As filed with Securities and Exchange Commission on May 15, 2002
Registration No. _____________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON FORM S-8
UNDER
THE SECURITIES ACT OF 1933
________________
TREMOR ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0454377
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2621 West Empire Avenue, Burbank, California 91504
(818) 729-0020
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
EMPLOYEE BENEFIT PLANS
(Full Title of Plan)
CSC Services of Nevada, Inc.
502 East John Street
Carson City, NV 89706
(Name and address of agent for service)
(775) 882-3072
(Telephone number, including area code, of agent for service)
with a copy to:
Martin E. Weisberg, Esq.
Jenkens & Gilchrist Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
(212) 704-6050
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
CALCULATION OF REGISTRATION FEE
Title of each class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered (1) Offering Price per Aggregate Offering Registration Fee (3)
Registered Share (2) Price (2)
Common Stock, par value 1,250,000 $ 0.55 $687,500.00 $ 63.25
$.001 per share
TOTAL: 1,250,000 $ 0.55 $687,500.00 $ 63.25
(1) Pursuant to Rule 416(b), there shall also be deemed covered hereby all
additional securities resulting from anti-dilution adjustments under the
Consulting Agreement.
(2) The price per share is estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c); based on the average of the high
($0.55) and low ($0.55) prices for the Common Stock as reported on the OTC
Bulletin Board on May 13, 2002.
(3) Calculated pursuant to Section 6(b) as follows: proposed maximum aggregate
offering price multiplied by .000092.
i
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SEEKING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
___________________________
PROSPECTUS
1,250,000 Shares of Common Stock
(par value $.001 per share)
TREMOR ENTERTAINMENT INC.
___________________________
The stockholders of Tremor Entertainment Inc. listed on page 9 of this
Prospectus (the "Selling Stockholders") are offering for sale up to 1,250,000
shares of our common stock, par value $.001 per share (the "Shares"), under this
Prospectus. Those to whom such Selling Stockholder identified herein may pledge,
donate or transfer their shares and other successors, may also use this
Prospectus. The Selling Stockholders may offer their respective shares through
public or private transactions, at prevailing market prices, or at privately
negotiated prices.
The Selling Stockholders will receive all of the net proceeds from the
resale of the Shares. Accordingly, our Company will not receive any proceeds
from the resale of the Shares. We have nonetheless agreed to bear the expenses
relating to the registration of the Shares, other than brokerage commissions and
expenses, if any, which will be paid by the Selling Stockholders.
-------------------------------------------------------------------
OTC Bulletin Board Common Stock symbol:
"TROR.OB"
-------------------------------------------------------------------
On May 13, 2002, the closing sale price of our Common Stock on the OTC
Bulletin Board was $0.55.
Our executive offices are located at 2621 West Empire Avenue, Burbank,
California 91504 and our telephone number is (818) 729-0020.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE FACTORS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON
PAGE 3 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
______________________
The Date of this Prospectus is May 15, 2002
______________________
i
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
over the Internet at the SEC's Website at "http://www.sec.gov."
We are filing this registration statement with the SEC on Form S-8 to
register the Shares being offered. This Prospectus is part of the registration
statement and, as permitted by the SEC's rules, does not contain all the
information included in the registration statement. For further information with
respect to us and our common stock, you should refer to this registration
statement and to the exhibits and schedules filed as part of the registration
statement, as well as the documents we have incorporated by reference which are
discussed in Item 3 to Part II of this Registration Statement. You can review
the documents we have incorporated by reference at the public reference
facilities maintained by the SEC as described above.
This Prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement.
The SEC permits us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be a part of this Prospectus and information we file later with
the SEC is deemed automatically to update or supersede this information. We
incorporate by reference the documents listed below and any future filings to be
made with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") by each of New
Systems, Inc., as our predecessor company, and our Company, as the
successor-in-interest following that merger by and among us and New Tremor
Acquisition Corp., a wholly owned subsidiary of New Systems, Inc., effected
December 12, 2001:
1. Current Reports on Form 8-K for the event dated December 12, 2001 (as
filed on December 21, 2001) and as amended on reports filed on Form
8-K/A (as filed on each of December 28, 2001, January 15, 2002,
February 25, 2002 and February 27, 2002);
2. Information Statement on Schedule 14C (preliminary filed on October
30, 2001 and definitive filed on November 9, 2001);
3. Information Statement on Schedule 14C (as filed pursuant to Rule 14f-1
on November 29, 2001);
4. Current Reports on Form 8-K for the events dated March 16, 2001,
August 7, 2001 and August 21, 2001
ii
(as filed on March 21, 2001, August 24, 2001 and August 24, 2001,
respectively);
5. Quarterly Reports on Form 10-QSB for the quarters ended March 31,
2001, June 30, 2001, September 30, 2001 and December 31, 2001 (as
filed on May 14, 2001, August 14, 2001, November 9, 2001 and February
20, 2002, respectively);
6. Annual Report on Form 10-KSB for the fiscal year ended December 31,
2000 (as filed on February 28, 2001);
You may request a copy of these filings, at no cost, by writing us at
Tremor Entertainment Inc., 2621 West Empire Avenue, Burbank, California 91504,
Attention: Karen L. Benson, or telephoning us at (818) 729-0020 extension 35.
