As filed with the Securities and Exchange Commission on May , 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
under the
SECURITIES ACT OF 1933
Streamedia Communications, Inc.
(Name of small business issuer in its charter)
Delaware 7375
(State or jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
22-3622272
(I.R.S. Employer
Identification Number)
James Douglas Rupp
Streamedia Communications, Inc.
9 East 45th street
New York, NY 10017
(212) 883-0299
(Address and telephone number of principal
executive offices and principal place of business)
James Douglas Rupp
Streamedia Communications, Inc.
9 East 45th street
New York, NY 10017
(212) 883-0299
(Name, address and telephone number of agent for service)
Copies of all communications to:
Louis E. Taubman, Esq Bruce A. Cheatham, Esq.
Kogan & Taubman, L.L.C. Winstead Sechrest & Minick P.C.
30 Broadway, Suite 2704 5400 Renaissance Tower
New York, NY 10006 1201 Elm Street
(212) 425-8200 Dallas, Texas 75270
(212) 482-8104 (214) 745-5400
(214) 745-5390 FAX
Approximate date of proposed sale to public: As soon as practicable after the
effective date of the Registration Statement.
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.
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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
(Registration Statement cover page cont'd)
Calculation of Registration Fee
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price per Unit Aggregate Offering Price Registration Fee
(1) (1) (1)
Units 1,150,000 $8.50 $9,775,000 $2,717
Common Stck, par
value$0.001 (2) 1,150,000 (2) (2) (2)
Redeemable Common Stock
Purchase Warrants (2) 1,150,000 (2) (2) (2)
Common Stock, par
value $0.001 (3)(4) 1,150,000 $12.75 $14,662,500 $4,076
Underwriter's Warrants (5) 100,000 $ 0.001 $100 $1
Units Underlying the
Underwriter's Warrants 100,000 $10.20 $1,020,000 $284
Common Stock, par
value $0.001 (4)(6) 100,000 (6) (6) (6)
Redeemable Common Stock
Purchase Warrants (6) 100,000 (6 (6) (6)
Common Stock, par
value $0.001 (4)(7) 100,000 $12.75 $1,275,000 $354
Total $26,732,600 $7,432
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Included in the Units. No additional registration fee is required.
(3) Issuable upon the exercise of the Redeemable Common Stock Purchase
Warrants.
(4) Pursuant to Rule 416 there are also registered an indeterminate number
of shares of Common Stock which may be issued pursuant to the
antidilution provisions applicable to the Redeemable Common Stock
Purchase Warrants, the Underwriter's Warrants and the Redeemable
Common Stock Purchase Warrants
issuable under the Underwriters Warrants.
(5) Underwriters Warrants to purchase up to 100,000 Units, consisting
of an aggregate of 100,000 shares of
Common Stock and 100,000 Redeemable Common Stock Purchase Warrants.
(6) Included in the Units underlying the Underwriters' Warrants. No
additional registration fees are required.
(7) Issuable upon exercise of Redeemable Common Stock Purchase
Warrants underlying the Underwriters' Units.
3
SUBJECT TO COMPLETION DATED MAY 1999
1,000,000 Units
Consisting of 1,000,000 Shares of 986728420Common Stock and
1,000,000 Redeemable Common Stock Purchase Warrants.
STREAMEDIA COMMUNICATIONS, INC.
This is an initial public offering of 1,000,000 units each unit consists of one
share of common stock and one warrant. Each warrant entitles the holder to
purchase one share of common stock at a price of $12.75 per share until
____________, 2004 (five years from the date of this prospectus) Currently,
there is no public market for our common stock.
The underwriters have an option to purchase an additional 150,000 units to cover
over-allotments if any. This is an initial public offering of 1,000,000 units
each unit consists of one share of common stock and one warrant. Each warrant
entitles the holder to purchase one share of common stock at a price of $12.75
per share until ____________, 2004 (five years from the date of this prospectus)
Currently, there is no public market for our common stock.
The underwriters have an option to purchase an additional 150,000 units to
cover over-allotments if any. Streamedia Communications,
Inc.4521984hspNext1149fLine0
9 East 45th Street
New York, NY 10017
Streamedia Communications, Inc.
9 East 45th Street
New York, NY 10017
The Offering:
Per unit Total
Public Offering Price $8.50 $8,500,000
Underwriting discounts $0.85 $ 850,000
Proceeds to Streamedia $ 7.65 $ 7,650,000
The Offering:
Per unit Total
Public Offering Price $8.50 $8,500,000
Underwriting discounts $0.85 $ 850,000
Proceeds to Streamedia $ 7.65 $ 7,650,000
Proposed Trading Symbol
Nasdaq SmallCap Market " "
-----------------------
This investment involves a high degree of risk. See "Risk Factors" beginning on
page 7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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.
------------------------------
REDSTONE SECURITIES, INC.
Prospectus dated May 14 , 1999
------------------------------
TABLE 986734129OF CONTENTS
Page
Prospectus Summary.............................................................................3
Selected Financial Information.................................................................6
Risk Factors...................................................................................7
Limited Operating History.................................................................7
Unpredictability of Future Revenues.......................................................7
Reliance on Key Personnel.................................................................8
Competition...............................................................................8
Uncertain Acceptance of the Internet as an Advertising Medium.............................8
Dependence on Continued Growth in Use of the Internet.....................................9
Risk of Technological Change..............................................................9
Government Regulation and Legal Liability.................................................9
Immediate Substantial Dilution............................................................9
Influence on Voting by Principal Shareholders.............................................10
Absence of Prior Public Market............................................................10
Arbitrary Determination of Offering Price.................................................10
Payment of Dividends......................................................................10
Shares Eligible for Future Sale...........................................................10
Effect of Underwriter's Warrants............................................. .... ..11
Underwriter's Influence on the Market........................................ .. ........11
Use of Proceeds................................................................................12
Dividend Policy................................................................................12
Dilution.......................................................................................13
Capitalization.................................................................................14
Management's Discussion and Analysis
of Financial Condition and Results Of Operations .........................................14
Business.......................................................................................18
Additional Information.........................................................................20
Management.....................................................................................28
Certain Relationships and Related Transactions.................................................31
Principal Shareholders.........................................................................32
Certain Federal Income Tax Matters.............................................................32
Description of Capital Stock...................................................................33
Shares Eligible For Future Sale................................................................34
Plan of Distribution...........................................................................35
Legal Matters..................................................................................37
Experts........................................................................................37
Glossary.......................................................................................38
Index to Financial Statements..................................................................43
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements including notes appearing elsewhere in this
prospectus. Unless otherwise indicated, the information in this prospectus
assumes the underwriters' over-allotment option and the underwriters' warrants
are not exercised. The units offered involve a high degree of risk. Investors
should carefully consider the information set forth under "Risk Factors."
32
shapeType202fFlipH0fFlipV0lTxidWe9arehapNmultimedia amcontent generator,
enabler, and aggregator. Our Webcast Technologies(TM) business will be divided
among four vertically-integrated divisions: Streamedia Webcast Streamedia
Broadcast; Streamedia Networks; Streamedia Webcast Technologies(TM)
Technologies; and Streamedia Publishing. Each center of activity will be
shapeType202fFlipH0fFlipV0lTxiddevelopedNearoundSmultipleasources of potential
revenue. Text, as well as Broadcasting & audio and video broadcasts that we
develop or distribute, will be Streamedia Networks accessible via the Internet,
primarily free to end users. Our goal is to Streamedia Broadcasting & capture
the maximum possible Internet audience. No special hardware or Streamedia
Networks software will be required to experience our basic content beyond that
of shapeType202fFlipH0fFlipV0lTxidthe28standard12mediafiplayers and browsers
routinely supplied by computer of Streamedia manufacturers. Communications'
Business Activities We will syndicate our broadcast content across a suite of
proprietary Profile of Streamedia multimedia networks, which will be aggregated
Internet broadcast Communications' Business mini-portals. Visitors to our
networks will experience live and on-demand Activities video and audio
programming in an environment similar to that of cable
broadcasters but offering a greater scope of
programming choices, enhanced interactive
elements, convenient access to retail
opportunities, and numerous sources of pertinent,
supplementary news and information. Our networks
will generate revenues through content
syndication, e-Commerce relationships,
advertising, and channel licensing fees.
Streamedia Broadcast will:
Create and own networks and channels and,
like network television, license other
channels to station affiliates, which will
integrate our content and advertising into
their own programming.
Multiply opportunities for Streamedia
Webcast Technologies(TM) to market broadcast
enabling services.
Create and market "rich" or multimedia
advertising as well as banner advertising
and sponsorships across its suite of
networks.
Syndicate its proprietary and licensed content to other websites and the
traditional broadcast industry. o Produce continuously streaming, seamless
"live" channels, which will include, in some situations, uniquely "anchored"
broadcasts.
Streamedia Webcast Technologies will provide or
arrange for media delivery and broadcast-enabling
solutions to the Streamedia Networks, their
channels, and other potential clients. It will
generate revenue by marketing Internet broadcast
services, equipment, tools, and talent.
Webcast Technologies will:
Market internet and intranet broadcasting
services and solutions to businesses,
associations, publishers, and traditional
broadcasters.
