As filed with the Securities and Exchange Commission on June 29, 2001
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
HOLLYWOOD MEDIA CORP.
(Exact name of registrant as specified in its charter)
Florida 65-0385686
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2255 Glades Road, Suite 237 West Mitchell Rubenstein
Boca Raton, Florida 33431 Chief Executive Officer
(561) 998-8000 Hollywood Media Corp.
- -------------------------------- 2255 Glades Road, Suite 237 West
(Address, including zip code and Boca Raton, Florida 33431
telephone number, including area Telephone No. (561) 998-8000
code, of registrant's principal Facsimile No. (561) 998-2974
executive offices) --------------------------------
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies of communications to:
W. Robert Shearer, Esq.
General Counsel and Senior Vice President
2255 Glades Road, Suite 237 West
Boca Raton, Florida 33431
Telephone No. (561) 998-8000
Facsimile No. (561) 998-2974
---------------------------
Approximate date of commencement of proposed
sale to the public: From time to time after this
registration statement becomes effective.
---------------------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
================================================================================
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum Amount Of
Title of Shares Amount To Offering Price Aggregate Offering Registration
To Be Registered Be Registered(1) Per Share Price Fee
- -------------------------------------- ---------------- --------------- ------------------ ---------------
Common stock, par value $.01 per share 1,287,787 $5.61(2) $7,224,485.07(2) $1,806.12(3)
Common stock, par value $.01 per share 614,059(4) $6.44 $3,954,540 $988.64
Common stock, par value $.01 per share 1,537,380(5) $5.61(2) $8,624,701.80(2) $2,156.18(3)
TOTAL FEE: $4,950.94
- --------------------------------------
(1) The registration statement also includes an indeterminate number of
additional shares of common stock that may become offered, issuable or
sold to prevent dilution resulting from stock splits, stock dividends
and similar transactions, which are included pursuant to Rule 416 under
the Securities Act of 1933, as amended (the "Securities Act").
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(3) Calculated pursuant to paragraph (c) of Rule 457 under the Securities
Act, on the basis of $5.61 per share, which was the average of the high
and low prices of the Registrant's common stock as reported on the
Nasdaq National Market on June 25, 2001.
(4) Represents 614,059 shares of Common stock which are issuable upon
exercise of warrants having an exercise price of $6.44 per share, which
may decrease to $5.37 per share and $4.51 per share, respectively on
specific dates if certain conditions are met.
(5) Represents 1,537,380 shares of Common stock that may be issuable upon
the exercise of adjustment warrants. The number of shares issuable
pursuant to the adjustment warrants will fluctuate based on the market
price of the Common stock.
================================================================================
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 28, 2001
PROSPECTUS
- ----------
3,439,226 SHARES OF COMMON STOCK
HOLLYWOOD MEDIA CORP.
In this prospectus, "Hollywood Media", the "Company" "we", "us" and
"our" refer to Hollywood Media Corp.
THE OFFERING:
This prospectus relates to the resale of 3,439,226 shares of common
stock, which consist of 1,287,787 shares of common stock currently outstanding
and 2,151,439 shares of common stock issuable upon the exercise of warrants. All
of these shares and warrants were issued and sold pursuant to private placements
to the selling shareholders listed on page 16 of this prospectus. We are
registering these shares of common stock pursuant to commitments to register the
shares with the selling shareholders.
USE OF PROCEEDS:
We will not receive any proceeds from the sale of the shares of
common stock by the selling shareholders, other than payment of the exercise
price of the warrants. The selling shareholders may sell the shares at prices
determined by the prevailing market price for the shares or in negotiated
transactions. The selling shareholders may also sell the shares to or with the
assistance of broker-dealers who may receive compensation in excess of their
customary commissions.
TRADING MARKET:
Our common stock is quoted on the Nasdaq National Market under the
symbol "HOLL." On June 27, 2001, the last reported sales price of our common
stock on the Nasdaq National Market was $6.11 per share.
OFFERING EXPENSES:
We will pay the expenses of registering the shares.
YOU SHOULD CAREFULLY CONSIDER THE "RISKS OF INVESTING IN OUR SHARES"
SECTION BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
- --------------------------------------------------------------------------------
THESE SHARES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAVE THESE ORGANIZATIONS
DETERMINED WHETHER THIS PROSPECTUS IS COMPLETE OR ACCURATE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
YOU SHOULD ONLY RELY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS OR ANY SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE
ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. OUR COMMON STOCK IS NOT BEING
OFFERED IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD NOT
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY SUPPLEMENT IS ACCURATE AS
OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THOSE DOCUMENTS.
The date of this prospectus is June __, 2001
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TABLE OF CONTENTS
Page
----
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS......................3
ABOUT HOLLYWOOD MEDIA CORP................................................3
RISKS OF INVESTING IN OUR SHARES..........................................8
PROCEEDS FROM SALE OF THE SHARES.........................................16
SELLING SHAREHOLDERS.....................................................16
HOW THE SHARES MAY BE DISTRIBUTED........................................19
OUR CAPITAL STOCK........................................................21
LEGAL OPINION............................................................24
EXPERTS..................................................................24
WHERE YOU CAN FIND MORE INFORMATION......................................24
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus or that are otherwise made by
us or on our behalf about our financial condition, results of operations and
business constitute "forward-looking statements," within the meaning of federal
securities laws. Hollywood Media cautions readers that certain important factors
may affect the Company's actual results, levels of activity, performance or
achievements and could cause such actual results, levels of activity,
performance or achievements to differ materially from any future results, levels
of activity, performance or achievements anticipated, expressed or implied by
any forward-looking statements that may be deemed to have been made in this
prospectus or that are otherwise made by or on behalf of Hollywood Media. For
this purpose, any statements contained in this prospectus that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, "forward-looking statements"
are typically phrased using words such as "may," "will," "should," "expect,"
"believe," "anticipate," "intend," "could," "estimate," "pro forma" or
"continue" or the negative variations thereof or similar expressions or
comparable terminology. Factors that may affect the Company's results include,
but are not limited to, our continuing operating losses, negative cash flows
from operations and accumulated deficit, our limited operating history, the need
for additional capital to finance our operations, the need to manage our growth
and integrate new businesses into the Company, our ability to develop strategic
relationships, our ability to compete with other Internet companies, technology
risks and the general risk of doing business over the Internet, future
government regulation, dependence on our founders, the interests of our largest
shareholder, Viacom Inc., and accounting considerations related to our strategic
alliance with Viacom Inc. The Company is also subject to other risks detailed
herein, including those risk factors discussed in the "Risks of Investing in Our
Shares" section as well as those discussed elsewhere in this prospectus or
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
Because these forward-looking statements are subject to risks and
uncertainties, we caution you not to place undue reliance on these statements,
which speak only as of the date of this prospectus. We do not undertake any
responsibility to review or confirm analysts' expectations or estimates or to
release publicly any revisions to these forward-looking statements to take into
account events or circumstances that occur after the date of this prospectus.
Additionally, we do not undertake any responsibility to update you on the
occurrence of unanticipated events which may cause actual results to differ from
those expressed or implied by these forward-looking statements. As a result of
the foregoing and other factors, no assurance can be given as to the future
results, levels of activity or achievements and neither us nor any other person
assumes responsibility for the accuracy and completeness of such statements.
ABOUT HOLLYWOOD MEDIA CORP.
THIS IS ONLY A SUMMARY AND DOES NOT CONTAIN ALL THE INFORMATION THAT
MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE MORE DETAILED INFORMATION,
INCLUDING THE FINANCIAL STATEMENTS AND THE RELATED FOOTNOTES, INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS, AS DISCUSSED IN THE "WHERE YOU CAN FIND MORE
INFORMATION" SECTION OF THIS PROSPECTUS.
INTRODUCTION
We are an entertainment-focused media and Internet company that
offers widely recognized brands and a broad collection of entertainment content
data and related information in the industry, which we license to media and
other companies including The New York Times, AOL Time Warner, Yahoo!, Sprint,
AT&T Wireless, Verizon and others. The Company owns an extensive ticketing
network and is engaged in the development and licensing of intellectual
properties and licensing of books. The Company generates revenues through the
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business-to-business syndication of entertainment-related content, the sale of
live theater tickets, the sale of advertising and from advances paid by
publishers and royalties received from our library of book titles.
BUSINESSES TO BUSINESS SYNDICATION DIVISIONS
CINEMASOURCE. CinemaSource is the largest supplier of movie showtimes
to the Internet and compiles movie showtimes for every movie theater in the
United States and Canada, representing approximately 36,000 movie screens. Since
its start in 1995, CinemaSource has substantially increased its operations and
currently provides movie showtime listings to more than 200 newspapers, wireless
companies, Internet sites, and other media outlets, including newspapers such as
The New York Times and Newsday, Internet companies including AOL's Digital City,
Yahoo!, Lycos, Excite, Ticketmaster/CitySearch, NBCi and wireless providers such
as Sprint PCS, AT&T Wireless and Verizon.
CinemaSource also syndicates entertainment news, movie reviews, and
celebrity biographies. In addition to charging fixed amounts for the data that
it provides to its customers, CinemaSource often shares in the advertising
revenue generated by its customers in connection with the data.
EVENTSOURCE. We launched the EventSource business in mid-1999 as an
expansion of the operations of CinemaSource. EventSource compiles and syndicates
detailed information on community events in cities around the country, including
concerts and live music, sporting events, festivals, fairs and live theater.