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL
OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF MAY 15, 2002.
______________________________
TABLE OF CONTENTS
Where to find out More about Us...........................................ii
Incorporation of Documents by Reference...................................ii
Summary Information........................................................1
Risk Factors...............................................................2
Use of Proceeds............................................................3
Selling Stockholders ......................................................8
Plan of Distribution......................................................10
Description of Securities.................................................11
Indemnification of Directors and Officers.................................12
Part II - Information in Registration Statement...........................14
iii
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus, including the information
under "Risk Factors" and the other information incorporated by reference herein.
ABOUT OUR COMPANY AND PRODUCT
Tremor Entertainment Inc. (the "Company") is a developer of interactive
entertainment software for the most popular video game consoles, including Sony
PlayStation, Sega Dreamcast and Microsoft Xbox. We create software that provides
immersive game experiences by combining advanced technology with engaging
content, vivid graphics and rich sounds.
Our Company, which commenced operations in 1998, has to date developed a
variety of products, including Sega Swirl(R), Railroad Tycoon II for Dreamcast,
Railroad Tycoon II for PlayStation, and KISS: Psycho Circus for Dreamcast. Our
employees include industry veterans whose past credits include such breakaway
hits as StarCraft, WarCraft, Diablo, Redneck Rampage and Kingpin.
We currently have an agreement with Microsoft under which our Company is
creating a major original product for Microsoft's Xbox. Xbox, which was released
in November 2001, is intended to be the most technologically powerful video game
console on the market. At this time, all of our development activities are being
dedicated to the completion of the game. The agreement with Microsoft provides
for periodic payments to us based upon the attainment of various development
milestones, and provides for a royalty based upon Microsoft's sales of the game.
The periodic payments under the agreement will aggregate approximately $4.8
million through delivery. Because royalty payments, if any, will depend upon
unit sales by Microsoft, there can be no assurance that we will realize any
revenue from royalties. At present, the agreement with Microsoft is our only
source of operating revenue. Microsoft, however, can cancel the agreement, at
any time in the event that we fail to attain any of the development milestones.
Our product is presently scheduled to ship for the holiday season of 2002.
In addition to the Xbox game itself, Microsoft has secured initial
agreements for comic book, novel, and feature film deals all based on the game's
underlying intellectual property, which Microsoft now owns. Because we created
and developed this intellectual property, our company will receive 10% of
Microsoft's net revenues from all ancillary products based upon such
intellectual property. There can be no assurance, however, that Microsoft will
invest in any such ancillary products or, if it does so, whether any revenue
will be derived therefrom.
We plan to expand our Company's development capacity moderately over the
next twelve months. When the current Xbox product is shipped, we intend to
immediately employ that primary team in the creation of a sequel. Discussions
have already begun with Microsoft on the topic of a sequel. However, there can
be no assurance that Microsoft will agree to create a
sequel with us. Should Microsoft decide not to pursue a sequel, our company will
endeavor to secure other work for our primary team through our extensive set of
industry contacts. In addition, prior to shipping the current Xbox product, we
plan to expand to a second team, whose intended objective will be to create
another original game product for Microsoft Xbox, Sony PlayStation 2, Nintendo
GameCube, and for the personal computer market. Our Company plans to use its
industry contacts to obtain work for this second team. However, there can be no
assurance that we will secure work for our current team or any projected second
team.
On December 12, 2001, Tremor Entertainment Inc. merged with New Tremor
Acquisition Corp., a wholly owned subsidiary of New Systems, Inc., a Nevada
corporation publicly-traded on the OTC Bulletin Board. Subsequent to the merger,
(i) New Systems, Inc. changed its name to Tremor Entertainment Inc.., (ii) the
company that was merged into the subsidiary of New Systems, Inc., formerly known
as Tremor Entertainment Inc., became Tremor Games, Inc. and (iii) Tremor
Entertainment Inc. changed its financial year-end to March 31. For accounting
purposes, the merger was accounted for as a purchase of a majority interest in
New Systems, Inc. valued at zero accompanied by a share exchange between Tremor
Enterprises Inc. and New Systems, Inc. accounted for as a recapitalization.