Downlink traditional broadcast signals via
leading satellite communications facilities
and encode the data for streaming via the
Web.
Syndicate proprietary programming via
leading fiber optic video switching hubs,
satellite uplink, and Web-powered networks.
Deliver multimedia and print content
through push and subscription systems.
Establish alert and notification systems for end users.
Provide specific information regarding site audiences to content
providers and advertisers.
Integrate 'e-Commerce' or merchandizing
programs into Streamedia Networks and
channels.
Build chatrooms, bulletin boards, personal
webcast stations and other interactive
elements into network and channel vehicles.
Streamedia Publishing will focus on the
development of StreamWire, which will aggregate
and deliver leading sources of news and
information appropriate to each of our Networks
and their sub-channels, and to non-affiliated
sites. It will also publish a series of
proprietary news, premium press release and
announcement wires, each of which will be
distributed across a variety of websites, through
various push, pull, and convergence mechanisms,
as well as archived for future retreaval.
Streamedia Publishing will:
Create marketable archives of print and
multimedia content appropriate to each
network.
Aggregate news and information resources at
each network site to enhance or broadcast
content.
Publish a series of focused, edited news
and information products under the
StreamWire News(TM) brand, such as wires
devoted to NASDAQ or Amex-listed companies,
or specific topic areas.
Launch a fee-based press release and
product announcement wire service,
StreamWire(TM).
Publish programming guides and network
schedules.
We have conceived StreamWire as a standalone
product, to supplement our broadcast content, and
to provide complementary promotional support for
our multimedia networks. We expect the Publishing
division to provide the Company with numerous
revenue sources, such as advertising,
sponsorships, design services, and fees for
information distribution. We expect the Broadcast
division to generate revenue through sales of
programming, produced in house, to other web
sites, as well as to traditional broadcast media,
such as radio and cable. We have conceived each
area of activity to augment the revenue potential
of the other areas.
shapeType202fFlipH0fFlipV0lTxid458752hspNext1207Streamedia
Publishing
Streamedia Publishing
shapeType202fFlipH0fFlipV0lTxidWe3believeeour2strategyswill vault our
networks into a leadership position Strategy in the rapidly developing internet
broadcast industry. We intend to:
Business Strategy
Exploit our proximity to sources of both
new and traditional forms of broadcast
content, major venues, and cultural centers.
"Think like a broadcaster," and recruit appropriate personnel from the
broadcast industry.
Build comprehensive, yet focused networks.
Uniquely syndicate our 'bundled' multimedia
networks and publications to other web
sites, multiplying our distribution outlets,
which will enhance corporate branding and
generate opportunities for greater
advertising revenues.
Enable print content generators and other
businesses without broadcast backbones to
participate in the emergence of a global
broadcast medium.
Syndicate web-originated content to
traditional media outlets, as well as
syndicate traditional media outlets via the
web.
Support the two leading media player
platforms from RealNetworks and Microsoft,
as well as emerging technologies and formats
such as MP3.
Become recognized as a 'one-stop' enabling
shop for media and information distribution.
Partner with recognized broadcast leaders
to carry their programs across the
Streamedia Networks.
Pursue strategic acquisitions to drive
revenue growth and product development, as
well as leverage cross-marketing
opportunities.
Capitalize on the retail e-commerce
opportunities unique to Internet
broadcasters.
Enhance our networks with a sense of
"community" by incorporating
state-of-the-art interactive components
lacking in traditional broadcast media.
Create the preeminent venue for rich
in-line media advertising by enabling
traditional broadcast advertisers to exploit
emerging online formats.
shapeType202fFlipH0fFlipV0lTxidOur6principal1executiveeoffices are located
at 9 East 45th Street, New Corporate Offices and York, NY, 10017. Our general
corporate contacts are at 212-883-0299, and Contacts info@streamedia.net. Our
Investor Relations contacts are 1-800-511-4216, Streamedia's Corporate or by
email to ir@streamedia.net. Offices and Contacts
The Offering
Units to be offered......................... 1,000,000 units, each unit consisting of one share of common
stock and one warrant, each warrant entitling the holder to
purchase one share of common stock at a price of $12.75 until
(May __, 2004).
Description of warrants..................... The warrants are not immediately exercisable and are not
transferable separate from the shares until (November ___,
2001). The warrants are redeemable by the Company at $0.05 per
Warrant under certain conditions. "
Common Stock to be outstanding
after the Offering........................ 4,025,000 shares (1)
Warrants to be outstanding after
the Offering................................ 1,000,000 (2)
Use of Proceeds............................. Strategic acquisitions, working capital and other general
corporate purposes. See "Use of Proceeds."
Risk Factors................................ The units offered are speculative and involve a high degree of
risk and should not be purchased by investors who cannot afford
the loss of their entire investment. See "Risk Factors."
Proposed NASDAQ Symbols
Units....................................... ""
Common stock................................ ""
Warrants.................................... ""
- -----------------
(1) Does not include:
Up to 1,000,000 shares issuable upon the exercise of the
warrants, and
Up to 150,000 shares to be issued upon exercise of the
underwriters' over-allotment option, and the
warrants thereunder, and
100,000 shares to be issued upon exercise of the underwriters'
warrants, and the warrants thereunder.
Does not include the 233,500 shares issued in the private
placement pursuant to rule 506 of Regulation D promulgated under
the securities act of 1933 as amended.
(2) Does not include:
Up to 150,000 warrants issuable upon the exercise of the
over-allotment option, and
100,000 warrants underlying the underwriters' warrants.
SELECTED FINANCIAL INFORMATION
The following selected financial data has been derived from and should
be read in conjunction with our financial statements and the related notes,
included elsewhere in this prospectus, as of and for the period frm April 29,
1998 (date of inception) to December 31, 1998 See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Period from April 29, 1998
(date of inception) to December 31, 1998
Operating Data:
Revenues $ -
Cost of Revenues $ -
Gross Profit $ -
Operating Expenses $ 296,760
----------
Net loss $(296,760)
Basic and diluted loss per common share $ (0.10)
December 31, 1998
Balance Sheet Data:
Working capital (deficit) $ (137,460)
Current assets $ 1,225
Total assets $ 77,425
Current liabilities $ 138,685
Total liabilities $ 138,685
Stockholders' equity (deficit) $ (61,260)
Common shares outstanding 3,025,000
- ------------
RISK FACTORS
Investing in our securities involves a high degree of risk. Prospective
investors should consider the following factors in addition to other information
set forth in the prospectus before purchasing the units. You should note that
this prospectus contains certain "forward-looking statements," including without
limitation, statements containing the words "believes," "anticipates,"
"expects," "intends," "plans," "should," "seeks to," and similar words. You are
cautioned that such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties. Actual results may differ
materially from those in the forward-looking statements as a result of various
factors, including but not limited to, the risk factors set forth in this
prospectus. The accompanying information contained in this prospectus identifies
important factors that could cause such differences.
Streamedia was formed on April 29,
1998, and is in development stage.
Streamedia was formed on April 29, 1998, and is in development stage.
Streamedia is currently in development stage. To date, we have not generated any
revenues. We anticipate that our upcoming launches of websites currently in the
development stage will transition Streamedia to operating status. However, you
should consider Streamedia and our prospects in light of the risks, difficulties
and uncertainties frequently encountered by companies in an early stage of
development. To achieve and sustain profitability, we believe that Streamedia
must, among other things:
Provide compelling and unique
content and technologies to Internet
users.
Successfully market and sell our
business services
Effectively develop new
relationships, and maintain existing
relationships, with advertisers,
content providers, business
customers and advertising agencies.
Continue to develop and upgrade our
technology and network
infrastructure and respond to our
competitors.
Successfully improve our existing
products and services to address new
technologies and standards.
Attract, retain and motivate
qualified personnel.
xt0lineWidth38100lineStyle1fLine1We
can not accurately predict future revenues due to the lack of past revenues. We
can not accurately predict future revenues due to the lack of past revenues.
Because of Streamedia's limited operating history and the emerging nature of the
markets in which we compete, we are unable to forecast our revenues with
certainty and precision. Streamedia's operating results are also dependent on
factors outside of the control of Streamedia, such as the availability of
compelling content and the development of broadband networks that support
multimedia streaming. There can be no assurance that we will succeed in
addressing these risks, and failure to do so could have a material adverse
effect on Streamedia's business, results of operations and financial condition.
The market for Streamedia's business services and the long-term acceptance of
Web-based advertising are uncertain. We currently intend to increase our
operating expenses in order to:
Expand our distribution network
capacity Increase sales and
marketing activities Acquire
additional content Develop and
upgrade technology and
proprietary content Purchase
equipment for its operations
Complete potential acquisitions
While we believe that these activities will
increase our opportunity for profitability,
there can be no assurance that Streamedia
will be profitable.
loss of our President or other key personnel could adversely affect our business
and decrease the value of your investment.
The loss of our President or other key personnel could adversely affect our
business and decrease the value of your investment.