EventSource entered into an agreement with AOL's Digital City in April 2000 to
provide event listings for up to 200 cities nationwide. In addition to Digital
City, other EventSource customers include the web sites of The New York Times
and Knight Ridder.
THEATERSOURCE. We launched the TheaterSource business in mid-2000 as
a further expansion of the operations of EventSource. TheaterSource compiles and
syndicates a comprehensive database of theater productions and showtimes,
covering shows on Broadway, off-Broadway, touring companies, community
playhouses, and dinner theaters throughout North America and in London's West
End theater district.
CONCERTSOURCE. We launched this business in October 2000.
ConcertSource offers extensive local listings of concerts and music-related
events from major arenas to small local jazz clubs, including a complete listing
of every performance from major touring groups to hometown bands. ConcertSouce
currently covers concert and event listings for the top 60 markets in the United
States and plans to expand its coverage to more than 200 markets throughout
North America.
BASELINE. We own and operate Baseline, a business which includes a
pay-per-use subscription web site (located at Baseline.hollywood.com) and
various publications geared to movie studios, investment banks, news agencies,
consulting firms and other professionals in the entertainment industry. We
acquired Baseline from media analyst Paul Kagan. The Baseline business maintains
one of the most comprehensive movie and television-related databases and has
been in operation for over 15 years. Baseline is a comprehensive database of
information on over 67,000 films and television programs, as well as biographies
on entertainment industry professionals. This rich, interactive database is
accessible online to our subscribers and includes credits, synopses, reviews and
box office statistics. Baseline continuously tracks production, distribution,
and exhibition of feature films worldwide, including box office projections,
budgets, and trends. Baseline customers include Bloomberg, Daily Variety, People
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Magazine, Lexis-Nexis, 20th Century Fox, DreamWorks, Paramount Pictures, Sony
Pictures, MGM, Warner Bros., E! Entertainment Television, Boston Consulting
Group and Booz, Allen, Hamilton.
TICKETING DIVISIONS
THEATRE DIRECT INTERNATIONAL AND BROADWAY.COM. We acquired Theatre
Direct International (TDI) as of September 15, 2000. Founded in 1990, TDI is a
live theater marketing and sales agency serving over 40,000 domestic and
international travel professionals, traveling consumers and New York-area
theater patrons. TDI is a ticketing wholesaler to the travel industry that
provides groups and individuals with access to theater tickets and knowledgeable
service, covering shows on Broadway, long running shows off-Broadway and shows
in London's West End theatre district. TDI sells tickets through an 800
toll-free number, via the Broadway.com web site and by fax. As a marketing
agency, TDI represents 12 producers and 17 Broadway shows to the travel industry
around the world. The 17 Broadway shows are Aida, Beauty and the Beast, Blast,
Cabaret, Chicago, Contact, 42nd Street, Jane Eyre, Kiss Me Kate, Les Miserables,
Rent, Riverdance, The Full Monty, The Lion King, The Sound of Music, The Rocky
Horror Show and The Phantom of the Opera. In addition, TDI's education division,
Broadway Classroom, markets group tickets to schools across the country. TDI's
offline ticketing service complements the online ticketing services available on
Broadway.com. The combined companies provide live theater ticketing and related
content for over 200 venues in multiple markets to a customer base consisting of
over 40,000 travel agencies, tour operators, corporations and educational
institutions, in addition to numerous newspapers and web sites.
MOVIETICKETS.COM. MovieTickets.com, Inc., was launched in late May
2000. Hollywood Media Corp., owns approximately 30% of the equity of
MovieTickets.com, Inc. MovieTickets.com entered into an agreement with Viacom
Inc. effective August 2000 whereby Viacom acquired a five percent interest for
$25 million of advertising and promotion over five years. MovieTickets.com is
promoted through on-screen advertising in each participating exhibitor's movie
screens and through the Viacom advertising and promotion. In March 2001, America
Online Inc. purchased a 3% preferred equity interest in MovieTickets.com for
$8.5 million in cash. In connection with that transaction, MovieTickets.com's
ticket inventory will be promoted throughout America Online's interactive
properties and ticket inventory of AOL's Moviefone will be featured on
MovieTickets.com.
MovieTickets.com's current participating exhibitors include AMC
Entertainment Inc., National Amusements, Inc., Famous Players Inc., Hoyts
Cinemas, Marcus Theaters, Muvico Entertainment and several regional exhibitors.
These exhibitors operate theaters located in all of the top 20 markets and
approximately 70% of the top 50 markets in the United States and Canada and
represent approximately 50% of the top 100 grossing theaters in North America.
AMC Entertainment Inc. is the largest movie theater operator in the United
States based on box office sales and Famous Players generates approximately half
of all box office sales in Canada. The MovieTickets.com web site allows users to
purchase movie tickets and retrieve them at "will call" windows or kiosks at
theaters. The web site also features bar coded tickets that can be printed at
home and presented directly to the ticket taker at the theater. The web site
contains movie content from the Company's various divisions for all current and
future release movies, movie reviews and synopses, digitized movie trailers and
photos, and box office results. The web site generates revenues from service
fees charged to users for the purchase of tickets and the sale of advertising.
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INTERNET DIVISIONS
HOLLYWOOD.COM. Hollywood.com is a premier entertainment related web
site featuring over one million pages of in-depth movie, television and other
entertainment content, including movie descriptions and reviews, digitized movie
trailers and photos, movie showtimes listings, entertainment news, box office
results, interactive games, movie soundtracks, television listings, concert
information, celebrity profiles and biographies, comprehensive coverage of
entertainment awards shows and film festivals and exclusive video coverage of
movie premieres.
We sell banner advertising and sponsorships on Hollywood.com through
relationships with advertising rep. firms and through an internal sales staff.
Some of our recent advertisers include BMW, General Motors, Universal Studios,
Proctor & Gamble, Visa, IBM, Diet Coke, New Line Cinema, MGM, US Army, Sprint,
AT&T, The Food Network, Ben & Jerry's Ice Cream, Microsoft, People Magazine,
Verizon, Purina, Fox, and Warner Bros.
We promote the Hollywood.com web site through our strategic
relationships with Viacom Inc. and the National Association of Theatre Owners
("NATO"). Through exclusive contracts with NATO and over 85 of its member
theater exhibitors, we promote the Hollywood.com web site to movie audiences by
airing trailers about Hollywood.com before feature films that play in
participating theaters and by displaying posters and other promotional materials
in those theaters. In exchange, we develop and maintain web SITES for many of
the theater exhibitors that feature their movie showtimes.
In January 2000, we entered into a strategic, seven-year relationship
with Viacom Inc. that provides for extensive promotion of the Hollywood.com and
Broadway.com web sites. Viacom has agreed to provide Hollywood.com and
Broadway.com with $105 million of promotion across its full range of CBS and
Infinity media properties, including the CBS television network, CBS owned and
operated television stations, CBS cable networks, Infinity Broadcasting
Corporation's radio stations and outdoor billboards and CBS syndicated
television and radio programs. The promotion provided by Viacom is valued based
upon the average price charged by Viacom for similar promotions during the
applicable time period. To supplement our internal sales efforts, we also have
the right to reallocate a portion of each year's promotional budget and require
Viacom to sell up to $1.5 million of advertising on the Hollywood.com and
Broadway.com web site. Viacom has agreed to include the Hollywood.com web site
in all advertising sale programs and presentations that are appropriate for the
sale of advertising on the web site. We will pay an 8% commission on any
additional advertising revenues generated by Viacom for us in excess of the $1.5
million guaranteed amount selected by us each year.
We have entered into and are pursuing several strategic relationships
geared toward leveraging the Hollywood.com brand internationally. We entered
into an agreement with America Online Latin America, Inc. in late 1999 pursuant
to which we agreed to launch Portuguese and Spanish versions of the
Hollywood.com web site to be promoted on AOL in countries throughout Latin
America. We launched the br.hollywood.com Portuguese-language web site in Brazil
in November 1999 and the mx.hollywood.com and ar.hollywood.com Spanish-language
web site in Mexico and Argentina in May 2000. These web sites are tailored to
the local movie-going audience and feature much of the same content that is on
Hollywood.com, including daily entertainment news, movie descriptions and
reviews, movie previews, movie soundtracks, celebrity profiles and biographies
and interactive games. Each of these web sites are featured and promoted on the
entertainment channels of both AOL Latin America and El Sitio.com, a Latin
American-based Internet portal.
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BROADWAY.COM. We launched Broadway.com on May 1, 2000. Broadway.com
features the ability to purchase Broadway, off-Broadway and West End theater
tickets online (See - Ticketing Divisions); theater showtimes for virtually all
professional live theater venues in the U.S. as well as London's West End and
hundreds of college and local live theater venues; the latest theater news;
interviews with stage actors and playwrights; opening-night coverage; original
theater reviews; and video excerpts from selected shows. Broadway.com also
offers current box office results, show synopses, cast and crew credits and
biographies, digitized show previews, digitized showtunes, and an in-depth Tony
Awards(R) area. Broadway.com generates revenue from ticket sales, advertising
sales, and syndication of its content to other Internet companies.
INTELLECTUAL PROPERTIES BUSINESS
INTELLECTUAL PROPERTIES. Our intellectual properties division owns
the exclusive rights to intellectual properties, which are complete stories and
ideas for stories, created by best-selling authors and media celebrities. Some
examples of our intellectual properties are Anne McCaffrey's Acorna the Unicorn
Girl, Leonard Nimoy's Primortals, and Mickey Spillane's Mike Danger. We license
rights to our intellectual properties to companies such as book publishers, film
and television studios, multi-media software companies and producers of other
products. These licensees develop books, television series and other products
based on the intellectual properties licensed from us. We generally obtain the
exclusive rights to the intellectual properties and the right to use the
creator's name in the titles of the intellectual properties (e.g., Mickey
Spillane's Mike Danger and Leonard Nimoy's Primortals).