[Accordingly, the operating results reflected in the most recent financial
statements of our Company, as reported to the Securities and Exchange Commission
("SEC") in reports for the quarter ended December 31, 2001 incorporated in this
Prospectus include only those of Tremor Games, Inc. (formerly Tremor
Entertainment Inc.) prior to December 12, 2001.]
THE OFFERING
The 1,250,000 shares of common stock (the "Shares") being offered for
resale hereby represent common stock previously received by the Selling
Stockholders in their respective capacities as a director or consultant to our
Company. The documents evidencing the consulting and advisory services performed
or to be performed by the Selling Stockholders on behalf of our Company and by
which the Selling Stockholders acquired the Shares are attached as exhibits to
this Registration Statement.
RISK FACTORS
An investment in the Shares involves a high degree of risk. The risk
factors set forth in this Prospectus are not intended to be an exhaustive list
of the general or specific risks involved, but to identify certain risks that
are now foreseen by management. As a prospective investor, you should carefully
consider all information contained in this Prospectus and should give particular
consideration to the risk factors set forth herein before deciding to purchase
the Shares offered hereby. Any of the risks could materially adversely affect
our business, operating results and financial condition and could result in a
complete loss of any investment in our company.
2
FORWARD-LOOKING STATEMENTS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995: Certain statements, other than
historical facts, included in this Prospectus regarding our business strategies
and plans of management for future operations are "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
statements, which include, but are not limited to, words such as "expect,"
"anticipate," "plan," "estimate," "project" and "intend" are based on
management's beliefs and assumptions, and on information currently available to
management. Forward-looking statements involve certain known and unknown risks,
uncertainties and other factors which may cause our Company's actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. These factors include, among others, our ability to finance our
business operations and to obtain such financing, the to successful
implementation of the Company's business plan; any uncertainties relating to
business and economic conditions in markets in which we operate; any
uncertainties relating to customer plans and commitments; the timely development
and market acceptance of our products and technologies; possible product defects
and product liability, dependence on intellectual property rights, the
competitive environment in which we operate and other risks detailed from time
to time in our periodic reports filed with the United States Securities and
Exchange Commission and other regulatory authorities.
RISK FACTORS
WE HAVE A HISTORY OF LOSSES AND IF WE DO NOT ACHIEVE PROFITABILITY WE MAY NOT BE
ABLE TO CONTINUE OUR BUSINESS
Our Company incurred losses for the nine months ended December 31, 2001 of
$1,395,937 and has cash used in operating activities of $773,560 for the nine
months ended December 31, 2001. Furthermore, at December 31, 2001 we had
negative working capital of $1,560,462 and stockholders' deficit of $1,450,780.
As a result of our financial position and results of operations as of March 31,
2001, our certified public accountants expressed substantial doubt about the
Company's ability to continue as a going concern in their report on the March
31, 2001 financial statements of our Company. We are in our third year of
implementing our business plan and cannot be assured that the results of
operations will be sufficient to sustain our operations. Accordingly, there is
substantial doubt regarding our Company's ability to continue as a going
concern. We are pursuing additional capital to meet future financial
obligations, but may not be able to do so. Should we not be able to raise
additional financing or implement our business plan and generate sufficient cash
flows from operations, we may have to curtail and/or cease our operations.
3
AGREEMENT WITH MICROSOFT IS SOLE SOURCE OF REVENUE AND ANY FAILURE BY US TO
ATTAIN VARIOUS DEVELOPMENT MILESTONES UNDER SUCH AGREEMENT CAN RESULT IN IT
BEING TERMINATED
We currently have an agreement with Microsoft under which we are creating a
major original product for Microsoft's Xbox. At present, our agreement with
Microsoft is our only source of operating revenue. At this time, all of our
development activities are being dedicated to the completion of the game. The
agreement with Microsoft provides for periodic payments to us based upon the
attainment of various development milestones. Failure to achieve these
milestones will significantly affect revenue from these periodic payments and
may induce termination of the agreement by Microsoft.
WE MAY RECEIVE NO ROYALTIES BECAUSE OF POOR SALES OF THE GAME
Our agreement with Microsoft provides for a royalty based upon Microsoft's
sales of the game following its completion by us. Because royalty payments, if
any, will depend upon unit sales by Microsoft, there can be no assurance that we
will realize any revenue from royalties.