Streamedia depends on the efforts of certain members of senior management,
particularly James Rupp (President and Chief Executive Officer), Gayle Essary
(Vice President of Strategic Development), and Nicholas Malino (Chief Financial
Officer). The loss of one or more of these individuals could adversely affect
Streamedia's business operations or prospects. These individuals have entered
into employment agreements, but Streamedia cannot guarantee that any of these
individuals will continue to serve in his current capacity or for what time
period this service might continue.
ToText0lineWidth38100lineStyle1The
intense competition in our markets may lead to reduced revenue and increased
losses. The intense competition in our markets may lead to reduced revenue and
increased losses.
Although we believe our approaches to establishing Streamedia as an emerging
leader in its fields reduces the threat of competition, the market for internet
broadcasting and news distribution services is highly competitive.
Streamedia expects that competition will continue to increase. We compete with:
o Other Web sites, Internet portals, dialup
software applications and Internet
broadcasters to acquire and provide
content and act as a gateway to attract
users.
o Videoconferencing companies, audio
conferencing companies and Internet
business services broadcasters.
o Online services, other Web site operators
and advertising networks, as well as
traditional media such as television,
radio and print, for a share of
advertisers' total advertising budgets.
o Other news aggregators and content generators.
o Other press release distributors.
There can be no assurance that Streamedia
will be able to compete successfully or that
the competitive pressures will not have a
material adverse effect on Streamedia's
business, results of operations and
financial condition. Competition among Web
sites that provide compelling content,
including streaming media content, is
intense, and we expect competition to
increase significantly in the future.
Traditional media may expend resources to
establish a more significant Internet
presence in the future. These companies have
significantly greater brand recognition and
financial, technical, marketing and other
resources than Streamedia. We also compete
with other content providers for the time
and attention of users and for advertising
revenues.
Our
success depends on the acceptance of the Internet as an advertising medium.
Our success depends on the acceptance of the Internet as an advertising medium.
The market for Internet advertising has only recently begun to develop. This
market is rapidly evolving and is characterized by an increasing number of
market entrants. As is typical in the case of a new and rapidly evolving
industry, demand and market acceptance new products and services are uncertain.
Streamedia's ability to generate advertising revenue will depend on, among other
factors:
The development of the Internet as an
advertising medium.
Pricing of advertising on other Web
sites.
The amount of traffic on Streamedia's
Web sites.
Streamedia's ability to achieve and
demonstrate user and member demographic
characteristics that are attractive to
advertisers.
Establishing and maintaining desirable
advertising sales agency relationships.
Streamedia's business, results of
operations and financial condition could
be materially adversely affected if
widespread commercial use of the
Internet does not develop, or if the
Internet does not develop as an
effective and measurable medium for
advertising, See "Business."
hapeToText0lineWidth38100lineStyle1Our
success depends on continued use and expansion of the Internet.
Our success depends on continued use and expansion of the Internet.
Rapid growth in use of and interest in the Internet is a recent phenomenon.
There can be no assurance that acceptance and use of the Internet will continue
to develop or that a sufficient base of users will emerge to support
Streamedia's business. Future revenues of Streamedia will depend largely on the
widespread acceptance and use of the Internet as a source of multimedia
information and entertainment and as a vehicle for commerce in goods and
services. Streamedia's business, results of operations and financial condition
could be materially adversely affected if:
use of the Internet does not continue to grow or grows more slowly than
expected, the Internet infrastructure does not effectively support the growth
that may occur, or the evolution of broadband connectivity is slower or less
widespread than anticipated.
8fFitShapeToText0lineWidth38100lineStyle1We
may not be able to develop acceptable new products at the rate required by our
rapidly changing market. We may not be able to develop acceptable new products
at the rate required by our rapidly changing market. The market for Internet
broadcast services experiences rapid technological developments, frequent new
product introductions and evolving industry standards. Therefore, Streamedia
must:
effectively use leading technologies,
continue to develop technological expertise, and
enhance our current services and
continue to improve the performance,
features and reliability of our network
infrastructure.
Also, the widespread adoption of new
Internet technologies or standards could
require substantial expenditures by
Streamedia to modify our Web sites and
services. A failure by the Streamedia to
rapidly respond to technological
developments could have a material adverse
effect on Streamedia's business, results of
operations and financial condition.
peToText0lineWidth38100lineStyle1Evolving
regulation of the Internet may affect us adversely.
Evolving regulation of the Internet may affect us adversely.
Although there are currently few laws and regulations directly applicable to the
Internet, new laws and regulations will likely be adopted in the United States
and elsewhere. These laws and regulations could cover issues such as broadcast
license fees, copyrights, privacy, pricing, sales taxes and characteristics and
quality of Internet services. The adoption of restrictive laws or regulations
could slow Internet growth or expose Streamedia to significant liabilities
associated with content available on our Web sites. The application of existing
laws and regulations governing Internet issues such as property ownership, libel
and personal privacy is also subject to substantial uncertainty. There can be no
assurance that current or new government laws and regulations, or the
application of existing laws and regulations will not expose Streamedia to
significant liabilities, significantly slow Internet growth or otherwise cause a
material adverse effect on Streamedia's business, results of operations or
financial condition.
shapeType202fFlipH0fFlipV0lTxid216268
e1You
will incur immediate and substantial dilution by purchasing securities in this
offering. You will incur immediate and substantial dilution by purchasing
securities in this offering. Our current shareholders acquired their shares at a
cost per share substantially below the price in this offering. After the
offering, the current shareholders will experience a substantial increase in the
value of their holdings. Also, the public offering price of the units will be
substantially higher than the current book value per share. Therefore, you will
incur an immediate and substantial dilution of your investment as it relates to
the book value of the shares after completion of this offering. See "Dilution."
shapeType202fFlipH0fFlipV0lTxid104
0lineStyle1Principal
shareholders will own 63.9% of the shares outstanding, and you will have minimal
influence on shareholder decisions.
Principal shareholders will own 63.9% of the shares outstanding, and you will
have minimal influence on shareholder decisions.
Our officers and directors will own approximately 63.9% of the outstanding
shares after this offering. These shareholders will be able to control the vote
on election of directors and to substantially impact the vote on other matters
submitted to shareholders. If these shareholders act together they will be able
to substantially impact any vote of the stockholders and exert considerable
influence over our affairs. You and the other investors will have minimal
influence on shareholder actions. See "Principal Shareholders."
168fFitShapeToText0lineWidth38100lineStyle1You
may not have the benefit of an active trading market for your shares. You may
not have the benefit of an active trading market for your shares.
Prior to this offering, there was no public market for the units or the common
stock. Streamedia intends to apply for listing of the units, shares, and
warrants on The Nasdaq SmallCap Market. We cannot assure you that our listing
application will be approved. Even if such listing is approved, there may not be
a meaningful, sustained market for the units. Streamedia cannot assure that an
active trading market for the units will develop or continue. Therefore, you may
be unable to sell your units at a favorable price.
peToText0lineWidth38100lineStyle1The
offering price for the units is not based on the value of Streamedia.
The offering price for the units is not based on the value of Streamedia.
The offering price for the units was determined by negotiation between
Streamedia and the underwriters. You should not assume that the offering price
bears any relationship to asset value, net worth or other generally accepted
measure of value. Recent history relating to the market prices of newly public
companies indicates that the market price of the units following this offering
may be highly volatile. See "Plan of Distribution."
shapeType202fFlip
xtToShape0fFilled1fHitTestFill1fill
lineFillShape1fShadow0fshadowObscured0f3D0fc3
nstrainRotation1fc3DRotationCen
MinusX0fCalloutMinusY0fCalloutDropAuto0fCalloutLengthSpecified0We
do not anticipate paying dividends.
We do not anticipate paying dividends.
Streamedia has never paid cash dividends on the common stock, and we do not
anticipate that we will pay cash dividends in the near future. The payment of
dividends will depend on earnings, financial condition and other factors the
Board of Directors may consider relevant. We currently plan to retain any
earnings to provide for development and growth of Streamedia. See "Dividend
Policy."
spNext1180fFitShapeToText0lineWidth38100lineStyle1Future
non-public sales of our securities may be on terms more favorable than the terms
of this offering.
Future non-public sales of our securities may be on terms more favorable than
the terms of this offering.
In order to raise additional working capital, Streamedia could make a limited
number of offers and sales of its common stock or other securities to investors
in transactions exempt from registration under the securities laws. These
purchasers may acquire our securities on terms more favorable than offered to
you. The price may not relate to any accepted measure of value, including the
prevailing market price. Streamedia may make sales of its securities at a lower
price than that of the units.
of shares by the current shareholders may adversely affect the market price.
Sales of shares by the current shareholders may adversely affect the market
price.
After this offering, our current shareholders will own 75.2% of the total
shares. If these shareholders sell a significant amount of shares by in the
public market after this offering, the market price of the shares could decrease
substantially. The current shareholders have agreed with the underwriters that
they will not sell or otherwise dispose of their shares for a period of one year
after the date of this prospectus without the prior written consent of the
underwriters.
Style1The
market prices for our securities, like those of other technology issues, may be
volatile
The market prices for our securities, like those of other technology issues,
may
be volatile
The value of your investment in Streamedia could decline from the impact of any
of the following factors:
changes in market valuations
of Internet companies,
variations in our actual and
anticipated operating results,
changes in our earnings
estimates by analysts, our
failure to meet analysts'
performance expectations, and
lack of liquidity.