NETCO PARTNERS. In June 1995, the Company and C.P. Group Inc. ("C.P.
Group"), entered into an agreement to form NetCo Partners. NetCo Partners is
engaged in the development and licensing of Tom Clancy's NetForce.
The Company and C.P. Group are each 50% partners in NetCo Partners.
Tom Clancy is a shareholder of C.P. Group. At the inception of the partnership,
C.P. Group contributed to NetCo Partners all rights to Tom Clancy's NetForce,
and the Company contributed to NetCo Partners all rights to Tad Williams'
MirrorWorld, Arthur C. Clarke's Worlds of Alexander, Neil Gaiman's Lifers, and
Anne McCaffrey's Saraband. NetCo Partners owns Tom Clancy's NetForce which was
licensed to Putnam Berkley for a series of mass market paperbacks and to ABC
Television for a television mini-series and video distribution in accordance
with the terms of the partnership agreement and the other properties have
reverted back to the Company.
BOOK DEVELOPMENT AND BOOK LICENSING. Our intellectual properties
division also includes a book development and book licensing operation through
our 51% owned subsidiary, Tekno Books, that develops and executes book projects,
typically with best-selling authors. Tekno Books has worked with approximately
50 New York Times best-selling authors, including Tom Clancy, Jonathan
Kellerman, Dean Koontz, Tony Hillerman, Robert Ludlum and Scott Turow, and
numerous media celebrities, including David Copperfield, Louis Rukeyser and
Willard Scott. Our intellectual properties division has licensed books for
publication with more than 60 book publishers, including HarperCollins, Bantam
Doubleday Dell, Random House, Simon & Schuster, Penguin Putnum and Warner Books.
The book development and book licensing division has a library of more than
1,200 books. The Chief Executive Officer of Tekno Books, Dr. Martin H.
Greenberg, is also a director of the Company and owner of the remaining 49%
interest in Tekno Books.
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Tekno Books also owns a 50% interest in Mystery Scene Magazine, a
trade journal of the mystery genre of which Dr. Greenberg is co-publisher.
During 1995, the Company directly acquired an additional 25% interest in the
magazine.
RISKS OF INVESTING IN OUR SHARES
THE SHARES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING MATTERS, AS WELL AS THE OTHER
INFORMATION IN THIS PROSPECTUS, BEFORE INVESTING.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT. WE ANTICIPATE
FURTHER LOSSES IN THE FUTURE AND OUR OPERATING RESULTS COULD FLUCTUATE
SIGNIFICANTLY ON A QUARTERLY AND ANNUAL BASIS.
We have incurred significant losses since we began doing business. In
the years ended December 31, 2000, 1999 and 1998 we had net losses of
approximately $51.8, $24.7 and $10.7 million, respectively. In the quarter ended
March 31, 2001, we had a net loss of $8.0 million. As of March 31, 2001, we had
an accumulated deficit of approximately $120.8 million. We expect to incur
additional losses during the next several years while we continue to grow our
businesses. Our future success will depend on the continued growth in the use of
the Internet in general and our web sites and services in particular and our
ability to generate ticketing, advertising and syndication revenues.
In addition, our Internet and ticketing operating results may
fluctuate significantly in the future as a result of a variety of factors,
including:
o the level of Internet usage generally and the level of traffic
on our web sites in particular;
o supply and demand for Internet advertising;
o seasonal trends in Internet usage, Internet sales and
advertising placements;
o the demand for Broadway tickets;
o the addition or loss of advertisers;
o our ability to enter into or renew strategic relationships and
agreements with popular media and entertainment organizations,
web sites and media celebrities;
o the amount and timing of our marketing expenditures and other
costs relating to the expansion of our Internet operations;
o price competition or pricing changes in the industry; o new
products, web sites or Internet services introduced by us or
our competitors;
o technical difficulties, security concerns or system downtime
affecting the Internet generally or the operation of our web
sites in particular; and
o general economic conditions and economic conditions specific
to the Internet, electronic commerce and online media.
As a result, our operating results for any particular period may not
accurately predict our future operating results.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.
INTERNET BUSINESSES. The market for Internet services and products is
relatively new, intensely competitive and rapidly changing. The number of web
sites on the Internet competing for consumers' attention and spending has
proliferated and we expect that competition will continue to intensify.
Competition could result in less user traffic to our web sites, price reductions
for content that we syndicate and advertising that we offer, a decline in
8
product sales, reduced margins or loss of market share, any of which could have
a material adverse effect on our business, results of operations and financial
condition. We compete, directly and indirectly, for advertisers, viewers,
members and content providers with the following categories of companies:
o online services or web sites targeted to entertainment
enthusiasts, particularly moviegoers and theatergoers, such as
Film.com, IMDb.com and Playbill.com;
o publishers and distributors of traditional off-line media,
such as television, radio and print, including those targeted
to movie enthusiasts, many of which have established or may
establish web sites, such as Eonline.com;
o traditional movie and entertainment organizations and vendors
of entertainment merchandise and products, including
conventional retail stores and catalog retailers, many of
which have established web sites, including Disney and Warner
Brothers;
o general purpose consumer online services such as AOL, Yahoo!
and Microsoft Network, each of which provides access to
movie-related information and services; and
o web search and retrieval and other online services, such as
Excite, Lycos and Yahoo! and other high-traffic web sites.
We believe that the principal competitive factors in attracting and
retaining users are the depth, breadth and timeliness of content, the ability to
offer compelling and entertaining content and brand recognition. Other important
factors in attracting and retaining users include ease of use, service quality
and cost. We believe that the principal competitive factor in attracting and
retaining advertisers include the number of users of our web site, the
demographics of our users, price and the creative implementation of
advertisement placements and sponsorship promotions. There can be no assurance
that we will be able to compete favorably with respect to these factors.
Based on our review of publicly available documents, we believe some
of our existing competitors, as well as potential new competitors, have longer
operating histories, significantly greater financial, technical and marketing
resources, greater name recognition and substantially larger user bases than we
do and, therefore, have significantly greater ability to attract advertisers and
users. In addition, many of these competitors may be able to respond more
quickly than us to new or emerging technologies and changes in Internet user
requirements and to devote greater resources than us to the development,
promotion and sale of their services. There can be no assurance that our current
or potential competitors will not develop products and services comparable or
superior to those developed by us or adapt more quickly than us to new
technologies, evolving industry trends or changing Internet user preferences.
Increased competition could result in price reductions, reduced margins or loss
of market share, any of which would materially and adversely affect our
business, results of operations and financial condition. In addition, as we
expand internationally, we will face new competition. There can be no assurance
that we will be able to compete successfully against current and future
competitors, or that competitive pressures faced by us would not have a material
adverse effect on our business, results of operations and financial condition.
TICKETING BUSINESSES. The market for Internet and wireless ticketing
services and products is relatively new, intensely competitive and rapidly
changing. The number of telephone services, online services, wireless services
and web site on the Internet competing for consumers' attention and spending has
proliferated and we expect that competition will continue to intensify. We
compete, directly and indirectly, for customers, advertisers, members and
content providers with the following categories of companies:
9
o telephone services, wireless services and web sites targeted
to entertainment enthusiasts, moviegoers, theatergoers and
other eventgoers, which feature directories of movies, shows,
events, showtimes, theater and event locations and related
content, and also allow users to purchase tickets; and
o travel agents and other traditional ticketing organizations,
companies, agents and brokers.
INTELLECTUAL PROPERTIES AND BOOK DEVELOPMENT AND LICENSING
BUSINESSES. Numerous companies and individuals are engaged in the business of
licensing entertainment properties and characters in the entertainment-related
licensing market. We compete with a wide range of other corporations as well as
individuals in the licensing market.
WE MAY REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS AND THERE
CAN BE NO ASSURANCE THAT ADDITIONAL FINANCING WILL BE AVAILABLE
We have required substantial financing to fund our acquisitions and
growth and we may continue to require additional financing for marketing and
promotional activities, to fund our growth plan and for working capital. Our
current operating plans and assumptions indicate that anticipated cash flows
when combined with cash on hand and other potential sources of capital will be
enough to meet our working capital requirements for the next twelve months. If
plans change or our assumptions prove to be inaccurate, we may need to seek
further financing or curtail our operations. Our long-term financial success
depends on our ability to generate enough revenue to offset operating expenses.
To the extent we do not generate sufficient revenues to offset expenses we will
require further financing to fund our ongoing operations. We cannot assure you
that any additional financing will be available or if available, that it will be
on favorable terms.
WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR TRADEMARKS AND
PROPRIETARY RIGHTS.
INTERNET BUSINESSES. We own trademark registrations in the United
States for ALL ABOUT MOVIES, HOLLYWOOD ONLINE, MOVIETUNES, THE GOLDEN HITCH,
GIVING TRAILERS THE RESPECT THEY DESERVE and ISN'T IT TIME YOU WENT HOLLYWOOD!
and in a number of foreign countries for HOLLYWOOD ONLINE. We have filed
trademark applications in the United States and in foreign countries for the
marks HOLLYWOOD MEDIA CORP., HOLLYWOOD.COM, MOVIETUNES.COM, BROADWAY.COM and the
slogans ON STAGE! ONLINE, and WHERE MOVIEGOERS GO.