THERE MAY BE NO ANCILLARY MARKET FOR OUR PRODUCT
In addition to the Xbox game itself, we (together with Microsoft) have
secured initial agreements for comic book, novel, and feature film deals all
based on the game's underlying intellectual property, which Microsoft now owns.
Because we created and developed this intellectual property, our Company will
receive 10% of Microsoft's net revenues from all ancillary products based upon
such intellectual property. There can be no assurance, however, that Microsoft
will invest in any such ancillary products or, if it does so, whether any
revenue will be derived therefrom.
WE WILL REQUIRE ADDITIONAL FINANCING TO OPERATE OUR BUSINESS
Our business plan demands that we incur significant operating expenses in
order to develop and extend our business model, our products and our operations,
as well as respond to unanticipated competitive pressures. At this time, our
only source of operating revenue is our agreement with Microsoft. The purchase
of the materials necessary to produce our products, and thus expand our product
sales, requires the raising of additional capital. We do not expect that our
revenue will cover those expenses. As a result, we intend to raise additional
capital through public or private debt or the sale of equity and/or debt
securities.
We cannot assure you that additional financing will be available on terms
favorable to us, or that additional financing will be available at all. If
adequate funds are not available or are not available on acceptable terms, we
may not be able to develop new technologies, respond to unanticipated
competitive pressures, or continue to fund our operations. Such inability could
have a material adverse effect on our business, financial condition, results of
operations and prospects.
4
WE ARE VULNERABLE TO TECHNOLOGICAL CHANGES
The markets we serve experience rapid technological change, changing
customer tastes, frequent new product introductions and evolving industry
standards that may render existing products and services unwanted, undesirable,
or obsolete. As a result, more advanced products produced by our competitors
could erode our position in our existing markets or other markets that we may
enter. It is difficult to estimate the life cycles of our products and services.
Our future success will depend, in part, upon our ability to enhance existing
products and services and to develop new products and services on a timely
basis. In addition, our products and services must keep pace with technological
developments and we must address increasingly sophisticated customer needs. We
might experience difficulties that could delay or prevent the successful
development, introduction and marketing of new products and services. New
products and services and enhancements might not meet the requirements of the
marketplace and achieve market acceptance. If these things happen, they would
materially and negatively affect our cash flows, financial condition and results
of operations.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS
Our success depends, in part, upon the protection of proprietary rights in
our products, technology and trade secrets. We rely on a combination of patent,
copyright, and trademark laws, confidentiality procedures and licensing
arrangements to protect our proprietary rights. There can be no assurance,
however, that the methods on which we rely to protect our trade secrets and
proprietary technology will be adequate. Further, the laws of certain countries
in which we do business do not protect our proprietary rights to the same extent
as the laws of the United States. Legal protections of our proprietary rights
may be ineffective in such countries. Policing unauthorized use of our products
is difficult, and litigation to defend and enforce our intellectual property
rights could result in substantial costs and diversion of resources. Despite our
efforts to safeguard and maintain our proprietary rights both in the United
States and abroad, there can be no assurance that we will be successful in doing
so, or that the steps taken by us in this regard will be adequate to deter
misappropriation or independent third party development of our technology or to
prevent an unauthorized third party from copying or otherwise obtaining and
using our products or technology. Any failure in the protection of our
proprietary rights could have a material adverse effect on our business,
financial condition and results of operations.
There can be no assurance that third parties will not assert infringement
or misappropriation claims against us in the future with respect to current or
future products. Any claims or litigation, with or without merit, could be
time-consuming, result in costly litigation, diversion of management's attention
and cause product shipment delays or require us to enter into royalty or
licensing arrangements. Such royalty or licensing arrangements, if required, may
not be available on terms acceptable to us, if at all, which could have a
material adverse effect on the our business, financial condition and results of
operations. Adverse determinations in such claims or litigation could also have
a material adverse effect on our business, financial condition and results of
operations.
5
THE MARKET FOR OUR BUSINESS IS DEVELOPING AND MAY NOT ACHIEVE THE GROWTH WE
EXPECT
Our plans to expand the Company's development capacity moderately over the
next twelve months. When the current Xbox product is shipped, we intend to
employ immediately that primary team in the creation of a sequel. However, there
can be no assurance that Microsoft will agree to create a sequel with us. Should
Microsoft decide not to pursue a sequel, we will endeavor to secure other work
for our primary team through an extensive set of industry contacts. In addition,
prior to shipping the current Xbox product, we also plan to expand to a second
team, whose objective is to create another original game product for Microsoft
Xbox, Sony PlayStation 2, Nintendo GameCube, and for the personal computer
market. Our Company plans to use its industry contacts to obtain work for this
second team. However, there can be no assurance that we will secure work for our
current team or any projected second team.
