committee has ever served as an officer or
employee of the Company or any of our subsidiaries. During the last fiscal year,
none of our executive officers served
12
<Page>
on the board of directors or compensation committee of any other entity whose
officers served either on our board of directors or compensation committee.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Executive Compensation Philosophy. Our executive compensation philosophy
emphasizes three guiding principles. First, providing a competitive executive
compensation package that enables us to attract, motivate and retain talented
executives. Second, basing a major portion of each executive's annual cash
compensation on our earnings per share and our net income or the net income of
the group or unit for which the executive is primarily responsible. Third,
aligning the financial interests of executives with long-term total shareholder
return, particularly through stock options.
Our executive compensation program has three major components: base
salaries, annual incentives, and long-term incentives.
Base Salaries. Our executive officers receive base salaries as compensation
for their job performance, abilities, knowledge, and experience. The base
salaries of Michael Weiner, Ken Boenish and Karyn Miller are determined under
the terms of their respective employment contracts with us. Apart from any
contractual commitments, the compensation committee intends to maintain base
salaries at competitive levels in the marketplace for comparable executive
ability and experience and to place more emphasis on the incentive portion of
executive compensation, thereby correlating compensation to performance. The
compensation committee reviews base salaries annually and determines increases
based upon an executive officer's contribution to corporate performance and on
competitive market conditions.
Annual Incentive Compensation. Our executive officers may also receive
annual bonuses at the discretion of the compensation committee.
Long-Term Incentives. The compensation committee believes that stock option
plans provide an excellent vehicle for rewarding performance by Company
executives and retaining their services for the future.
Respectfully submitted July 1, 2004 by the members of the compensation
committee.
DAVID NICHOLAS AND DR. SKENDER FANI
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table states, as of June 9, 2004, the number and percentage
of shares of Company common stock owned by each person owning at least 5% of the
outstanding shares of Company common stock, each officer and director owning
stock, each nominee for director owning stock, and all officers and directors as
a group. Beneficial ownership is determined in accordance with the rules of the
United States Securities and Exchange Commission. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of common stock subject to options or warrants held by that
person that are currently exercisable or will become exercisable within 60 days
after June 9, 2004, are deemed outstanding, but those shares are not deemed
outstanding for purposes of computing percentage ownership of any other person.
The number and percentage of shares beneficially owned are based on the
aggregate of 21,954,458 shares of common stock outstanding as of June 9, 2004,
as reported in the Company's annual report on Form 10-K filed with the
Securities and Exchange Commission on June 14, 2004.
Unless otherwise indicated in the footnotes below, the persons and entities
named in the table have sole voting or investment power with respect to all
shares owned, subject to community property laws.
13
<Page>
<Table>
<Caption>
NAME AND ADDRESS OF NUMBER OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT
- ------------------------------------------------------- ------------------ ----------
Michael Weiner ........................................ 838,116(1) 4%
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Alan Isaacman ......................................... 325,000(2) 1%
8484 Wilshire Blvd. Suite 850
Beverly Hills, CA 90211
Ken Boenish ........................................... 176,000(3) 1%
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Karyn Miller .......................................... 127,000(4) 1%
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Hiram Woo ............................................. 90,000(5) *
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Dr. Skender Fani ...................................... 30,000 *
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Melissa Hubbard ....................................... 44,500(6) *
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Bill Mossa ............................................ 68,200(7) *
7007 Winchester Circle, Suite 200
Boulder, CO 80301
David Nicholas ........................................ 40,000(8) *
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Royce & Associates .................................... 1,329,500(9) 6%
1414 Avenue of the Americas
New York, NY 10119
LCG Holdings, LLC ..................................... 1,106,498(10) 5%
599 Lexington Avenue
35th Floor
New York, NY 10022
All officers and directors as a group (9 persons)...... 1,738,816 8%*
</Table>
- ---------------
* Less than 1%.
(1) Includes the right to acquire 655,000 shares of common stock within 60 days
upon the exercise of employee stock options and warrants.
(2) Includes the right to acquire 325,000 shares of common stock within 60 days
upon the exercise of stock options.
(3) Includes the right to acquire 175,000 shares of common stock within 60 days
upon the exercise of employee stock options.
(4) Includes the right to acquire 121,000 shares of common stock within 60 days
upon the exercise of employee stock options.
(5) Includes the right to acquire 90,000 shares of common stock within 60 days
upon the exercise of stock options.
14
<Page>
(6) Includes the right to acquire 40,000 shares of common stock within 60 days
upon the exercise of stock options. Ms. Hubbard disclaims the beneficial
ownership of 500 shares of stock owned by her husband.
(7) Includes the right to acquire 68,200 shares of common stock within 60 days
upon the exercise of employee stock options.
(8) Includes the right to acquire 40,000 shares of common stock within 60 days
upon the exercise of stock options.
(9) This share total is derived from a Schedule 13G filed by Royce & Associates
on February 5, 2004.
(10) This share total is derived from a Schedule 13G filed by LCG Holdings, LLC
on April 6, 2004.
PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change, assuming dividend reinvestment, over the last five fiscal years in (a)
the total shareholder return on our common stock with (b) the total return on
the Standard & Poor's SmallCap 600 Index and (c) the total return on a peer
group index. The Standard & Poor's SmallCap 600 index includes companies with a
market capitalization of between $300 million and $1 billion, the current
average market capitalization being approximately $456,654,000. The peer group
is an index weighted by the relative market capitalization of Playboy
Enterprises, Inc. and Private Media Group, Inc., both of which were selected for
being in industries related to ours (provider of adult content), and for having
revenues of $315,844,000 and $48,723,000, respectively, in their most recently
reported fiscal years.
The following graph assumes that $100 had been invested in each of the
Company, the Standard & Poor's Small Cap 600 Index and the two-member peer group
on March 31, 1999.
INDEXED RETURNS
Base Years Ending
Period
Company Name / Index Mar99 Mar00 Mar01 Mar02 Mar03 Mar04
- --------------------------------------------------------------------------------------------------------
NEW FRONTIER MEDIA INC 100 269.57 67.75 44.29 18.55 179.71
S&P SMALLCAP 600 INDEX 100 130.70 129.02 157.37 118.32 185.15
PEER GROUP 100 124.95 70.76 88.02 36.69 61.25
The preceding sections entitled "Executive Compensation" and "Performance
Graph" do not constitute soliciting material for purposes of SEC Rule 14a-9,
will not be deemed to have been filed with the SEC for purposes of Section 18 of
the Securities Exchange Act of 1934, and are not to be incorporated by reference
into any other filing that we make with the SEC.
15
<Page>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company paid $652,956 to Isaacman, Kaufman, & Painter during the fiscal
year ended March 31, 2004, for legal services provided by the firm. The
Company's board member Alan Isaacman is a senior partner of Isaacman, Kaufman &
Painter.
PROPOSAL TWO:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
INDEPENDENT AUDITORS
Grant Thornton has been the principal accounting firm for the Company since
November 2001. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE YOUR SHARES FOR
RATIFICATION OF SELECTION OF GRANT THORNTON LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE 2005 FISCAL YEAR.
The Company anticipates that representatives of Grant Thornton LLP will
attend the annual meeting for the purpose of responding to appropriate
questions. At the annual meeting, the representatives of Grant Thornton LLP will
be afforded an opportunity to make a statement if they so desire.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The audit committee is comprised of three independent directors (each of
whom meets the independence and expertise requirements of the National
Association of Securities Dealers, Inc.) and operates under a written charter, a
copy of which is available on our website, www.noof.com. The audit committee
recommends the engagement of the Company's independent auditor and reviews and
considers actions of management in matters relating to audit functions. The
audit committee also reviews with the independent auditor the scope and results
of its audit engagement, and the Company's system of internal controls and
procedures, and it reviews the effectiveness of procedures intended to prevent
violations of laws. In fulfilling its responsibilities, the audit committee has
reviewed and discussed the audited consolidated financial statements for the
Company for the fiscal year ended March 31, 2004 with the Company's management
and Grant Thornton LLP, the Company's independent auditors.
In accordance with the Sarbanes-Oxley Act of 2002, in May 2004 the audit
committee established the New Frontier Media, Inc. "Audit Committee Pre-Approval
Policy" whereby the audit committee is required to annually pre-approve the
audit fees and the provision of certain tax and other non-audit related services
by Grant Thornton LLP after Grant Thornton LLP describes to the audit committee
the services to be performed and specific fee estimates for each such service. A
copy of that policy is attached as appendix A to this proxy statement. The audit
committee limits the engagement by the Company of Grant Thornton LLP for
non-audit services and tax services to those circumstances where the services
are considered integral to the audit services that it provides, or in which
there is another compelling rationale for using its services. The audit
committee considered the provision by Grant Thornton LLP of the tax services
referred to below and other non-audit services and concluded that the provision
of these services was compatible with maintaining the independence of Grant
Thornton LLP.
The audit committee has discussed with Grant Thornton the matters required
to be discussed by Statement on Auditing Standards No. 61, "Communication with
Audit Committees." In addition, the audit committee has received the written
disclosures and the letter from Grant Thornton required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit Committees"
and has discussed with Grant Thornton its independence from the Company and its
management.
Finally, in reliance on the reviews and discussions referred to above, the
audit committee recommended to the board of directors that the audited
consolidated financial statements for the Company for the fiscal year ended
March 31, 2004, be included in our annual report on Form 10-K for the year ended
March 31, 2004. We have filed that annual report with the Securities and
Exchange Commission.
16
<Page>
AUDIT FEES AND ALL OTHER FEES
Audit Fees
Fees for audit services totaled approximately $352,831 in fiscal year 2004
and approximately $307,832 in fiscal year 2003, including fees associated with
the annual audit and the reviews of the Company's quarterly reports on Form
10-Q.
Tax
Fees for tax services, including tax compliance, tax advice and tax
planning, totaled approximately $109,765 in fiscal year 2004 and approximately
$92,415 in fiscal year 2003.