Our performance and ability to compete are dependent to a significant
degree on our internally developed and licensed content and technology. We rely
on a combination of copyright, trademark and trade secret laws, confidentiality
and nondisclosure agreements with our employees and with third parties and
contractual provisions to establish and maintain our proprietary rights. There
can be no assurance that the steps taken by us to protect our proprietary rights
will be adequate, or that third parties will not infringe upon or misappropriate
our copyrights, trademarks, service marks and similar proprietary rights. In
addition, effective copyright and trademark protection may be unenforceable or
limited in certain foreign countries. In the future, litigation may be necessary
to enforce and protect our trademarks, service marks, trade secrets, copyrights
and other intellectual property rights. Any such litigation would be costly and
could divert management's attention, which could have a material adverse effect
on our business, results of operations and financial condition. Adverse
determinations in such litigation could result in the loss of certain of our
10
proprietary rights, subject us to significant liabilities, require us to seek
licenses from third parties, or prevent us from selling our services, any one of
which could have a material adverse effect on our business, results of
operations and financial condition.
There can be no assurance that third parties will not bring copyright
or trademark infringement claims against us, or claim that our use of certain
technology violates a patent. Even if these claims are not meritorious, they
could be costly and could divert management's attention, which could have a
material adverse effect on our business, results of operations and financial
condition. If it is determined that we have infringed upon or misappropriated a
third party's proprietary rights, there can be no assurance that any necessary
licenses or rights could be obtained on terms satisfactory to us, if at all. The
inability to obtain any required license on satisfactory terms could have a
material adverse effect on our business, results of operations and financial
condition. If our competitors prepare and file applications that claim
trademarks owned or registered by us, we may oppose these applications and have
to participate in administrative proceedings to determine priority of right in
the trademark, which could result in substantial costs to us, even if the
eventual outcome is favorable to us. An adverse outcome could require us to
license disputed rights from third parties or to cease using such trademarks. In
addition, inasmuch as we license a substantial portion of our content from third
parties, our exposure to copyright infringement or right of privacy or publicity
actions may increase; because we must rely upon such third parties for
information as to the origin and ownership of such licensed content. We
generally obtain representations as to the origins, ownership and right to use
such licensed content and generally obtain indemnification to cover any breach
of any such representations; however, there can be no assurance that such
representations will be accurate or that such indemnification will provide
adequate compensation for any breach of such representation. There can be no
assurance that the outcome of any litigation between such licensors and a third
party or between us and a third party will not lead to royalty obligations for
which we are not indemnified or for which such indemnification is insufficient,
or that we will be able to obtain any additional license on commercially
reasonable terms if at all.
In 1999 we obtained a federal trademark registration for the name
HOLLYWOOD ONLINE and in 1998 we obtained a federal trademark registration for
the name BIG ENTERTAINMENT. In December 2000 we changed our corporate name and
primary branding to HOLLYWOOD MEDIA CORP. We have filed a number of United
States trademark applications for HOLLYWOOD MEDIA CORP., HOLLYWOOD.COM,
BROADWAY.COM and variants thereof, and foreign trademark applications for
HOLLYWOOD.COM. There can be no assurance that we will be able to secure adequate
protection for these names or other trademarks in the United States or in
foreign countries. If we obtain registration of those trademarks, we may not be
able to prevent our competitors from using different trademarks that contain the
words "Hollywood" or "Broadway." Many countries have a "first-to-file" trademark
registration system; and thus we may be prevented from registering our marks in
certain countries if third parties have previously filed applications to
register or have registered the same or similar marks. It is possible that our
competitors or others will adopt product or service names similar to ours,
thereby impeding our ability to build brand identity and possible leading to
customer confusion. Our inability to protect our HOLLYWOOD.COM and BROADWAY.COM
marks and other marks adequately could have a material adverse effect on our
business, results of operations and financial condition.
INTELLECTUAL PROPERTIES BUSINESS. The Company has applied for
trademark and copyright protection for each of its major intellectual property
titles and featured characters. The Company (including Netco Partners) currently
has approximately 46 U.S. registered trademarks and approximately 7 trademark
applications are pending related to this business. As the Company's properties
11
are developed, the Company intends to apply for further trademark and copyright
protection in the United States and certain foreign countries.
Copyright protection in the United States on new publications of
works for hire extend for a term of 95 years from the date of initial
publication or 120 years from the year of creation, whichever expires first.
Trademark registration in the United States extends for a period of ten years
following the date of registration. To maintain the registration, affidavits
must be filed between the fifth and sixth years following the registration date
affirming that the trademark is still in use in commerce and providing evidence
of such use. The trademark registration must be renewed prior to the expiration
of the ten-year period following the date of registration.
WE MUST MANAGE OUR GROWTH IN ORDER TO ACHIEVE THE DESIRED RESULTS.
We have significantly expanded our Internet and ticketing operations
over the past two years through our acquisitions of the businesses of
hollywood.com, Inc., CinemaSource, Inc., Baseline II, Inc., BroadwayTheater.com,
Inc. and Theatre Direct NY, Inc. and through the launch of Broadway.com,
MovieTickets.com and our Portuguese and Spanish-language sites in Brazil,
Argentina and Mexico. We plan to continue to expand our operations and market
presence by entering into joint ventures, acquisitions, business combinations,
investments, or other strategic alliances. These transactions create risks such
as:
o difficulty assimilating the operations, technology and
personnel of the combined companies;
o disruption of our ongoing business;
o increased marketing and advertising expenses to promote new
ventures;
o problems retaining key technical and managerial personnel;
o the availability of financing to make acquisitions;
o expenses associated with amortization of goodwill and other
purchased intangible assets;
o additional operating losses and expenses of acquired
businesses; and
o impairment of relationships with existing employees, customers
and business partners.
We may not succeed in addressing these risks. In addition, some of
our new businesses may incur operating losses. To the extent that we are unable
to identify and successfully integrate future ventures into our operations, our
growth strategy may not be successful and our stock price could be adversely
impacted.
WE ARE DEPENDENT ON OUR ABILITY TO DEVELOP STRATEGIC RELATIONSHIPS
WITH MEDIA AND ENTERTAINMENT ORGANIZATIONS.
The success of our Internet operations is dependent in part on our
ability to enter into and renew strategic relationships and agreements with
media and entertainment organizations. Our intellectual property division is
dependent on our ability to identify, attract and retain best-selling authors
and media celebrities who create our intellectual properties. Our business could
be harmed by the loss of the services of one or more of the people who have
developed relationships with the best-selling authors and media celebrities who
create our intellectual properties. Similarly, our business could be harmed if
those relationships change or if we do not develop new relationships.
12
OUR OPERATIONS COULD BE NEGATIVELY IMPACTED BY SYSTEMS INTERRUPTIONS.
The hardware and software used in our Internet and ticketing
operations, or that of our affiliates, could be damaged by fire, floods,
earthquakes, power loss, telecommunications failures, break-ins and similar
events. Our web sites could also be affected by computer viruses, electronic
break-ins or other similar disruptive problems. These system problems could
affect our business. Insurance may not adequately compensate us for any losses
that may occur due to any failures or interruptions in systems. We do not
currently have a formal system disaster recovery plan. General Internet traffic
interruptions or delays could also harm our business. As with Internet web sites
in general, our web sites may experience slower response times or decreased
traffic for a variety of reasons. Additionally, online service providers have
experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
To the extent our services are disrupted, we could lose users of our web sites
and our ticketing and advertising revenues could decline.
WE ARE SUBJECT TO ADDITIONAL SECURITY RISKS BY DOING BUSINESS OVER
THE INTERNET.
A significant obstacle to consumer acceptance of electronic commerce
over the Internet has been the need for secure transmission of confidential
information in transaction processing. Internet usage could decline if any
well-publicized compromise of security occurred. We may incur additional costs
to protect against the threat of security breaches or to alleviate problems
caused by these breaches. If a third person were able to misappropriate our
users' personal information or credit card information, we could be held liable.
WE MAY NOT BE ABLE TO ADAPT AS INTERNET TECHNOLOGIES AND CUSTOMER
DEMANDS CONTINUE TO EVOLVE.
To be successful, we must adapt to rapidly changing Internet
technologies by continually enhancing our web sites and introducing new services
to address our customers' changing demands. We could incur substantial costs if
we need to modify our services or infrastructure in order to adapt to changes
affecting providers of content and services through the Internet. Our business,
results of operations and financial condition would be adversely affected if we
incurred significant costs to adapt, or if we cannot adapt to these changes.
GOVERNMENT REGULATION OF THE INTERNET COULD IMPACT OUR BUSINESS.
Federal and state governments have recently adopted many new laws and
regulations directly applicable to the Internet. In addition, laws and
regulations may be adopted in the future that further address issues such as
user privacy, pricing, taxation, content, copyrights, advertising, and the
characteristics and quality of products and services. Although we endeavor to
comply with all applicable laws and regulations, as new laws are adopted there
is a risk that we will not be in full compliance. Any new laws or regulations
relating to the Internet could also hurt our business.
WE MAY NOT BE ABLE TO ACQUIRE OR MAINTAIN EFFECTIVE WEB ADDRESSES.