The development of products for interactive entertainment software is a
developing market. Our future growth and profitability will depend, in part,
upon consumer use and acceptance of such products and applications in general
and a significant expansion in the consumer market for the delivery of such
products and applications. Even if these markets experience substantial growth,
there can be no assurance that our products and applications will be
commercially successful or will benefit from such growth. Further, even if
initially successful, any continued development and expansion of the market for
our products and applications will depend in part upon our ability to create and
develop additional products and applications and adjust existing products and
applications in accordance with changing consumer preferences, all at
competitive prices. Our failure to develop new products and applications and
generate revenues could have a material adverse effect on our financial
condition and operating results.
WE ARE HIGHLY DEPENDENT ON OUR EXECUTIVE OFFICERS AND SEVERAL TECHNICAL
EMPLOYEES, THE LOSS OF ANY OF WHOM COULD HAVE AN ADVERSE IMPACT ON OUR FUTURE
OPERATIONS
We believe that due to the rapid pace of innovation within our industry,
factors such as the technological and creative skills of our personnel are more
important in establishing and maintaining a leadership position within the
industry than legal protections of our technology. We are dependent on our
ability to recruit, retain and motivate high quality personnel. However,
competition for such personnel is intense and the inability to attract and
retain additional qualified employees or the loss of current key employees could
materially and adversely affect our business, operating results and financial
condition.
OUR SECURITIES MAY BE SUBJECT TO "PENNY STOCK" RULES
If our common stock is excluded from Nasdaq and the price per share of our
common stock is below $5.00, then unless we satisfy certain net asset and
revenue tests our securities
6
would become subject to certain "penny stock" rules promulgated by the
Securities and Exchange Commission. The application of these rules to our common
stock may adversely impact both your ability to resell our common stock
(liquidity) and the market price of these Shares. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document prepared by
the Securities and Exchange Commission that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from such rules, the broker-dealer must make a special written
determination of suitability of the investor purchasing the penny stock.
FUTURE ISSUANCE OF COMMON STOCK COULD ADVERSELY AFFECT THE MARKET
Sales of substantial amounts of the common stock in the public market, or
the prospect of these sales, could depress the prevailing market price of our
common stock and its ability to raise equity capital in the future. At May 13,
2002, we had outstanding 18,040,000 shares of common stock issued and
outstanding, $.001 par value.
THERE IS POTENTIAL FOR FLUCTUATION IN THE MARKET PRICE OF OUR SECURITIES
Because of the size of our business and the nature of the industry in which
we operate, our quarterly revenues and operating results are difficult to
predict and may fluctuate significantly from quarter to quarter. Consequently,
the market price of our securities has been, and can be expected to continue to
be, highly volatile. Factors such as announcements by us or others of
technological innovations, new commercial products, regulatory approvals or
proprietary rights developments, and competitive developments all may have a
significant impact on our future business prospects and market price of our
securities.
THE PRICE OF OUR COMMON STOCK MAY BE DEPRESSED DUE TO THE EFFECTIVENESS OF THIS
REGISTRATION STATEMENT
When this registration statement becomes effective, 1,250,000 shares of
common stock will become eligible to be sold subject to the reoffer and resale
limitations of control and restricted securities under Rule 144 (e) under the
Securities Act of 1933, as amended. Under that Rule, none of the Selling
Stockholders can sell an amount of their respective shares during any 90 day
period in excess of 1% of the Company's issued and outstanding common stock of
18,040,000 shares. No prediction can be made as to the effect, if any, that
sales of shares of common stock or the availability of such shares for sale will
have on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of common stock may be sold in the public
market would likely have a material adverse effect on prevailing market
7
prices for the common stock and could impair our ability to raise capital
through the sale of our equity securities.
WE DO NOT ANTICIPATE THE PAYMENT OF DIVIDENDS
We have never declared or paid cash dividends on our common stock. We
currently anticipate that we will retain all available funds for use in the
operation of our business. Thus, we do not anticipate paying any cash dividends
on our common stock in the foreseeable future.
USE OF PROCEEDS
The Selling Stockholders are selling all of the Shares covered by this
Prospectus for their own account. Accordingly, we will not receive any of the
proceeds from the resale of the Shares. We have agreed to bear the expenses
relating to the registration of the Shares, other than brokerage commissions and
expenses, if any, which will be paid by the Selling Stockholders.