The stock markets have, in general, and with
respect to Internet companies in particular,
recently experienced stock price and volume
volatility that has affected companies'
stock prices. The stock markets may continue
to experience volatility that may adversely
affect the market price of our securities.
Stock prices for many companies in the
technology and emerging growth sector have
experienced wide fluctuations that have
often been unrelated to the operating
performance of those companies. Fluctuations
such as these may affect the market prices
of our securities.
spNext1171fFitShapeToText0lineWidth38100lineStyle1The
warrants to be issued to the underwriters may adversely affect Streamedia
in the future.
The warrants to be issued to the underwriters may adversely affect Streamedia in
the future.
The holders of the underwriters' warrants will have four years starting one year
from the effective date of this offering to profit from a rise in the market
price of the units. The exercise of the underwriters' warrants will cause
dilution in the interests of the other shareholders. Further, the terms on which
Streamedia might obtain additional financing during that period may be adversely
affected by the existence of the underwriters' warrants. The holders of the
underwriters' warrants may exercise their warrants at a time when Streamedia
might be able to obtain additional capital through a new offering of shares on
terms more favorable than those in this offering. Streamedia has agreed that,
under certain circumstances, we will register under the securities laws the
shares to be issued upon exercise of the underwriters' warrants. Exercise of
these registration rights could involve expense at a time when we could not
afford the expenditures and may adversely affect the terms upon which we may
obtain financing. See "Plan of Distribution."
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underwriters will have a dominating influence on the market.
The underwriters will have a dominating influence on the market.
A significant amount of the units offered may be sold to customers of the
underwriters. Subsequently, these customers may purchase or sell these units
through or with the underwriters. If they participate in the market, the
underwriters may exert a dominating influence on the market, if one develops,
for the units. The price and the liquidity of the units may be significantly
affected by the degree of the underwriters' participation in the market. See
"Plan of Distribution."
0hspNext1208fFitShapeToText0lineWidth38100lineStyle1Our
accountantants have determined that there are doubts about our ability to
continue as a going concern..
Our accountantants have determined that there are doubts about our ability to
continue as a going concern..
As a result of Streamedia's current financial condition, our independent
certified public accountants have modified their report on our financial
statementsas of end for the period from April 29, 1998 (date of inception) to
December 31, 1998. Our independent certified public accountants' report on the
financial statements includes an ex[planitory paragraph stating that
Streamedia's existinse is dependent upon their abbility to obtain additional
capital, amoung other things, raises substantial doubt about
our ability to continue as going concern.
shapeType202fFlipH0fFlipV
ext0lineWidth38100lineStyle1You
should not rely on our forward looking statements.
You should not rely on our forward looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties. When used in this prospectus, the words "believes," "intends,"
"plans," "anticipates," "expects," and similar expressions are intended to
identify forward-looking statements. Forward-looking statements are subject to a
number of risks and uncertainties. Actual results could differ materially from
those described in the forward-looking statements as a result of the risk
factors set forth in this section and the information provided in this
prospectus generally. We do not intend to update any forward-looking statements.
USE OF PROCEEDS
We expect to receive approximately $7,225,000 from the proceeds of this
offering, or $8,372,500 if the over-allotment option is exercised in full. This
assumes an initial public offering price of $8.50 per unit after deducting the
underwriters' discount and $425,000 of expenses relating to the offering. The
anticipated use the net proceeds is as follows:
Amount %
-------------------- ------------
Working Capital $ 2,475,000 35%
Strategic Acquisitions (1) 2,000,000 28%
Content License & Acquisition 1,250,000 17%
Sales, Marketing, and Promotion 750,000 10%
Capital Equipment and Infrastructure 750,000 10%
==================== ============
$ 7,225,000 100.0%
==================== ============
---------
(1) We have no present plans or commitments and are not currently engaged
in any negotiations with respect to strategic acquisitions. However, we
may, when and if the opportunity arises, use an unspecified portion of
the net proceeds to acquire of invest in complementary businesses,
products and technologies.
DIVIDEND POLICY
We have never paid cash or other dividends on the common stock and we do not
anticipate that we will pay cash dividends in the foreseeable future. The Board
of Directors plans to retain future earnings for the development and expansion
of business. Any future determination as to the payment of dividends will be at
the discretion of the Board of Directors and will depend on a number of factors,
including future earnings, capital requirements, financial condition, and any
other factors that the Board of Directors may deem relevant.
DILUTION
As of December 31, 1998, Streamedia's net tangible book value was a negative
$(61,260) or $(0.02) per share based on 3,025,000 shares outstanding. The net
tangible book value is the aggregate amount of its tangible assets less its
total liabilities. The net tangible book value per share represents the total
tangible assets, less total liabilities, divided by the number of shares
outstanding. After giving effect to (i) the sale of 1,000,000 units at an
assumed offering price of $8.50 per unit, and (ii) the application of the
estimated net proceeds, the pro forma net tangible book value would increase to
$7,163,740 or $1.78 per share. This represents an immediate increase in net
tangible book value of $1.80 per share to current shareholders and an immediate
dilution of $6.72 per share to new investors or 79.1% as illustrated in the
following table:
Public offering price per Share $8.50
Net tangible book value per Share before this offering $(0.02)
Increase per share attributable to new investors
$1.80
-------------
Adjusted net tangible book value per share after this $1.78
offering
---------------
Dilution per share to new investors $6.72
---------------
Percentage dilution 79.1%
The following table sets forth as of December 31, 1998, (i) the number of shares
of common stock purchased by the current shareholders, the total consideration
paid, and the average price per share paid by the current shareholders, and
(ii) the number of shares of common stock included in the units to be purchased
in this offering and total consideration to be paid by new investors, before
deducting underwriting discounts and other estimated expenses at an assumed
offering price of $8.50 per unit.
Shares Purchased Total Consideration Average Price
-------------------------------- ---------------------------------- -----------------
--------------- ----- ---------- -- -------------------- ---------- -----------------
Number Percent Amount Percent Per Share
--------------- -- ----------
--------------- ---------- ---------------- ---------- ----------- ----
Current Shareholders 3,025,000 75.2% $ 5,500 0.0% $0.00
(1) (1)
New investors 1,000,000 24.8% 8,500,000 100.0% $8.50
-----
(2)
--------------- ---------- ---------------- ----------
=============== ========== ================ ==========
Total 4,025,000 100.0% $8,505,500 100.0%
(3) (2)
=============== ========== ================ ==========
--------
(1) Does not reflect 233,500 shares of common stock that we issued in a private
placement subsequent to December 31, 1998.
(2) Upon exercise of the over-allotment option, the number of shares held by new
investors would increase to 1,150,000 or 27.5% of the total number of shares
to be outstanding after the offering and the total consideration paid by new
investors will increase to $9,775,000.
(3) Does not include (i) up to 1,000,000 shares issuable upon the exercise of
the warrants, (ii) up to 150,000 shares to be issued upon exercise of the
underwriters' over-allotment option, and the warrants thereunder, and (iii)
100,000 shares to be issued upon exercise of the underwriters' warrants,
and the warrants thereunder. To the extent that the over allotment option
and warrants are exercised, there will be further share dilution to new
investors.
(1)
CAPITALIZATION
The following table sets forth Streamedia's capitalization (i) as of December
31, 1998 and (ii) on a pro forma as adjusted basis to give effect to the sale of
1,000,000 units and the application of the estimated net proceeds. See "Use of
Proceeds."
December 31, 1998
--------------------------------------------
------------------ ---- --------------------
(Actual) (As Adjusted)
------------------ --------------------
------------------ --------------------
Liabilities:
Total Liabilities $138,685 $138,685
------------------ --------------------
Stockholders' equity (deficit)
Preferred Stock, $.001 par value, 100,000 shares authorized; - -
no shares issued actual or adjusted
common stock, $.001 par value 3,025 4,025
20,000,000 shares authorized, 3,025,000 shares issued and outstanding, actual
4,025,000 as adjusted (1)
Additional paid in capital $ 232,475 7,456,475
Deficit accumulated during developmental stage $(296,760) $(296,760)
------------------ --------------------
------------------ --------------------
Total stockholders' equity (deficit) $ (61,260) $7,163,740
------------------ --------------------
------------------ --------------------
Total capitalization $ 77,425 $7,302,425
------------------ --------------------
- -----------
(1) Does not include:
Up to 1,000,000 shares issuable upon the exercise of the
warrants, and
Up to 150,000 shares to be issued upon exercise of the
underwriters' over-allotment
option, and the warrants thereunder, and
100,000 shares to be issued upon exercise of the underwriters'
warrants, and the warrants thereunder.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read Streamedia's Financial Statements, related notes and other
financial information included in this prospectus in conjunction with this
discussion of our operations. The following discussion contains
forward-looking statements. Streamedia's actual results may differ
significantly from those projected in the forward-looking statements.
Factors that might cause future results to differ materially from those
projected in the forward looking statements include, but are not limited
to, those discussed in "Risk Factors" and elsewhere in this prospectus.