We hold rights to more than 150 web domain names, including
hollywood.com, hollywood.net, broadway.com, broadway.net, musicsite.com,
showtimes.com, theater.com, allaboutmovies.com, cableguide.com, cablesite.com,
cdguide.com, cdsite.com, cinemasite.com, eguide.com, esites.com, filmpick.com,
moviecritics.com, movieguide.com, moviepeople.com and moviesite.com.
Governmental agencies typically regulate domain names. These regulations are
subject to change. We may not be able to acquire or maintain appropriate domain
names in all countries in which we plan to do business. Furthermore, regulations
13
governing domain names may not protect our trademarks and similar proprietary
rights. We may be unable to prevent third parties from acquiring domain names
that are similar to, infringe upon or diminish the value of our trademarks and
other proprietary rights. In addition, we may not be able to secure the rights
to appropriate domains using new top level domains that are developed and
marketed from time to time, such as ".cc."
WE ARE DEPENDENT ON MITCHELL RUBENSTEIN AND LAURIE S. SILVERS, OUR
FOUNDERS.
Mitchell Rubenstein, our Chairman of the Board and Chief Executive
Officer, and Laurie S. Silvers, our Vice Chairman, President and Secretary, have
been primarily responsible for our organization and development. The loss of the
services of either of these individuals would hurt our business. Their
employment agreements provide, among other things, that if we terminate either
of their agreements without "cause," we will have also terminated the other's
agreement without "cause." Termination without "cause" entitles each to receive
his or her salary for the remainder of the term of employment.
There is intense competition for qualified personnel in our industry
and the limited availability of qualified individuals could become an issue of
increasing concern in the future. Our future success will be dependent upon our
ability to attract and retain qualified and creative key management personnel.
VIACOM INC. BENEFICIALLY OWNS APPROXIMATELY 31% OF OUR COMMON STOCK
AND ITS INTERESTS MAY DIFFER FROM YOURS.
Viacom Inc.'s significant equity interest in us and other rights we
have granted to Viacom could delay or prevent a merger or other transaction
involving a change of control of us that could be beneficial to you. Viacom
beneficially owns approximately 31% of our outstanding common stock. Viacom also
currently has the right to nominate two individuals for election to our board of
directors. If we issue common stock or securities convertible into common stock
in the future, Viacom will, with some exceptions, have the right to purchase for
cash securities from us so it can maintain its percentage ownership. As a result
of its equity interest in us and its right to nominate individuals for election
to our board, Viacom may be able to influence our management and affairs.
THE ACCOUNTING TREATMENT OF VIACOM INC.'S INVESTMENT IN US WILL
RESULT IN FUTURE NON-CASH EXPENSES ON OUR INCOME STATEMENT.
Viacom Inc.'s commitment to provide $105.5 million of advertising,
promotion and content for our Hollywood.com and Broadway.com web site is
recorded as an asset on our balance sheet. The original amount of the asset was
approximately $137 million, the fair market value of the common stock issued to
Viacom in exchange for the $105.5 million of advertising and $10.8 million in
cash. As we receive the advertising, promotion and content from Viacom over the
seven-year term of the agreements, we will record a non-cash expense on our
income statement in an amount equal to the value paid for the advertising,
promotion and content received. We currently expect to record an expense of
approximately $19.6 million per year to reflect the value of the advertising,
promotion and content expected to be received each year during the seven-year
term. This expense will result in a net loss to us to the extent our revenues do
not increase by an amount at least equal to the amount of the expense.
14
OUR STOCK PRICE IS VOLATILE.
The trading price of our common stock has and may continue to
fluctuate significantly. During the past 12 months, the trading price for our
common stock on the Nasdaq Stock Market has ranged from $3.00 to $12.6875 per
share. Our stock price may fluctuate in response to a number of events and
factors, such as our quarterly operating results, announcements of new products
or services, announcements of mergers, acquisitions, strategic alliances, or
divestitures and other factors, including similar announcements by other
companies that investors may consider to be comparable to us. In addition, the
stock market in general, and the market prices for Internet-related companies in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of the companies. These broad market and industry
fluctuations may adversely affect the price of our stock, regardless of our
operating performance.
OUR STOCK PRICE MAY BE HURT IF THE NUMBER OF INVESTORS SEEKING TO
SELL SHARES OF OUR COMMON STOCK IN THE PUBLIC MARKET INCREASES.
As of June 1, 2001, approximately 13 million shares of our common
stock, representing approximately 50% of our outstanding shares of common stock,
constituted "restricted securities" as defined in Rule 144 under the Securities
Act. Most of these shares are subject to agreements with the Company permitting
the holders thereof to demand that the Company register the shares for resale
under the Securities Act. This will permit the sale of registered shares of
common stock in the open market or in privately negotiated transactions without
compliance with the requirements of Rule 144. We are unable to estimate the
amount, timing or nature of future sales of outstanding common stock. Sales of
substantial amounts of our common stock in the public market could adversely
affect the market price for our common stock. In addition, a decline in the
price of our common stock would likely impede our ability to raise capital
through the issuance of additional shares of common stock or other equity
securities.
OUR COMMON STOCK PRICE MAY BE HURT BY THE EFFECTS OF OUTSTANDING
OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES.
As of June 1, 2001, we had options and warrants outstanding for the
purchase of an aggregate of approximately 5.5 million shares of our common stock
with an average exercise price of $10.94 per share, and we plan to issue
additional options from time to time to our employees and directors. Exercise of
these options and warrants will cause dilution to existing shareholders. As long
as these options and warrants remain unexercised or are not converted, the terms
under which we can obtain additional capital may be adversely affected.
Moreover, the holders of the options and warrants may exercise or convert them
at a time when we are attempting to obtain needed capital by a new offering of
our securities on terms more favorable than those provided by these securities.
In connection with our financing in May 2001, we issued adjustment
warrants to certain investors. If at the conclusion of any of four adjustment
periods specified in the warrants, the average of the ten lowest closing sale
prices of the common stock during twenty consecutive days of the adjustment
period is below $5.19, the Company will be obligated to issue additional shares
to the investors. For example, if the average price was $4.50 during any
adjustment period, the Company would issue a total of 165,733 additional shares
of common stock to the investors under the warrants. The maximum number of
shares issuable under the warrants is 1,537,380, which number of shares would
only be issuable if the average price of the common stock was $2.15 or less
during any adjustment period.
15
The perceived risk of dilution or any actual dilution caused by the
adjustment warrants may cause our stockholders to sell their shares, which could
result in downward movement in the trading price of our common stock. In
addition, any significant downward pressure on the trading price of our common
stock could encourage investors to engage in short sales, which could contribute
to a decrease in the market price of our common stock. A lower market price of
the common stock could result in the company issuing additional shares of common
stock under the warrants. The sale of these additional shares in the open market
or the continued short selling by investors could further drive down the market
price of the common stock.
Additionally, our board of directors may, without shareholder
approval, issue additional shares of preferred stock with dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting power
or other rights of the holders of our common stock.
PROCEEDS FROM SALE OF THE SHARES
We will receive no proceeds from the sale of any of or all of the
shares being offered by the selling shareholders under this prospectus. We will
receive an amount ranging from $2,769,406 to $3,954,540 upon the exercise of the
warrants, if exercised, for which we are registering the underlying shares of
common stock. We estimate we will spend approximately $25,000 in registering the
offered shares.
SELLING SHAREHOLDERS
We are registering all 3,439,226 shares covered by this prospectus on
behalf of the selling shareholders named in the table below. We issued all of
the shares and the warrants exercisable for shares to the selling shareholders
in private placement transactions. We have registered the shares to permit the
selling shareholders and their respective pledgees, donees, transferees or other
successors-in-interest that receive their shares from a selling shareholder as a
gift, partnership distribution or other non-sale related transfer after the date
of this prospectus to resell the shares when they deem appropriate.
The following table sets forth certain information with respect to
the beneficial ownership of our common stock by the selling shareholders as of
the date of this prospectus.
OWNERSHIP OF COMMON OWNERSHIP OF COMMON
STOCK BEFORE OFFERING NUMBER OF STOCK AFTER OFFERING
------------------------------ SHARES BEING -----------------------------
SELLING SHAREHOLDERS NUMBER PERCENTAGE OFFERED NUMBER PERCENTAGE
- ----------------------------------------- ------ ---------- ------- ------ ----------
Viacom Inc............................... 8,863,572(1) 31.3% 912,649(1) 7,950,923 29.5%
Societe Generale......................... 1,508,944(2) 3.2% 1,508,944(2) - -
Velocity Investment Partners Ltd......... 982,633(3) 2.0% 982,633(3) - -
KA Investments LDC....................... 35,000 * 35,000 - -
- -------------------------
*Less than 1%.
(1) Represents (i) 7,850,923 shares of common stock that are held directly,
(ii) 100,000 shares of common stock issuable under a currently exercisable
warrant, and (iii) 162,973 shares of common stock that are issuable upon
exercise of a series A warrant having an exercise price of $6.44 per
share. The aggregate number (but not the percentage ownership) also
includes up to 439,251 shares of common stock that are not currently
issuable but may be issuable in the future upon exercise of a series B
16
adjustment warrant.
(2) Represents (i) 576,504 shares of common stock that are held directly, and
(ii) 273,562 shares of common stock that are issuable upon exercise of a
series A warrant having an exercise price of $6.44 per share. The
aggregate number (but not the percentage ownership) also includes up to
658,878 shares of common stock that are not currently issuable but may be
issuable in the future upon exercise of a series B adjustment warrant. The
series A warrant and series B adjustment warrant issued to Societe
Generale prohibit it from beneficially owning more than 4.9% of our common
stock at any time.