SELLING STOCKHOLDERS
The Shares being offered for resale hereby represent common stock
previously received by the Selling Stockholders in their respective capacities
as executive officer, director and, in the case of Messrs. Boesky and Flowers,
consultants to the Company. A description of the employment, consulting and
advisory services performed and/or to be performed by the Selling Stockholders
on behalf of our Company, as the case may be, and by which they acquired the
Shares is set forth in the following documents (copies of which are attached as
exhibits in this Registration Statement):
o Letter Agreement dated as of April 1, 2002 by and between the Company
and Steven Oshinsky
o Letter Agreement dated as of April 1, 2002 by and between the
Company and Martin E. Weisberg;
o Consulting Agreement dated as of March 25, 2002 by and between the
Company and Keith Boesky; and
o Consulting Agreement dated as of April 1, 2002 by and between the
Company and Karl Flowers;
The information in the table concerning the Selling Stockholders who may
offer Shares hereunder from time to time is based on information provided to us
by each Selling Stockholder, and assumes exercise of the options, if any, and
the assumptions referenced in footnotes thereto.
8
Other than Mr. Boesky, who is not an affiliate of the Company, each of Messrs.
Oshinsky, Weisberg and Flowers is or was within the 90 days prior to the date
of this Prospectus, a director of the Company. Mr. Oshinsky is also the
President and Chief Executive Officer of the Company.
Shares of Common Stock Owned
after the Offering (2)
Shares of Common Shares of ----------------------------
Stock Owned Prior Common Stock
Name of Selling Stockholder to Offering (1) to be Sold Number Percent
- --------------------------- -- ------------ -------------- ------ -------
Steven Oshinsky 11,815,111 (3) 500,000 11,315,111 59.5%
Martin E. Weisberg 616,666 (4) 400,000 216,666 1.2%
Karl Flowers 946,166 (5) 300,000 646,166 3.5%
Keith Boesky 50,000 50,000 0 0.0%
-------------- ------- ---------- -----
Totals: 1,250,000 12,177,943
_________________
(1) Under the rules promulgated by the Securities and Exchange Commission, a
person is deemed to be the beneficial owner of a security if such person has or
shares the power to vote or direct the voting of such security or the power to
dispose or direct the disposition of such security. A person is also deemed to
be a beneficial owner of any securities if that person has the right to acquire
beneficial ownership within 60 days of the date hereof. Unless otherwise
indicated by footnote, the Selling Stockholder has sole voting and investment
power with respect to the shares of common stock beneficially owned by him.
(2) Assumes that all of the shares of common stock and shares issuable upon
exercise of any options that are being offered hereby are sold [and that no
other shares of common stock held by the Selling Stockholders are sold during
the offering period].
(3) Includes 10,254,000 shares of common stock held by RAM Capital Management
and 200,000 shares of common stock held by Harmony Investment Trust. Includes
warrants held by Ram Capital Management, currently exercisable, to acquire
861,111 shares of common stock at prices ranging from $0.25 to $9.00 per share.
Mr. Oshinsky is the General Manager of RAM Capital Management and Harmony
Investments and beneficial ownership over the shares held by those entities may
be attributable to Mr. Oshinsky.
(4) Includes options, currently exercisable, to acquire an aggregate of 166,666
shares of common stock at an exercise price of $0.30 per share, and warrants,
currently exercisable, to acquire 50,000 shares of common stock at an exercise
price of $0.30 per share.
(5) Includes 476,000 shares of common stock, options, currently exercisable, to
acquire an aggregate of 166,666 shares of common stock at an exercise price of
$0.30 per share and warrants, currently exercisable, to acquire 3,500 shares of
common stock at an exercise price of $9.00 per share. Mr. Flowers has pledged
approximately 430,000 shares of his common stock as collateral to secure loans
made to Mr. Flowers by an entity affiliated with Mr. Oshinsky.
9
PLAN OF DISTRIBUTION
The Shares may be sold or distributed from time to time by the Selling
Stockholders or by pledgees, donees or transferees of, or successors in interest
to, the Selling Stockholders, directly to one or more purchasers (including
pledgees) or through brokers, dealers or underwriters who may act solely as
agents or may acquire shares as principals, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, which may be changed.
The Shares that are being registered under this Prospectus constitute
"control" or "restricted" securities as defined for purposes of General
Instruction C to this Form S-8 Registration Statement and promulgated by the
SEC. As such, the Shares are subject to resale and reoffer limitations imposed
by Rule 144(e) under the Securities Act of 1933, as amended. Under that Rule,
none of the Selling Stockholders can sell an amount of their respective shares
during any 90 day period in excess of 1% of the Company's issued and outstanding
common stock of 18,040,000 shares.