OVERVIEW
Streamedia will aggregate and broadcast streaming media programming via the
World Wide Web . By combining in-house and outsourced capacities, we expect
to deliver high volumes of simultaneous live and on-demand audio and video
programs. OurWeb sites, in particular the Streamedia Networks(TM) and our
proprietary channels,have been conceived to offer an expansive selection of
multimedia programming, including, but not limited to, such broad
categories as news, music, history, talk, sports, women's issues, business
activities, movies, education, television, and children's interests. We
will deliver our programming via software applications which already
account for over 100 million desktop installations, thus minimizing a
user's need to download any further software. Initial offerings will be
provided free to all audiences, although we are is considering pay-per-view
and subscription based services for some classes of content at a future
date.
We believe ourapproach to streaming media delivery is differentiated by our
focus on bundled delivery of multimedia and text, and a plan for suite of
focused, searchable, aggregated broadcast content sites. Ourplans will
provide our audience with a convenient way to select a diverse range of
broadcasts and supplementary information from an integrated network of
mini-portals.
Our revenues will primarily stem from sited, rich media, and traditional
media advertising sales, webcast services sales, and fees for content
distribution. We also anticipate thatwe willgenerate additional revenue
streams through ad-free program charges and charges for premium content,
multiple e-commerceinitiatives, as well as licensing and Intranet sales.
There is no assurance that the wewill in fact generate revenues from all or
any of these potential sources at any time in the future.
Our revenues will be directly related to a number of factors, including the
volume of advertisers, the rates charged for the various types of
advertising, the extent of the traffic to ourWeb sites, and the costs of
bandwidth and other services required to deliver content, and number of
clients we can attract for business services offered by our WebCast
Technologies division. We believe that by increasing the number and
frequency of visitors to our sites, and to those sites via which we
distribute content, we will experience greater revenue growth across all
our product and service offerings. For this reason, we expect to devote a
significant portion of the net proceeds of this offering to marketing and
promotional efforts as well as to acquire and licensing Internet broadcast
rights to a wide range of appealing, unique, high-quality broadcast
content.
We intend to use the net proceeds of This
offering to, among other activities, develop
our broadcast technology backbone; launch,
over time, more than 100 web sites at the
nearly 200 registered URLs we currently own,
and aggregate them into focused broadcast
Network 'mini-portals'; initiate a broadcast
enabling, or 'StreamStation(TM)" affiliate
program, to whose members we will syndicate
both proprietary and licensed programming
from numerous sources. We believesuch
syndication could provide uswith a
substantial number of further distribution
outlets, which may generate increased
advertising revenues for content we produce
or distribute We expect expenditures to rise
significantly across all expense categories
as we attempt toincrease our advertising
inventory; expand our streaming content
catalog; develop and launch The Streamedia
Networks(TM) sites and numerous 'channel'
sites, as well as our news and information
site and service, StreamWire(TM); and create
proprietary event production and digital
processing facilities.
Plan of Operations
Text0lineWidth38100lineStyle1
Plan of Operations
Re
eWidth38100lineStyle1
Recent Developments
Weare in the early stages of our transition to an operating Company. We have
been developing our network and channel structure; identifying staffing
requirements and interviewing prospective employees in sales, marketing,
traditional broadcasting, editorial, design, and technology; devising a media
strategy and evaluating media relations firms; reviewing potential acquisitions
in such areas as multimedia production, web hosting services, and original
content generation; establishing relationships for studios, bandwidth and
broadcast content, as well as information, news and data feeds. We have leased
office space at 9 E. 45th Street in midtown Manhattan, in a building linked by
fiber optic cable at zero mileage to the largest broadcast signal switching hub
in Manhattan. This hub serves all of the major cable and television networks in
the New York area as well as key industry companies. To accommodate our planned
expansion, we havenegotiated for additional midtown Manhattan facilities. We are
contracting to lay additional fiber to the new facilities. Each location will
then have low-mileage, diverse digital fiber connectivity to multiple broadcast
switching hubs and major metropolitan New York broadcast teleports, connections
we believe will present us with unique broadcast marketing opportunities. To
assist us as we position to become a leader in the streaming content delivery
industry, and syndication via the internet as well as traditional broadcast
outlets, we recruited and elected two key players in the advancement of the
cable industry to our Board of Directors. We believe that this will give us an
advantage over our competitors in the acquisition of quality content.
RESULTS OF OPERATIONS
The inception date of Streamedia was April 29, 1998, and as such there are no
prior operations. During the period from April 29, 1998 to December 31, 1998, we
were engaged in organizational activities, developing the conceptual framework
of the enterprise, and establishing networking and partnering relationship that
needed to be developed prior to the commencement of operations..
Operating Data: 12/31/98
===================================================== =====================================
Revenues $ 0
Cost of revenues $ 0
Gross profit $ 0
Operating expenses $ 296,760
Net loss $ (296,760)
Basic and diluted Net loss per common share $ (0.10)
Weighted average common shares outstanding 2,922,409
We are a development stage enterprise engaged in providing internet-based media
programming and content on the Web. During the period from April 29, 1998 (date
of inception) to December 31, 1998, we were engaged in organizational and
pre-operating activities. These activities included:
research and development efforts
initial planning and development of our Web sites and operations
refinement of our broadcast strategy
building market awareness
planning our network infrastructure
developing a network of partners to help carry out our income-producing
activities
securing funding to finance these activities.
Streamedia was originally organized as a limited liability company on December
21, 1998, the limited liability company was merged into the Streamedia corporate
entity, with the corporate entity continuing as the surviving entity.
Liquidity and Capital Resources
We have financed capital requirements through the issuance of common stock in a
private placement. As of March 31, 1999 wesold 233,500 shares of common stock,
pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as
amended, and raised $467,000 from this private placement. The proceeds of the
private placement have and will be used for cost of this offering, purchase of
capital assets such as equipment and domain names. We believe that the net
proceeds of this offering will be sufficient to fund our operations for at least
the next 12 months. We do notcurrently believe that, during this period, it will
be necessary to raise additional funds to execute our basic plans for
operations. There can be no assurance, however, that we will not determine that
additional financing would be advantageous to further develop and execute our
plans for operation or acquisitions, or that such future additional financing
will be available on terms attractive to us. The proceeds of this offering,
together with the remaining proceeds of our private placement, are the only
sources of capital currently available to us. We anticipate that we will make
significant ongoing investments in research and development for future
generation products and services. We also expect tomake significant expenditures
in sales, marketing, and content acquisition in order to attract customers to
our numerous planned Web sites. There is no assurance that ours analysis of our
capital requirements will be accurate: we arepositioning in a new business in
the midst of a rapidly evolving, yet burgeoning, market, the potential
attractiveness of which will, in our opnion, attract intense competition. Our
future expenditures and capital requirements will depend on a number of factors
including the development and implementation of next-generation technologies,
technological developments on the Internet, potential acquisitions, and the
regulatory and competitive environment for Internet based products and services.
As the Year 2000 approaches, industry
experts expect issues to arise related to
the programming code in legacy computer
systems. The "Year 2000 problem" is regarded
by many as an omnipresent problem, as most
if not all computer operations will be
impacted to some extent by the rollover of
the two digit year value to 00. Systems that
do not properly recognize such information
could generate erroneous data or cause a
system to fail. We have evaluated our
current systems, and believes that our
current hardware and software is Year 2000
compliant. Since we have only purchased
hardware and software dating from 1998
forward, and the overwhelming majority of
our software and capital expenditures will
occur from 1999 forward, and involve
newly-manufactured equipment, which is
routinely designated as Year 2000 compliant,
and intend to outsource projects only to
high-quality, third party media delivery
systems which attest that they are Year 2000
compliant, we do not anticipate that the
Year 2000 problem will have a material
impact on our business or operations.
However, any Year 2000 compliance problem of
either we, our users, suppliers, customers
or advertisers could have a material adverse
effect on our business, results of
operations, and financial condition.
Year 200 dth38100lineStyle1
Year 2000 Compliance
BUSINESS
We are positioning ourselves as a multimedia content generator, enabler, and
aggregator. We will divide our business activity among four
vertically-integrated divisions: Streamedia Broadcast, Streamedia Networks,
Streamedia Webcast Technologies, and Streamedia Publishing. We intend to develop
each center of activity around multiple sources of potential revenue. Text, as
well as audio and video broadcasts which we develop or distribute, will be
globally accessible via the Internet, primarily free at all times to end users
with the goal of capturing the maximum possible Internet audience. Users will
require neither special hardware nor software to experience basic Streamedia
content beyond that of standard media players and browsers routinely supplied by
computer manufacturers.
We will focus on establishing Streamedia as a broadcaster. Our content will be
syndicated across a suite of proprietary multimedia networks (the "Streamedia
Networks"). Visitors to the Streamedia Networks will experience live and
on-demand video and audio programming in an environment similar to that of cable
broadcasts, but offering greater scope of programming choices, enhanced
interactive elements, convenient access to retail opportunities, and numerous
sources of pertinent, supplementary news and information. Much like cable and
network television, we will aggregate and distribute content in various
categories, including finance, lifestyles, entertainment, comedy, movies,
history, music, education, shopping, sports, news, and children's programming.