Audit-Related Fees
Fees for audit-related services not described above totaled approximately
$23,325 in fiscal year 2004 and approximately $48,282 in fiscal year 2003. In
fiscal year 2004, these fees were principally related to the audit of the
Company's 401(k) plan; in fiscal year 2003, these fees were principally related
to the audit of the Company's 401(k) plan, the filing of a Form S-8 registration
statement registering shares of Company common stock issuable on exercise of
options or awards available for grant under the Company's 2001 Incentive Stock
Plan, and responding to an SEC comment letter.
Respectfully submitted July 16, 2004 by the members of the audit committee.
HIRAM J. WOO, MATTHEW ARMSTRONG, AND DAVID NICHOLAS
* * *
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Michael Weiner
Michael Weiner
Chief Executive Officer and Secretary
Dated: July 23, 2004
17
<Page>
[This Page Intentionally Left Blank]
<Page>
APPENDIX A
Effective May 2004
NEW FRONTIER MEDIA, INC.
GUIDELINES FOR THE PRE-APPROVAL OF INDEPENDENT AUDITOR SERVICES
BY THE NEW FRONTIER MEDIA, INC. AUDIT COMMITTEE
The New Frontier Media, Inc. Audit Committee ("the Committee") has adopted
the following guidelines regarding the engagement of the Company's independent
auditor to perform audit and non-audit services for the Company:
1. For audit services, the independent auditor will provide the Committee with
an engagement letter during the fourth quarter of each fiscal year outlining
the scope of the audit services proposed to be performed during the next
fiscal year. If agreed to by the Committee, this engagement letter will be
formally accepted by the Committee at its next Audit Committee meeting.
2. For non-audit services, the Company's Chief Financial Officer will submit to
the Committee for approval (during the first quarter of each fiscal year) the
list of non-audit services that he or she recommends the Committee engage the
independent auditor to provide for the fiscal year. The Company's CFO and the
independent auditor will each confirm to the Committee that each non-audit
service on the list is permissible under all applicable legal requirements.
In addition to the list of planned non-audit services, a budget estimating
non-audit service spending for the fiscal year will be provided. The
Committee will approve both the list of permissible non-audit services and
the budget for each such service. The Committee will be informed routinely as
to the non-audit services actually provided by the independent auditor
pursuant to this pre-approval process.
3. To ensure prompt handling of unexpected matters, the Committee delegates to
the Chair the authority to amend or modify the list of approved permissible
non-audit services and fees. The Chair will report action taken to the
Committee at the next Committee meeting.
4. The independent auditor must ensure that all audit and non-audit services
provided to the Company have been approved by the Committee.
P
R
O
X
Y
NEW FRONTIER MEDIA, INC.
2004 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints each of Michael
Weiner and Karyn Miller as proxies, acting jointly and severally, with full
power of substitution, for and in the name of the undersigned to vote all shares
of common stock, par value $.0001 per share, of New Frontier Media, Inc., that
the undersigned would be entitled to vote if present in person at the annual
meeting of shareholders to be held on Tuesday, August 24, 2004, at 10:00 a.m.
Mountain Daylight Time, at the Omni Interlocken Resort, 500 Interlocken
Boulevard, Broomfield, Colorado 80021, and at any adjournment, on the matters
described in the accompanying proxy statement and on any such other matters as
may properly come before the annual meeting. The proxies are directed to vote or
refrain from voting as checked on the reverse side on the matters listed on the
reverse side, and otherwise may vote in their discretion.
This proxy granted by this proxy card will be voted in the manner directed on
the reverse side by the undersigned shareholder. If no direction is specified,
this proxy will be voted FOR proposals 1 and 2. With respect to any other
matters that properly come before the annual meeting, the proxies may vote at
their discretion. The board of directors currently knows of no other business
that will come before the annual meeting. If at the time of the annual meeting
any of the nominees listed on this proxy card are unable to serve, this proxy
will be voted for any other person or persons, if any, that the board of
directors designates.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
<Page>
1. Election of the following director nominees to serve for the following year
and until their successors are elected:
Nominees are: Michael Weiner, Dr. Skender Fani, Melissa Hubbard, Alan
Isaacman, David Nicholas and Hiram J. Woo
<Table>
FOR ALL NOMINEES WITHHELD FOR THE FOLLOWING ONLY:
LISTED ABOVE WITHHOLD AUTHORITY FOR (WRITE THE NAME(S) OF THE
WITH EXCEPTIONS NOTED ALL NOMINEES NOMINEE(S) IN THE SPACE BELOW)
--------------------------------------
/ / / /
--------------------------------------
2. Ratification of the selection of Grant Thornton LLP as the Company's
independent auditors for the fiscal year ending March 31, 2005.
<Table>
FOR AGAINST ABSTAIN
/ / / / / /
</Table>
Mark here if your address has changed and
provide us with your new address in
the space provided to the right: New Address: ___________________________
Dated: ___________________________, 2004
________________________________________
Signature(s) of Stockholder(s)
________________________________________
Title
Please mark, date and sign exactly as
your name appears above and return in
the enclosed envelope. If acting as
executor, administrator, trustee,
guardian, etc., you should so indicate
when signing. If the signer is a
corporation, please sign the full
corporate name, by duly authorized
officer. If shares are held jointly,
each stockholder named should sign.