The distribution of the Shares may be effected in one or more of the
following methods:
o ordinary brokers transactions, which may include long or short sales,
o transactions involving cross or block trades or otherwise on the
quotation system operated by the Over-the-Counter Bulletin Board, or
on one or more other securities markets and exchanges, in privately
negotiated transactions,
o purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this Prospectus,
o "at the market" to or through market makers or into an existing market
for the common stock,
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents,
o through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise), or
o any combination of the foregoing, or by any other legally available
means.
In addition, the Selling Stockholders may enter into hedging transactions
with broker-dealers who may engage in short sales of shares in the course of
hedging the positions they assume with the Selling Stockholders. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers that require the delivery by such broker-dealers of the shares,
which shares may be resold thereafter pursuant to this Prospectus.
Brokers, dealers, underwriters or agents participating in the distribution
of the Shares
10
may receive compensation in the form of discounts, concessions or commissions
from the Selling Stockholders and/or the purchasers of shares for whom such
broker-dealers may act as agent or to whom they may sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions). The Selling Stockholders and any broker-dealers acting
in connection with the sale of the shares hereunder may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act of 1933,
and any commissions received by them and any profit realized by them on the
resale of shares as principals may be deemed underwriting compensation under the
Securities Act of 1933, as amended (the "Securities Act"). Neither we nor the
Selling Stockholders can presently estimate the amount of such compensation. We
know of no existing arrangements between the Selling Stockholders and any other
stockholder, broker, dealer, underwriter or agent relating to the sale or
distribution of the Shares.
We will not receive any proceeds from the sale of the Shares pursuant to
this Prospectus. We have agreed to bear the expenses (other than broker's
commissions and similar charges) of the registration of the shares, including
legal and accounting fees.
The Selling Stockholders may also use Rule 144 under the Securities Act to
sell the shares if they meet the criteria and conform to the requirements of
such Rule.
There can be no assurance that the Selling Stockholders will sell any or
all of the shares offered by them hereunder.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 250,000,000 shares of common stock, par
value $.001 per share (the "Common Stock"). As of May 13, 2002, approximately
18,040,000 shares of Common Stock were issued and outstanding.
The Common Stock to be registered for resale pursuant to this Registration
Statement on Form S-8, entitle the holders to the following rights:
o Voting - Holders of shares of Common Stock are entitled to one vote per
share on all matters submitted to a vote of the shareholders. Shares of Common
Stock do not have cumulative voting rights; accordingly, the holders of a
majority of the shareholder votes eligible to vote and voting for the election
of the Board of Directors can elect all members of the Board of Directors.
o Dividends - Holders of record of shares of Common Stock are entitled to
receive dividends when and if declared by the Board of Directors out of funds of
the Company legally available therefor.
11
o Liquidation - Upon any liquidation, dissolution or winding up of the
Company, holders of shares of Common Stock are entitled to receive pro-rata all
of the assets of the company available for distribution to shareholders after
any distributions are made to the holders of the Preferred Stock.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the Nevada General Corporation Law ("NGCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another entity, against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he acted in
good faith and in a manner which 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. With respect to actions or suits by or in the right of the
corporation, section 78.7502 provides that a corporation may indemnify those
serving in the capacities mentioned above against expenses, including amounts
paid in settlement and attorneys' fees actually and reasonably incurred in
connection with the defense or settlement of the action or suit, provided that
such person acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation. To the extent
that a director, officer, employee or agent of a corporation has been successful
on the merits or otherwise in defense of any action, suit or proceeding, or in
defense of any claim, issue or matter therein, the corporation shall indemnify
him against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
Section 78.751 of the NGCL provides that the articles of incorporation, the
bylaws or an agreement made by the corporation may provide that the expenses of
officers and directors incurred in defending an action, suit or proceeding must
be paid by the corporation in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined that he
is not entitled to be indemnified by the corporation. Section 78.751 further
provides that indemnification and advancement of expense provisions contained in
the NGCL shall not be deemed exclusive of any rights to which a director,
officer, employee or agent may be entitled, whether contained in the articles of
incorporation or any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, provided, however, that no indemnification may be made
to or on behalf of any director or officer if a final adjudication establishes
that his acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
12
The articles of incorporation of the Company provide that the Company shall
indemnify any of its officers and directors, past, present, and future, who was
or is a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal,a dminstrative, or investigative, against
any and all expenses, including but not limited to attorneys' fees, judgments,
fines and amounts paid in settlement which may be incurred, rendered or levied
in any action brought against any or all of them for or on account of any act or
omission alleged to have been committed while acting within the scope of their
duties as officers or directors of the corporation. Any and all expenses
incurred by the officers and directors of the corporation in defending a civil
or criminal action, suit or proceeding must be paid by the corporation as they
are incurred and in advance of the final disposition of the action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation.