We believe that by co-venturing with a wide variety of content partners,
including recognized industry leaders, the overall quality and quantity of
streaming content may eventually surpass what any single Internet broadcaster,
and even traditional broadcasters, could possibly offer. Our networks will
generate revenues through content syndication, e-Commerce relationships,
advertising, and channel licensing fees.
Streamedia Webcast Technologies will provide or arrange for media delivery and
broadcast-enabling solutions to the Streamedia Networks, their channels, and
other potential clients. It will generate revenue by marketing Internet
broadcast services, equipment, tools, and talent. Streamedia Publishing will
focus on the development of StreamWire(TM), which will aggregate and deliver
leading sources of news and information appropriate to each Streamedia Network
and sub-channel, and will also supply third-party sites. It will also publish a
series of news and premium press release wires, each of which will be
distributed to websites, through various push, subscription, and convergence
mechanisms. StreamWire will also develop a searchable database. We conceived
StreamWire to work as a standalone product, to supplement our broadcast content,
and provide complementary promotional support for the Company's multimedia
networks. We expect the Publishing Division to provide us with numerous revenue
sources, such as advertising, sponsorships, design services, and fees for
information distribution. We expect the Broadcast Division to generate revenue
through sales of programming, produced in house, to other web sites, as well as
to traditional broadcast media, such as radio and cable. We have conceived each
area of activity to augment the revenue potential of the other areas.
The StreamWire(TM) series of sited and streaming text has been conceived to
aggregate leading sources of high-quality information and entertainment. Each
StreamWire will focus on a specific topic category. StreamWire will also publish
a series of proprietary newswires, premium press release distribution wires,
alert services and product announcement wires, each of which will be distributed
throughout the Streamedia "family" of web sites and syndicate stations.
Industry Background
The rise in the raw number of households and users online has been dramatic, and
the trend is expected to continue. The Computer Industry Almanac reports that by
the year 2000, 327 million people will have Internet access. Surveys conducted
by Arbitron and Edison Media Research show that audiences listening to radio
broadcasts via the Internet doubled during a recent 6-month period. Rapid and
dramatic improvements continue to be made on the hardware, software, and
infrastructure required to support and transmit streaming media. Industry
experts believe that technological advances projected for the future of the
Internet, such as widespread multicast capacity and markedly faster connect
rates, will improve the quality of streaming broadcasts.
The media players for the Internet that have been developed by Microsoft and
RealNetworks allow for enjoyable experience of streaming video at connect speeds
as low as 28.8; users, however, are connecting at significantly faster speeds on
an increasingly frequent basis, and enjoying correspondingly higher quality
broadcast reception. The latest versions of the software can take advantage of
higher speed access that is expected to be provided by xDSL, cable modems and
other emerging broadband and multicast technologies. These players have combined
installed bases estimated to be approaching 100 million users.We have chosen to
support both technologies in order to capture the widest possible audience,
since the greater our audience, the more attractive the Streamedia Networks will
be to potential content partners, advertisers, distribution clients, business
services clients, and station licensees, all of which will promote revenue
generating business for all four primary Corporate divisions.
Traditional broadcasters have limited capacity to measure or identify in real
time their listeners or viewers. Internet broadcasters, however, can provide
highly specific information about a program's audience to content providers and
advertisers. Internet broadcasters have an ability to precisely target
advertising that television and cable broadcasters do not. The Internet has
become increasingly accepted as a business tool. This has created economic
opportunities in Web-based advertising and business service offerings, including
audio conferencing, e-commerce, and video transmission.
We recognize that streaming media on the World Wide Web provides business
opportunities that traditional broadcast media does not. Television, radio, and
cable broadcasters have relative, if not severe, geographic restrictions of
their reach. The Internet, by contrast, is a both a local and global medium. It
can penetrate the workplace on a more consistent basis than television or
radios, as the use of radios and televisions is often discouraged or disallowed
at work. Targeted streaming media content can be economically broadcast to a
geographically dispersed audience. Internet users can interact with the
broadcast content by responding to online surveys and voting in polls. They can
easily obtain additional information on subjects related to the programming, and
even click through directly to retailers to purchase merchandise. Among the more
striking advantages of Internet versus traditional broadcasting is the power to
shift the schedule of the programming, to experience favorite choices "on
demand," and replay segments or whole programs at will.
The Market
While current industry leaders such as Broadcast.com have been very successful
in attracting large audiences, we believe that current leaders in the industry
have barely scratched the surface of content capable of appealing to niche and
mass audiences alike. Broadcast.com already attracts over 1 million unique users
per day, proving that despite lower levels of quality than traditional broadcast
mediums, Internet broadcasters can attract large audiences. Although the number
of radio webcasters on the Internet continues to rise, recent figures published
by the National Association of Broadcasters show that only 2200 of the 12,512
stations broadcast via the Internet. Broadcast.com hosts less than one-sixth of
these stations. The Radio Advertising Bureau (RAB) reports that in 1997, radio's
revenue grew to a record $13.6 billion. There were 1587 television stations
licensed as of March 31, 1999. The Television Advertising Bureau (TVB) reported
TV revenue at $44.5 billion in 1997. Only a handful of television stations have
committed to Internet broadcasts of their content. Current trends and statistics
indicate audience interest in Web-based programming is growing in such areas as
movies, club shows, tradeshows, concerts, documentaries, education, cartoons,
independent films, reruns, true crime, interactive instructional programming,
literature, auctions, awards shows, fashion shows, political events, health
concerns, scientific advancements, local programming, travel programming, and
hobby videos. However, current industry leaders have made only small inroads to
the development of a catalog of readily available program material. The market,
therefore, remains almost completely open at this time, even as the overall
medium of the Internet persists in a rapid escalation in terms of users.
Streamedia's Strategy
We believe that our strategy can vault our networks into a leadership position
in the rapidly developing Internet broadcast industry. We will address what we
see as deficiencies in current Internet offerings and have devised our products
accordingly. We believe that we can aggregate content; generate comprehensive,
yet focused networks; integrate each network so that all other topical networks
are accessible from any given network; and syndicate the content of the
networks, via licensing agreements, to other sites interested in offering their
users multimedia programming. As a result, we will be able to multiply
exponentially the number of 'entry' paths to any given network or channel. We
project that traffic will increase accordingly, and not be tied to visits to any
single proprietary site. We have secured approximately 200 subject-oriented
Internet domains for use by our network and channel partners, and intend to
build out well over 100 Company-owned sites.
Our strategy is to become as pervasive as possible by permitting our content to
be broadcast from multiple locations, both company-owned and, like Network
Television broadcasters, from affiliated 'stations.' We expect the tactic to
multiply our distribution outlets. At the same time, this will enhance corporate
branding, and generate opportunities for greater advertising revenues. We will
pursue the syndication of web-propagated content to traditional media outlets,
in addition to syndicating traditional media outlets via the web.
We hope to directly benefit from our ability to secure traditional,
broadcast-quality studios in Midtown Manhattan, which facilitate, in some cases,
fiber optic and satellite transmissions of live broadcasts via the largest
video-switching hub on the East Coast. Our facilities are directly connected to
adjacent professional television 'live shot' broadcast studios and the
video-switching hub, as well as leading metropolitan area teleports. Content
generators who partner with us will obtain a new distribution outlet within a
unique, leading-edge multimedia venue. We will enable print content generators
and other businesses without broadcast backbones to participate in the rise to
prominence of a new medium. Studies by The Yankee Group suggest that Internet
broadcasts are already drawing viewers away from cable and broadcast networks.
Between the Streamedia Networks, Streamedia Broadcast, Streamedia Webcast
Technologies, and Streamedia Publishing, featuring StreamWire, we believe that
we can earn a reputation as a 'one-stop' enabling shop for media and information
distribution. We intend to develop our own quality programming in numerous
subject areas, as well as partner with recognized industry leaders to
co-develop, feature, or carry their content across and throughout the Streamedia
Networks and authorized remote StreamStations(TM) --licensed programming
distribution outlets. In addition, we intend to aggressively pursue strategic
acquisitions to drive revenue growth and product development, as well as
leverage cross-marketing opportunities.
Streamedia Broadcast and the Streamedia Networks
Through the Streamedia Broadcast and Networks divisions, we intend to create a
unique suite of categorized broadcast networks to deliver live and on-demand
audio and video programming over the Internet. Additionally, we intend to
acquire and produce content of sufficient interest and quality to market to
traditional broadcasters in the radio, network television and cable industries.
Our Network sites will offer programming in categories such as business, sports,
women's issues, parenting, travel, education, religion, politics, health, teen
and children's interests, shopping, real estate, music, technology, personal
fitness, movies, entertainment, and lifestyles. We have chosen to launch a
financial network as one of our initial offerings, to capitalize on the,
significant revenue-generating opportunities of financial- and
investment-related programming. According to an industry source, the market for
all online business information services was $24.8 billion in 1997 and is
projected to grow to $39.8 billion in 2002. NFO Interactive has found that 5
million Americans invest their money online. Further network launches are
planned for the remainder of 1999 and 2000. We may aggregate content from that
which is developed in house; licensed from other Internet as well as traditional
radio, television, and multimedia content developers; and generated by channel
and "StreamStation" licensees. The Broadcast and Networks divisions are,
together, expected to generate revenue through sales and syndication of
programming to other web sites, as well as to traditional broadcast media, such
as radio and cable, and also develop significant lines of advertising,
e-commerce, premium distribution, and program sponsorship revenues.