(3) Represents (i) 365,858 shares of common stock that are held directly, and
(ii) 177,524 shares of common stock that are issuable upon exercise of a
series A warrant having an exercise price of $6.44 per share. The
aggregate number (but not the percentage ownership) also includes up to
439,251 shares of common stock that are not currently issuable but may be
issuable in the future upon exercise of a series B adjustment warrant. The
series A warrant and series B adjustment warrant issued to Velocity
Investment Partners Ltd. prohibit it from beneficially owning more than
4.9% of our common stock at any time.
The selling shareholders have not been employed by, held office in,
or had any other material relationship with us or any of our affiliates within
the past three years except as described below.
MAY 2001 INVESTMENTS BY VIACOM INC., SOCIETE GENERALE AND VELOCITY
INVESTMENT PARTNERS LTD. In May 2001 the Company raised an aggregate of $7.25
million in cash, consisting of an aggregate $4.25 million investment by Societe
Generale and Velocity Investment Partners Ltd., and a $3 million investment by
Viacom Inc. consisting of a $1.4 million investment in the Company and a $1.6
million prepayment of future cash advertising and promotion commitments to the
Company.
The Company issued an aggregate of 1,252,787 shares of the Company's
common stock to Societe Generale, Velocity Investment Partners Ltd. and Viacom
Inc. at a purchase price of $4.51 per share for a total purchase price of $5.65
million in cash. The purchase price per share represents 105% of the "Market
Price" of the common stock, which is defined as the average volume weighted
average price for the 20 business days prior to the closing date. The investors
also received series A warrants to acquire an aggregate of 614,059 shares of
common stock at a price of $6.44 per share (150% of the Market Price at
closing). If on each of January 30, 2002 and April 30, 2002, any investor holds
at least seventy-five percent of any of the investor's shares of common stock
issued to it in the transaction, then the exercise price of the series A
warrants will be decreased to $5.37 per share and $4.51 per share, respectively,
on such dates. The investors also received series B adjustment warrants to
acquire additional shares of common stock from time to time in amounts in
proportion to each of their respective investments. The investors will be
entitled to receive additional shares of common stock upon exercise of the
series B adjustment warrants for no additional consideration if the average
market price of the common stock at the six, nine, twelve, or fifteen month
anniversaries of the closing date is less than $5.19.
The series A warrants and series B adjustment warrants issued to each
of Societe Generale and Velocity Investment Partners Ltd. prohibit each of them
from beneficially owning more than 4.9% of our common stock at any time. The
series A warrants and series B adjustment warrants issued to each of the
investors contain anti-dilution provisions, which, upon certain specified
events, such as certain specified changes in common stock (i.e., dividends or
distributions, or a reclassification, subdivision or combination of the
Company's common stock), and certain specified issuances of common stock or
convertible securities, require the Company to adjust the number of shares of
common stock of the Company issuable upon exercise of such warrants, to prevent
dilution of the number of shares of common stock of the Company issuable upon
exercise of such warrants.
17
In connection with this investment, Viacom also invested an
additional $1,600,000 in the Company as a prepayment of future cash advertising
and promotion commitments owing under the Advertising and Promotion Agreement,
dated as of January 3, 2000, between the Company and Viacom. This payment
reduces Viacom's annual promotional commitment under the Advertising and
Promotion Agreement by $1,500,000 for calendar year 2002 and by $1,500,000 for
calendar year 2003.
In connection with this investment, we entered into registration rights
agreements with each of Viacom Inc., Societe Generale and Velocity Investment
Partners Ltd. The registration rights agreements require that we register
3,404,226 of the shares of common stock covered by this prospectus. We will
prepare and file such amendments and supplements to the registration statement
as may be necessary in accordance with the Securities Act, and the rules and
regulations promulgated thereunder. We are subject to compensatory payments if
we do not fulfill our obligations under the registration rights agreement. For
example, in the event that the registration statement for the shares is not
filed by the filing deadline set forth in the registration rights agreements, or
is not declared effective by the effectiveness deadline set forth in the
registration rights agreements, then the Company shall pay to each such
purchaser pro rata based on their relative ownership of registrable securities
an amount in cash equal to (i) $84,750 times (ii) the sum of: (A) the number of
months (prorated per day for partial months) following the filing deadline that
the registration statement is not filed or following the effectiveness deadline
that the registration statement is not declared effective by the Commission, as
the case may be, plus (B) the number of months (prorated per day for partial
months) following the effectiveness deadline that sales cannot be made pursuant
to the registration statement after the registration statement has been declared
effective for more than 10 days in any 365-day period.
VIACOM INC. In January 2000, the Company entered into a strategic,
seven-year relationship with Viacom Inc. that provides for extensive promotion
of the Hollywood.com and Broadway.com web sites. In connection with our
strategic relationship, Viacom Inc. purchased 6,672,031 shares of the Company's
common stock, representing approximately 30% of our outstanding common stock, in
exchange for $5,303,030 in cash and $100,000,000 of advertising, promotion,
content and advertising sales support over a seven-year term pursuant to an
Advertising and Promotion Agreement and a Content Agreement. The Company also
issued to Viacom a Warrant to purchase an additional 1,178,892 shares of our
Common Stock for an aggregate exercise price of $10,937,002. Viacom exercised
the warrant in full during March 2000. Half of the warrant exercise price was
paid in cash and half was paid in additional advertising and promotion under the
Advertising and Promotion Agreement during year 2000.
The Company also entered into a Content License Agreement, an
Investor's Rights Agreement, and a Voting Agreement with Viacom, which contain,
among other things, transfer restrictions, standstill provisions, preemptive
rights, registration rights and voting rights, some provisions of which are
highlighted below.
o Advertising and Promotion Agreement: Viacom agreed to provide
the Company with an aggregate of $70 million in advertising
and promotion of the Hollywood.com and Broadway.com web sites
over a seven-year term across its full range of CBS media
properties.
o Content License Agreement: Viacom agreed to provide the
Company with an aggregate of $30 million in value over a
seven-year term to be allocated in the Company's discretion to
the license of content, advertising sales or additional
advertising and promotion of the Hollywood.com and
18
Broadway.com websites. The Company receives $4.3 million in
value during each of the first six years of the term and $4.2
million in value during the last year of the term.
o Investor's Rights Agreement: The Investor's Rights Agreement
between the Company and Viacom Inc. sets forth various rights
and obligations of the Company and Viacom related to Viacom's
ownership of the Company's common stock, including Viacom's
registration rights with respect to the common stock, the
Company's right of first refusal with respect to transfers by
Viacom of the Company's common stock, standstill provisions to
which Viacom is bound, and preemptive rights of Viacom with
respect to certain issuances of common stock and other
securities by the Company.
o Voting Agreement: The Voting Agreement provides that Viacom
has the right to nominate for election to the Company's Board
of Directors, a number of individuals equal to the product of
Viacom's percentage ownership of the Company's common stock
and the total number of members of the Board of Directors
(rounded down to the nearest whole number), and the parties to
such agreement agree to vote in favor of such nominees. In
addition, as long as the Advertising and Promotion Agreement
and the Content Agreement remain in effect, Viacom shall have
the right to designate at least one nominee to the Board of
Directors.
KA INVESTMENTS LDC. In September 1998 the Company sold an aggregate
of 250 shares of convertible preferred stock of the Company for an aggregate
purchase price of $2,500,000, all of which have since been converted into shares
of common stock of the Company. In connection with the private placement, the
Company entered into a Convertible Preferred Stock Purchase Agreement and a
Registration Rights Agreement with KA Investments LDC. In connection with
obligations of the Company set forth in the registration rights agreement
entered into between the Company and KA Investments LDC as part of the private
placement, the Company recently issued KA Investments LDC an additional 35,000
shares of common stock of the Company in fulfillment of such obligations, which
shares are being registered in this registration statement.
HOW THE SHARES MAY BE DISTRIBUTED
The selling shareholders may sell their shares of common stock from
time to time in various ways and at various prices. Some of the methods by which
the selling shareholders may sell their shares include:
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o privately negotiated transactions;
o block trades in which the broker or dealer will attempt to
sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by
that broker or dealer for the selling shareholder's account
under this prospectus;
o sales under Rule 144 rather than by using this prospectus;
o a combination of any of these methods of sale; and
19
o any other legally permitted method.
The applicable sales price may be affected by the type of
transaction.
The selling shareholders may also pledge their shares as collateral
for a margin loan under their customer agreements with their brokers. If there
is a default by the selling shareholders, the brokers may offer and sell the
pledged shares.
Brokers or dealers may receive commissions or discounts from the
selling shareholders (or, if the broker-dealer acts as agent for the purchaser
of the shares, from that purchaser) in amounts to be negotiated. These
commissions may exceed those customary in the types of transactions involved.
We cannot estimate at the present time the amount of commissions or
discounts, if any, that will be paid by the selling shareholders in connection
with sales of the shares.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. The
selling shareholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities. There is no underwriter
or coordinating broker acting in connection with the proposed sale of shares by
the selling shareholders.