The bylaws of the Company provide that the Company shall indemnify the
directors and officers of the Company from and against any and all claims,
judgments and liabilities to which such directors or officers shall become
subject by reason of any action or omission alleged to have been taken by such
director or officer, and shall reimburse each director or officer for all legal
and other expenses reasonably incurred by him in connection with any such claim
of liability, provided, however, that no director or officer shall be
indemnified against, or be reimbursed for, any expense incurred in connection
with any claim or liability arising out of his own gross negligence or willful
misconduct.
13
PART II.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INCORPORATION OF DOCUMENTS BY REFERENCE.
Disclosed in Prospectus under "Where You Can Find More Information About
Us"
DESCRIPTION OF SECURITIES.
Disclosed in Prospectus under same title.
INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Disclosed in Prospectus under same title.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The issuance of the Shares to the Selling Stockholders was based, in part,
upon representations and warranties by each such individual as to his status as
an "accredited investor" (as such term is defined in Rule 501(a) of Regulation D
under the Securities Act) and, accordingly, was exempt from the registration
requirements of the Securities Act of 1933, as amended, pursuant to Regulation D
promulgated by the SEC under Section 4(2) of such Securities Act.
14
EXHIBITS.
Exhibit
Number Description
- ------ -----------
5.1* Opinion of Jenkens & Gilchrist Parker Chapin LLP, counsel to the
Company, as to the legality of Common Stock being offered.
23.1* Consent of Hansen, Barnett & Maxwell, certified public accountants.
23.2 Consent of BDO Seidman, LLP, independent public accountants.
23.2* Consent of Jenkens & Gilchrist Parker Chapin LLP (contained in Exhibit
5.1).
99.1* Consulting Agreement dated as of April 1, 2002 by and between the
Company and Karl Flowers,
99.2* Consulting Agreement dated as of March 25, 2002 by and between the
Company and Keith Boesky
99.3* Letter Agreement dated as of April 1, 2002 by and between the Company
and Martin E. Weisberg
99.4* Letter Agreement dated as of January 1, 2002 by and between the
Company and Steven Oshinsky
___________________________
* Filed herewith.
15
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in this registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
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 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 registrant 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.
16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing this registration statement on Form S-8 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Burbank, State of
California, on this 15th day of May, 2002.
TREMOR ENTERTAINMENT INC.
By: /s/ Karen L. Benson
-----------------------------------
Name: Karen L. Benson
Title: Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned hereby
constitutes and appoints Steven Oshinsky and Karen L. Benson each as his true
and lawful attorney-in-fact and agent, for him and in his name, place and stead,
in any and all capacities, each with full power to act alone, to sign any and
all amendments to this Registration Statement, and to file each such amendment
to this Registration Statement with all exhibits thereto, and any and all
documents in connection therewith, with the Commission, hereby granting unto
each attorney-in-fact and agent full power and authority to do and perform any
and all acts and things required and necessary to be done, as fully and to all
intents and purposes as, he might or could do in person, hereby ratifying and
confirming all that each attorney-in-fact and agent 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 7th day of January, 2002 indicated.
Signature Title Date
- --------- ----- ----
/s/ Steven Oshinsky
- ----------------------------- Chairman, Director and Chief May 15, 2002
Steven Oshinsky Executive Officer
/s/ Martin E. Weisberg
- ----------------------------- Director May 15, 2002
Martin E. Weisberg
May 15, 2002
- ----------------------------- Director
Karl Flowers
17
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
5.1* Opinion of Jenkens & Gilchrist Parker Chapin LLP, counsel to the
Company, as to the legality of Common Stock being offered.
23.1* Consent of Hansen, Barnett & Maxwell, certified public accountants.
23.2 Consent of BDO Seidman, LLP, independent public accountants.
23.2* Consent of Jenkens & Gilchrist Parker Chapin LLP (contained in Exhibit
5.1).
99.1* Consulting Agreement dated as of April 1, 2002 by and between the
Company and Karl Flowers,
99.2* Consulting Agreement dated as of March 25, 2002 by and between the
Company and Keith Boesky
99.3* Letter Agreement dated as of April 1, 2002 by and between the Company
and Martin E. Weisberg
99.4* Letter Agreement dated as of January 1, 2002 by and between the
Company and Steven Oshinsky
___________________________
* Filed herewith.