Streamedia Networks
We intend to create our own network sites, as well as numerous channels, but
license other channels for development by third parties. We expect the
relationships to be reciprocal on numerous levels. The Networks division could
thereby multiply opportunities for Streamedia Webcast Technologies(TM) to
generate revenue by marketing broadcast services to parties lacking broadcast
backbones. We expect to soon uniquely produce seamlessly streaming, 'live'
channels, which will, in some situations, include actual anchored broadcasts. We
intend to offer the following categories of programming. The list is
representative, not exhaustive:
New Product Launches
Concerts
Comedy Routines
Video and Audio Press Releases M & A Announcements Investor Conferences Medical
Symposia Emergency Communications Analyst and Broker Presentations Club &
Association Meetings Road Show Presentations Sales Training Seminars Distance
Learning Sessions Full length movies FM radio stations Short films Stockholder
Meetings US & International News Talk and call-in shows College and Pro Sports
Executive Interviews Quarterly Conference Calls Corporate Video Profiles
Infomercials Trade Shows Celebrity interviews Awards Ceremonies Educational
Videos Political Programming Religious programming
Streamedia Webcast Technologies(TM)
Through Streamedia Webcast Technologies(TM) we will market Internet and intranet
broadcasting and interactive technology services and solutions to a wide
spectrum of enterprises, such as, businesses, associations, electronic
publishers, web sites lacking in streaming content, and 'off-line' media
generators such as newspapers who wish to obtain an Internet broadcast presence.
Through this division we will attempt to deliver multimedia and text through a
variety of push, poll, and proprietary subscription mechanisms. We intend to
establish alert and notification systems for end users regarding news and
information items published on our sites as well as on behalf of other
distribution clients, and about upcoming events to be broadcast on our Networks.
This division will provide specific information regarding site audiences to
content providers and advertisers; integrate 'E-Commerce' or merchandizing
programs into Streamedia Networks and channels; construct chatrooms, bulletin
boards, personal webcast stations and other interactive elements, and integrate
them into network and channel vehicles. All such business services will generate
revenue to foster further content development.
Streamedia Webcast Technologies can provide or arrange for the following
representative types of business services and equipment:
Live Event Webcasting
On Demand Broadcasts
File Hosting and Serving
Push Technologies
Voice-Overs
Synchronized Multimedia
Event 'Ticketing' & Reservations Film and Sound Crews Satellite Up and Downlinks
Restricted Intranet Broadcasts Feeds To Broadcast Video Hubs A/V Equipment
Bulletin Boards and Forums Web Page Creation Home Page Integration Virtual Q & A
Sessions New York or Remote Studios Event Production and Consultation A/V
Bookmarking & Indexing Event Transcripts Programming Reminders Media Conversions
and Encoding Mailing List Distributions Live Chats and Instant Messaging
Broadcast Archival Searchable Databases On Air Talent Web Bots and Intelligent
Agents
Streamedia Publishing
The focus of the Streamedia Publishing division will be upon our
StreamWire(TM) content. StreamWire shall consist of a series of edited news
and information products, such as wires devoted to NASDAQ or Amex-listed
companies, or space exploration, or medical issues. We intend that each
newswire developed by the Streamedia Publishing division will have its
broadcast network correlative. Our Broadcast and Publishing divisions have
been devised to integrate vertically to create bundled, truly multimedia
Internet networks. We project that through our Publishing division will
produce a series of "webcast guides" and schedules for each of the Streamedia
Networks. In addition, through StreamWire, we will endeavor to ramp up our
fee-based press release distribution and product announcement wire services to
serve the interests of public companies, government agencies, trade
associations, the entertainment industry, and numerous other areas. Still
other projects include the creation of focused, marketable archives and
indexes of print and multimedia content appropriate to each network.
StreamWire may thus aggregate and integrate news and information resources at
each network site to support our network broadcast content and, in so doing,
synergize each network's content offerings. Each site will become more
"sticky," and retain greater numbers of users for longer periods of time-- a
trait not lost on advertisers and content generators interested in furthering
their own distribution points.
Emerging and Developing Revenue Opportunities
We believe that the proliferation of broadband and multicast connectivity
technologies and infrastructure will greatly increase end user demand for
streaming multimedia content. We expect that, as demand increases, the same
revenue sources available to traditional broadcast media will become
increasingly realistic profit centers for Internet broadcasters, aggregators,
and syndicators. We are positioning Streamedia to benefit from any possible
growth in traditional sources of broadcast revenues, such as various forms of
advertising, but also from the unique opportunities presented to it as a
member of the internet community, such as e-commerce relationships with
internet retailers of items such as books, videos, movies, tickets, CD's,
gifts, memorabilia, and apparel. We intend to participate in the trend towards
referring sites commanding a percentage of gross sales generated as a result
of their users 'clicking-through' to retailer's sites. We intend to resell or
provide production, encoding, and other broadcast-enabling services to content
generators seeking representation at one or more of the Streamedia Networks or
channels, as well as to Intranets requiring multimedia service bureaus.
Advertising
In addition to licensing and syndication fees, technology and production
services, premium distribution services, and e-commerce opportunities, we
expect to derive a significant portion of our revenues from the emerging
business of multimedia advertising. The Web has proven an attractive medium
for advertising because it is interactive, flexible, and precisely
quantifiable. Advertisers can mine user profile data to help them either
reach broad audiences with a 'branding' approach or choose to 'target' data
to people displaying similar demographic characteristics or interests. The
interactive nature of the Web enables advertisers to determine customer
preferences and profiles, and use this data to develop commercial
relationships with potential customers. Advertisers can easily change their
advertising messages frequently and at relatively low cost. We intend to
engage in the emerging business of creating and marketing 'rich' or
multimedia advertising; banner and interstitial advertising; and network
and channel sponsorships across our suite of networks. We will insert
advertisements at the beginning of audio or video segments, as well as
during shows, much like commercials in traditional broadcast media. Jupiter
Communications projects that online ad spending will rise from $3 billion
in 1999 to almost $8 billion in 2002.
We intend to make increasing use of the Synchronized Multimedia Integration
Language, or SMIL. SMIL offers developers the ability to synchronize text,
images, audio and video over the Web. Each element of a multimedia
presentation can be sewn together using simple HTML-like coding. The
results have many possible applications, such as the creation of streaming
graphic 'commercials' played during streaming audio broadcasts, or
streaming text advertisements running in subtitles below a video
presentation, or slim banners that can stream below a video presentation.
StreamWire may add the extra dimension of email sponsorships and
text-banners to the Streamedia arsenal of placement offerings.
As traffic to network sites increases, we believe that we may be able to
charge a premium for multimedia ads versus basic banner ads, due to their
richer content, flexible placements, and our ability to charge for focused
advertising related to a specific content channel. We expect to derive a
significant percentage of our revenue from advertising on our network
sites, and by revenue splits with operators of sites to which we syndicate
our content. We will target traditional advertisers, such as consumer
product and service companies, manufacturers and automobile companies, as
well as other Internet sites and products as advertisers on our Web sites.
We expect to derive advertising revenue principally from short-term
advertising contracts on a per impression basis or for a fixed fee based on
a minimum number of impressions. Rich media ads price higher than graphic
and text banners per impression. We will supply our advertiser clients with
statistics detailing impressions, click-through rates, and other factors,
which should allow them to monitor the totals of their ad playbacks or
visual impressions, and thus track their effectiveness.
ADDITIONAL INFORMATION
Streamedia has not previously been subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended. Streamedia has filed with
the Securities and Exchange Commission (the "Commission") a Registration
Statement on Form SB-2 under the Securities Act with respect to the units
offered. This prospectus does not contain all of the information, exhibits,
and schedules contained in the Registration Statement. For further
information about Streamedia and the units, you should read the
Registration Statement. Statements made in this prospectus regarding the
contents of any contract or document filed as an exhibit to the
Registration Statement are not necessarily complete. Therefore, you should
read the Registration Statement. Each such statement is qualified in its
entirety by such reference. The Registration Statement, the exhibits, and
the schedules filed with the Commission may be inspected, without charge,
at the Commission's public reference facilities. These facilities are
located at:
Room 1024, Judiciary Plaza, 450 Fifth Street, NW, Washington, D.C.
20549, Northwestern Atrium Center, 500 West Madison Street, Room 1400,
Chicago, Illinois 60661; and Suite 1300, Seven World Trade Center, New
York, New York 10048.
Copies of the materials may also be obtained at prescribed rates by writing
to the Commission, Public Reference Section, 450 Fifth Street, NW,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission at http://www.sec.gov.
As a result of this offering, Streamedia will become subject to the
reporting requirements of the Exchange Act. Therefore, we will file
periodic reports, proxy statements, and other information with the
Commission. Following the end of each calendar year, we will furnish our
shareholders with annual reports containing audited financial statements
certified by independent public accountants and proxy statements. For the
first three-quarters of each calendar year, we will provide quarterly
reports containing unaudited consolidated financial information.