In addition, the selling shareholders may enter into option,
derivative, hedging or short transactions with respect to the shares, and any
related offers or sales of shares may be made under this prospectus, subject to
certain limitations set forth in agreements between the selling shareholders and
the Company. For example, the selling shareholders may:
o enter into transactions involving short sales of the shares by
broker-dealers in the course of hedging the positions they
assume with the selling shareholders;
o sell shares short itself and deliver the shares registered
hereby to settle such short sales or to close out stock loans
incurred in connection with its short positions;
o write call options, put options or other derivative
instruments (including exchange-traded options or privately
negotiated options) with respect to the shares, or which it
settles through delivery of the shares;
o enter into option transactions or other types of transactions
that require the selling shareholder to deliver shares to a
broker, dealer or other financial institution, who may then
resell or transfer the shares under this prospectus; or
o loan the shares to a broker, dealer or other financial
institution, who may sell the loaned shares.
These option, derivative, hedging and short transactions may require
the delivery to a broker, dealer or other financial institution of shares
offered under this prospectus, and that broker, dealer or other financial
institution may resell those shares under this prospectus.
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Under the securities laws of certain states, the shares may be sold
in those states only through registered or licensed broker-dealers. In addition,
the shares may not be sold unless the shares have been registered or qualified
for sale in the relevant state or unless the shares qualify for an exemption
from registration or qualification.
We have agreed to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to the selling shareholders. We have agreed to indemnify the selling
shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Certain of the selling shareholders have also agreed to indemnify us,
our directors, officers, agents and representatives against certain liabilities,
including certain liabilities under the Securities Act.
The selling shareholders and other persons participating in the
distribution of the shares offered under this prospectus are subject to the
applicable requirements of Regulation M promulgated under the Exchange Act in
connection with sales of the shares.
We have agreed with the selling shareholders to keep the registration
statement of which this prospectus is a part effective until all the shares
registered under the registration statement have been resold.
OUR CAPITAL STOCK
SHARES AUTHORIZED AND OUTSTANDING
Our third amended and restated articles of incorporation authorize us
to issue up to 100,000,000 shares of common stock, par value $.01 per share, and
1,000,000 shares of preferred stock, par value $.01 per share. As of June 1,
2001, 26,570,955 shares of common stock were outstanding and no shares of
preferred stock were outstanding. The transfer agent for our common stock is
American Stock Transfer & Trust Company, New York, New York.
RIGHTS OF HOLDERS OF OUR COMMON STOCK
Each share of common stock entitles the holder to one vote on all
matters submitted to a vote of the shareholders. The holders of common stock are
entitled to receive dividends, when, as and if declared by the Board of
Directors in its discretion, from legally available funds. Upon our liquidation
or dissolution, the holders of common stock will be entitled to share
proportionately in our legally available assets, after all our debts and
liabilities and the liquidation preference of any outstanding shares of our
preferred stock are paid.
The common stock has no preemptive rights and no subscription,
redemption or conversion privileges. The common stock does not have cumulative
voting rights, which means that the holders of a majority of the outstanding
shares of common stock voting for the election of directors will be able to
elect all members of the Board of Directors. A majority vote will also be
sufficient for other actions that require the vote or concurrence of
shareholders. All of our outstanding shares of common stock are, and the shares
to be sold in this offering will be, when issued and paid for, fully paid and
nonassessable.
21
PREFERRED STOCK ISSUABLE WITHOUT APPROVAL BY HOLDERS OF OUR COMMON STOCK
AUTHORITY OF BOARD OF DIRECTORS TO ISSUE PREFERRED STOCK. Without any
further vote or action by our shareholders, the Board of Directors has the
authority to issue up to 1,000,000 shares of preferred stock in one or more
series and to determine the number of shares in a series and the voting powers,
preferences and relative rights and restrictions of each series, including the
dividend rights and dividend rate, the terms of redemption (including sinking
fund provisions), redemption price or prices, the conversion rights, and the
liquidation preferences of the shares of each series.
EFFECTS OF ISSUANCE OF PREFERRED STOCK ON HOLDERS OF OUR COMMON
STOCK. The issuance of preferred stock by the Board of Directors could result in
a class of securities outstanding that has preferences with respect to voting
rights and dividends, and/or in liquidation, over our common stock. These shares
may also be convertible into common stock, and then would enjoy all of the
rights of common stock. The specific preferential rights of our various current
types of preferred stock are described below.
PREVIOUSLY ISSUED SERIES OF PREFERRED STOCK. We previously designated
various series of preferred stock, including Series A, Series B, Series C,
Series D-1 and Series D-2. All of the previously issued shares of Series A,
Series B, Series C, Series D-1 and Series D-2 Preferred Stock have been
converted into shares of our common stock and therefore are no longer
outstanding.
In conjunction with the original issuance of the Series A Preferred
Stock, we and certain holders of our common stock (Mitchell Rubenstein, Laurie
S. Silvers, Martin H. Greenberg and Asbury Park Press, Inc.) agreed that one
nominee of Tekno Simon, LLC, the holder of the Series A Preferred Stock, would
be appointed to the Board of Directors. These shareholders agreed to vote their
shares for election of this nominee. The current nominee is Deborah J. Simon,
who was first appointed to the Board of Directors in November 1996.
ANTI-TAKEOVER PROVISIONS
We have various measures in place that could discourage, delay or
prevent a change in control even if the holders of our common stock would prefer
a change. These measures include:
o POWER TO ISSUE BLANK CHECK PREFERRED STOCK. Our Third Amended
and Restated Articles of Incorporation authorize the issuance
of "blank check" preferred stock with designations, rights and
preferences as may be determined from time to time by our
Board of Directors.
o SHAREHOLDERS' RIGHTS PLAN. In August 1996, we adopted a
shareholders' Rights Plan entitling each share of our common
stock to certain rights. On October 18, 1999, we amended the
shareholders' Rights Plan. Pursuant to the terms of the
original shareholders' Rights Plan, the Board of Directors of
the Company declared a dividend of one right for each share of
common stock outstanding as of September 4, 1996. Pursuant to
the terms of the shareholders' Rights Plan, as amended, each
Right now entitles the registered holder to purchase from us
one one-thousandth (1/1,000) of a share of a new series of
preferred shares, designated as Series E Junior Preferred
Stock, at a price of $100.00 per one one-thousandth (1/1,000)
of a share, subject to certain adjustments. The description
and terms of the Rights and the shareholders' Rights Plan, as
amended, are set forth in an Amended and Restated Rights
Agreement between the Company and American Stock Transfer &
22
Trust Company, as Rights Agent, dated as of August 23, 1996.
The Series E Junior Preferred Stock is non-redeemable and,
unless otherwise provided in connection with the creation of a
subsequent series of preferred stock, subordinate to any other
series of the Company's preferred stock. The Series E Junior
Preferred Stock may not be issued except upon exercise of
Rights. Each share of the Series E Junior Preferred Stock will
be entitled to receive when, as and if declared, a quarterly
dividend in an amount equal to the greater of $0.001 per share
and 1,000 times the cash dividends declared on the Company's
common stock. In addition, the Series E Junior Preferred Stock
is entitled to 1,000 times any non-cash dividends (other than
dividends payable in equity securities) declared on the common
stock, in like kind. In the event of liquidation, the holders
of Series E Junior Preferred Stock will be entitled to receive
for each share, a liquidation payment in an amount equal to
the greater of $1,000 or 1,000 times the payment made per
share of common stock. Each share of Series E Junior Preferred
Stock will have 1,000 votes, voting together with the common
stock. In the event of any merger, consolidation or other
transaction in which common stock is exchanged, each share of
Series E Junior Preferred Stock will be entitled to receive
1,000 times the amount received per share of common stock. The
rights of Series E Junior Preferred Stock as to dividends,
liquidation and voting are protected by anti-dilution
provisions. Fractions of shares of Series E Junior Preferred
Stock (other than fractions that are integral multiples of one
one-thousandth (1/1,000) of a share) may, at the election of
the Company, be evidenced by depositary receipts. The Company
may also issue cash in lieu of fractional shares which are not
integral multiples of one one-thousandth (1/1,000) of a share.
The terms of the amended shareholders' Rights Plan grant the
Company's Board of Directors the option, after any person or
group acquires beneficial ownership of 15% or more of the
voting stock but before there has been a 50% acquisition, to
exchange each then valid Right (which would exclude Rights
held by the Acquiring Person (as defined in the Amended and
Restated Rights Agreement) that have become void) for that
number of shares of the Company's common stock having a fair
market value on the date of such 15% acquisition equal to the
excess of (i) the value of the shares of Preferred Stock
issuable upon exercise of the Right in the event of such
acquisition over (ii) the exercise price of the Right, in each
case as adjusted. These rights may cause substantial dilution
to a person or group that attempts to acquire us in a manner
or on terms not approved by the Board of Directors. The
shareholders' Rights Plan is intended to encourage a person
interested in acquiring us to negotiate with, and to obtain
the approval of, the Board of Directors. The shareholders'
Rights Plan, however, may discourage a future acquisition of
us, including an acquisition in which our shareholders might
otherwise receive a premium for their shares.
o FLORIDA LAWS. Florida has enacted legislation that may deter
or frustrate takeovers of Florida corporations. We are subject
to several anti-takeover provisions under Florida law that
apply to public corporations organized under Florida law
unless the corporation has elected to opt out of those
provisions in its articles of incorporation or its bylaws. We
have not elected to opt out of these provisions. The Florida
Business Corporation Act prohibits the voting of shares in a
publicly held Florida corporation that are acquired in a
"control share acquisition" unless the board of directors
approves the control share acquisition or the holders of a
23
majority of the corporation's voting shares approve the
granting of voting rights to the acquiring party. A "control
share acquisition" is defined as an acquisition that
immediately thereafter entitles the acquiring party, directly
or indirectly, to vote in the election of directors within any
of the following ranges of voting power: (i) 1/5 or more but
less than 1/3; (ii) 1/3 or more but less than a majority; and
(iii) a majority or more. There are some exceptions to the
"control share acquisition" rules. The Florida Business
Corporation Act also contains an "affiliated transaction"
provision that prohibits a publicly held Florida corporation
from engaging in a broad range of business combinations or
other extraordinary corporate transactions with an "interested
shareholder" unless (i) the transaction is approved by a
majority of disinterested directors before the person becomes
an interested shareholder; (ii) the corporation has not had
more than 300 shareholders of record during the past three
years; (iii) the interested shareholder has owned at least 80%
of the corporation's outstanding voting shares for at least
five years; (iv) the interested shareholder is the beneficial
owner of at least 90% of the outstanding voting shares
(excluding shares acquired directly from the corporation in a
transaction not approved by a majority of the disinterested
directors); (v) consideration is paid to the holders of the
corporation's shares equal to the highest amount per share
paid by the interested shareholder for the acquisition of the
corporation's shares in the last two years or fair market
value, and other specified conditions are met; or (vi) the
transaction is approved by the holders of two-thirds of the
voting shares other than those owned by the interested
shareholder. An "interested shareholder" is defined as a
person who, together with affiliates and associates,
beneficially owns more than 10% of a company's outstanding
voting shares. The Florida Business Corporation Act defines
"beneficial ownership" in more detail.
LEGAL OPINION
W. Robert Shearer, General Counsel and Senior Vice President of the
Company, is giving an opinion regarding the validity of the offered shares.
EXPERTS
The audited financial statements incorporated by reference in this prospectus
from the Company's Annual Report on Form 10-K for the year ended December 31,
2000 have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
report.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (SEC). You may
read and copy any report or document we file at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. You may also inspect our filings at the regional offices of the SEC
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
at the SEC's web site located at http://www.sec.gov.
24
Quotations for the prices of our common stock appear on the Nasdaq
National Market, and reports, proxy statements and other information about us
can also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" some of the documents
we file with it into this prospectus, which means that we can disclose important
information to you by referring you to those documents. The documents
incorporated by reference are considered to be part of this prospectus, and
later information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the following filings and any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended:
(a) Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2000;
(b) Our Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2001; and
(c) all other reports filed by the Registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, since the end of the fiscal year covered by
the Annual Report referred to in (a) above.
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act with respect to the common stock covered by this prospectus.
This prospectus, which is a part of the registration statement, does not contain
all the information set forth in, or annexed as exhibits to, the registration
statement, as permitted by the SEC's rules and regulations. For further
information with respect to us and the common stock offered under this
prospectus, please refer to the registration statement, including the exhibits.
Copies of the registration statement, including exhibits, may be obtained from
the SEC's public reference facilities listed above upon payment of the fees
prescribed by the SEC, or may be examined without charge at these facilities.
Statements concerning any document filed as an exhibit are not necessarily
complete and, in each instance, we refer you to the copy of the document filed
as an exhibit to the registration statement. You should assume that the
information appearing in this prospectus is accurate as of the date of this
prospectus only. Our business, financial position and results of operations may
have changed since that date.
We will provide, without charge, to each person to whom a copy of
this prospectus is delivered, upon written or oral request, a copy of any or all
of the information incorporated by reference in this prospectus. Exhibits to any
of the documents, however, will not be provided unless such exhibits are
specifically incorporated by reference into such documents. The requests should
be addressed to: Investor Relations Department, Hollywood Media Corp., 2255
Glades Road, Suite 237 West, Boca Raton, Florida 33431, telephone number (561)
998-8000.
Prospective investors should only rely on the information
incorporated by reference or provided in this prospectus or any supplement. We
have not authorized anyone else to provide prospective investors with different
or additional information. This prospectus is not an offer to sell nor is it
seeking an offer to by these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the front of those documents, regardless of the time of the delivery of this
prospectus or any sale of these securities. Our business, financial position and
results of operations may have changed since that date.
25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Hollywood Media Corp. (the "Company") estimates that its expenses in
connection with this registration statement will be as follows:
Securities and Exchange Commission registration fee....... $ 4,950.94
Legal fees and expenses................................... 10,000
Accounting fees and expenses.............................. 5,000
Miscellaneous............................................. 5,000
-----------
Total........................................... $24,950.94
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has authority under Section 607.0850 of the Florida
Business Corporation Act (the "FBCA") to indemnify its directors and officers to
the extent provided for in the FBCA. The Company's Third Amended and Restated
Articles of Incorporation provide that the Company shall indemnify and may
insure its officers and directors to the fullest extent permitted by law. The
Company may from time to time enter into agreements with each of its directors
and executive officers wherein it may agree to indemnify each of them to the
fullest extent permitted by law.
The provisions of the FBCA that authorize indemnification do not
eliminate the duty of care of a director, and in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief will
remain available under Florida law. In addition, each director will continue to
be subject to liability for (a) violations of criminal laws, unless the director
had reasonable cause to believe his conduct was lawful or had no reasonable
cause to believe his conduct was unlawful, (b) deriving an improper personal
benefit from a transaction, (c) voting for or assenting to an unlawful
distribution, and (d) willful misconduct or conscious disregard for the best
interests of the Company in a proceeding by or in the right of the Company to
procure a judgment in its favor or in a proceeding by or in the right of a
shareholder. The statute does not affect a director's responsibilities under any
other law, such as the federal securities laws. The effect of the foregoing is
to require the Company to indemnify the officers and directors of the Company
for any claim arising against such persons in their official capacities if such
person acted in good faith and in a manner that he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Pursuant to certain registration rights agreements, each of the
Company and certain of the selling shareholders has agreed to indemnify the
others and their directors, officers, agents and representatives (and with
respect to the indemnification by the Company, any underwriters) against certain
civil liabilities that may be incurred in connection with this offering,
including certain liabilities under the Securities Act.
II-1
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
3.1 Third Amended and Restated Articles of Incorporation(1)
3.2 Bylaws(2)
10.1 Securities Purchase Agreement dated as of April 25, 2001 between
Hollywood Media Corp., Societe Generale and Velocity Investment
Partners Ltd. (3)
10.2 Registration Rights Agreement dated as of May 1, 2001 between
Hollywood Media Corp., Societe Generale and Velocity Investment
Partners Ltd. (3)
10.3 "A" Warrant issued to Societe Generale(3)
10.4 "B" Warrant issued to Societe Generale(3)
4.1 Form of Common Stock Certificate(2)
4.2 Rights Agreement dated as of August 23, 1996 between the Company and
American Stock Transfer & Trust Company, as Rights Agent(4)
5.1 Opinion and Consent of Counsel*
23.1 Consent of Arthur Andersen LLP*
23.2 Consent of Counsel (included in the opinion filed as Exhibit 5.1 to
this registration statement)
24.1 Power of Attorney (included on signature pages hereof)
- ---------------------------------------
* Filed as an exhibit to this Form S-3.
(1) Incorporated by reference from the exhibit filed with the Company's
Annual Report on Form 10-K for the year ended December 31, 2000.
(2) Incorporated by reference from the exhibit filed with the Company's
Registration Statement on Form SB-2 (No. 33-69294).
(3) Incorporated by reference from the exhibits to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2001.
(4) Incorporated by reference from exhibit 1 to the Company's Current
Report on Form 8-K filed on October 20, 1999.
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING. The undersigned Registrant hereby undertakes
to:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
II-2
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act.
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) Include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to 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
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer, or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE. The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(d) The undersigned Registrant hereby undertakes that:
(i) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
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(ii) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Boca Raton, State of Florida, on this 28th day of
June, 2001.
HOLLYWOOD MEDIA CORP.
By: /s/ Mitchell Rubenstein
----------------------------
Mitchell Rubenstein
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below on this registration statement hereby constitutes and appoints
Mitchell Rubenstein and Laurie S. Silvers, each of them singly, his or her true
and lawful attorneys-in-fact and agents, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments, including any post-effective
amendments, to this registration statement, and to file the same, with exhibits
thereto, and other documents to be filed in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, and he or she
hereby ratifies and confirms all that said attorneys-in-fact or their
substitutes, each acting alone, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Mitchell Rubenstein Chairman of the Board, and June 28, 2001
- ------------------------------- Chief Executive Officer
Mitchell Rubenstein (Principal executive, financial and
accounting officer)
/s/ Laurie S. Silvers Vice Chairman of the Board, June 28, 2001
- ------------------------------- President and Secretary
Laurie S. Silvers
II-5
/s/ Dr. Martin H. Greenberg Chief Executive Officer of June 28, 2001
- ------------------------------- Tekno Books and Director
Dr. Martin H. Greenberg
/s/ Harry T. Hoffman Director June 28, 2001
- -------------------------------
Harry T. Hoffman
/s/ Russell I. Pillar Director June 28, 2001
- -------------------------------
Russell I. Pillar
/s/ Jules L. Plangere, Jr. Director June 28, 2001
- -------------------------------
Jules L. Plangere, Jr.
Director June 28, 2001
- -------------------------------
Deborah J. Simon
/s/ Mitchell Semel Director June 28, 2001
- -------------------------------
Mitchell Semel
Director June 28, 2001
- -------------------------------
David Williams
II-6
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
5.1 Opinion and Consent of Counsel
23.1 Consent of Arthur Andersen
23.2 Consent of Counsel LLP (included in the opinion filed as Exhibit 5.1
to this registration statement)
24.1 Power of Attorney (included on signature pages hereof)
II-7