Streamedia intends to apply for listing of the units on the Nasdaq SmallCap
Market. We cannot assure that our shares will be accepted for listing. Our
reports, proxy statements, and other information will be available for
inspection at the principal office of The Nasdaq Stock Market, Inc. at 1735
K Street, Washington, D.C. 20006-1500.
MANAGEMENT
Directors and Executive Officers
Our directors and executive officers as of February 10, 1999 are identified
below:
Name Age Position
James D. Rupp 38 President, Chief Executive Officer & Director
Gayle Essary 58 Vice President & Director
Nicholas Malino 48 Chief Financial Officer & Director
David Simonetti 29 Director
Henry Siegel 56 Director
Robert Wussler 60 Director
Our directors are elected at each
annual meeting of shareholders. The officers
are elected annually by the Board of
Directors. Officers and directors hold
office until their respective successors are
elected and qualified or until their earlier
resignation or removal.
James D. Rupp is one of the founders
of Streamedia and has served as Chief
Executive Officer, President and Director
since Streamedia's inception. From July 1997
to September 1998 Mr. Rupp served as
President, Chairman and Chief Executive
Officer of Capital Markets Communications
Corporation, an editor and publisher of a
series of electronic newsletters, including
StreetSignals(TM), TradeSignals(TM),
PowerSignals(TM), AmexWire(TM), and the
Waaco Kid's Forum(TM). Mr. Rupp continues as
Capital Markets' Chairman. Mr. Rupp
organized Web2Ventures, LLC, a company
formed in February, 1998 to incubate,
capitalize, and invest in emerging Internet
firms. Since its inception, Mr. Rupp has
served as the Manager of Web2Ventures. From
1990 to 1996 Mr. Rupp served as General
Manager of a restaurant management concern
in New York City. Mr. Rupp holds a Bachelor
of Arts degree from the State University of
New York at Binghamton and has pursued
graduate studies in information sciences and
literature at the Universities of Delaware
and Maryland.
Gayle Essary is one of the founders of
Streamedia and has served as Chairman of the
Board of Directors and Vice
President-Strategic Development since its
inception. From September 1996 to the
present, Mr. Essary has served as Chairman
of the Board of Directors of IRI, Inc. a
publicly-held company in the investment data
and information industry. He has also served
as IRI's Chief Executive Officer from July
1997 to the present. From 1995 to 1997, Mr.
Essary was founder of StreetLevel which has
since merged into Capital Markets
Communications Corporation and publisher of
its electronic products. From 1988 to 1997,
Mr. Essary was a Principal of New York
Management Group, which provided consulting
and support services to various firms and
organizations, including The Thomson
Corporation. From 1981 to 1988, Mr. Essary
was Managing Director of the Media Financial
Group and The Media Center, both companies
engaged in consulting for media properties.
From 1973 to 1980, Mr. Essary was President
of ESCO Publishing Co., Inc., and
Huthig-ESCO Publishing, Inc., which
published two international dental business
magazines, one of which led its field in
distribution and advertising revenues. Mr.
Essary studied journalism at The University
of Texas.
Nicholas Malino has served as Streamedia's
Chief Financial Officer since November of
1998. Previously, he served as President and
Chief Executive Officer of ATC Group
Services, Inc., a $160 million national
business services firm, providing
specialized technical and project management
services to Fortune 500 companies and
federal, state, and local government
agencies. During his tenure, he completed 16
acquisitions, ranging in size from $1
million to $85 million in gross revenues,
during which time the company achieved the
second highest price/earnings ratio in its
sector. ATC Group Services also led its
sector in profitability for 12 consecutive
quarters. Mr. Malino has a Masters of
Business Administration degree in Finance,
and Master and Bachelor of Science degrees
in Biology from the University of
Bridgeport.
David J. Simonetti has served as a Director of Streamedia since September
of 1998. Since October of 1998, Mr. Simonetti has served as Co-Chairman and
Chief Executive Officer of VentureNow, Inc., a private venture capital concern.
From August 1997 to December 1998, Mr. Simonetti was Chief Executive Officer of
Invoke Distribution, LLC, a marketing and advertising company. From February
1997 to October 1998, Mr. Simonetti was Chief Executive Officer of Projix
Corporation, an Internet software company. From October 1994 through February
1997, Mr. Simonetti served as Vice President and Chief Operating Officer of
Edmar, Inc., a construction management company. Mr. Simonetti also serves on the
Board of Directors of NuOncology Labs, Inc., a publicly-held company. Mr.
Simonetti holds a Bachelor of Arts degree from Marlboro College, Vermont.
Henry Siegel has served as a Director of
Streamedia since February, 1999. From 1995
to the present, Mr. Siegel has been the
Chairman and Chief Executive Officer of
Kaleidoscope Media Group, a publicly-held
company. Kaleidescope is a worldwide
distributor of television and home video
programming including the ESPY Awards Show.
Mr. Siegel began his career at Grey
Advertising and in 1974 where he was placed
in charge of its media operation, managing
all areas of media planning, research and
execution. In 1976, Mr. Siegel founded
Lexington Broadcasting Services (LBS), where
he pioneered the concept of barter
syndication (advertiser-supported
television). As Chairman and Chief Executive
Officer of LBS, Mr. Siegel developed
numerous successful television series,
including Fame and Baywatch. Mr. Siegel has
been named by Advertising Age Magazine as
one of the pioneers of the first 50 years of
television.
Robert J. Wussler has served as a Director
of Streamedia since February, 1999. Mr.
Wussler is the Chairman of the Board of
Directors of US Digital Communications,
Inc., a publicly-held company. From 1992 to
the present he has served as the President
and Chief Executive Officer of the Wussler
Group, a media consulting firm. From 1994 to
the present, Mr. Wussler has served as the
President and Chief Executive Officer of
Affiliate Enterprises, Inc., a company
formed by ABC Television affiliates to
pursue new business opportunities, including
emerging technology applications. From 1989
to 1992 Mr. Wussler was the President and
CEO of COMSAT Video Enterprises, a major
supplier of satellite entertainment to the
nation's lodging industry. Between 1980 and
1989, Mr. Wussler served as Senior Vice
President, Corporate Executive Vice
President, and President of Turner
Broadcasting's Superstation, WTBS. During
his 10 years at Turner, Mr. Wussler
co-founded and organized CNN, Headline News,
and became a key player in the development
of WTBS and the formation of TNT. Prior to
joining Turner, Mr. Wussler served as
President of CBS Sports
and the CBS Television Network. Mr. Wussler is a past Chairman of the
National Academy of Television Arts and Sciences, and recipient of five Emmy
Awards. Mr. Wussler also serves on the Board of Directors of Ednet, Inc., a
publicly held company which develops and markets integrated digital
communications systems for the entertainment industry, and the Board of
Directors of The Cousteau Society.
Directors
Outside Directors
We will nominate for election one director who is not an officer, employee, or
5% shareholder upon conclusion of the offering as designated by the
representative of the underwriters. We may also appoint advisors to the Board of
Directors from time to time.
n
of Directors
Compensation of Directors
Directors who are also employees will not receive any remuneration in their
capacity as directors. Outside directors will be paid $1,000 monthly, travel
expense reimbursement and $500 per meeting attended.
Executive Compensation
The following table sets forth the current compensation awarded to, earned by,
or paid to each of our executive officers.
Summary Compensation Table
Name and Annual Compensation All Other
--------------------------------
Principal Position Salary Bonus Compensation
- --------------------------- --------------- -------------- ---------------------
James D. Rupp - President $ 104,000 -- --
& CEO
- --------------------------- --------------- -------------- ---------------------
Gayle Essary - Vice 84,000 -- --
President
- --------------------------- --------------- -------------- ---------------------
Nicholas Malino - CFO 84,000 100,000(1)
- --------------------------- --------------- -------------- ---------------------
(1) Mr. Malino will receive the $100,000 bonus upon completion
of this pending initial public offering.
Agreements
Employment Agreements
We have obtained employment agreements with the above employees.
Compensation Plan
Stock Compensation Plan
There is no stock compensation plan currently in place. We intend to implement
a Stock Compensation Plan during 1999. No committee has yet been formed for the
task.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998 and 1999, and since the inception of Streamedia, certain e-mail
distribution systems owned and/or administered by one or both of two of our
major shareholders, IRI, Inc. ("IRI"), and Capital Markets Communications,
Inc. ("CapMark"), were provided to us for our StreamWire division and its
predecessor at no cost. The three companies foresee continuing synergies in
the mutual development of opt-in distributions which may benefit any or all
of the companies, and their respective separate business activities. We
also anticipate that the two companies will become customers of StreamWire
for the distribution of press releases and announcements. Also, IRI and to
some extent, CapMark are expected to continue to provide marketing and
promotion support for Streamedia, and to utilize the streaming broadcast
distributions of Streamedia Broadcast and Streamedia Networks whenever
possible for themselves and their respective clients.
During 1998, we issued 25,000 shares of common stock to our legal counsel,
Kogan & Taubman, L.L.C., as partial consideration for services to be
rendered in connection with this offering.
PRIOR OFFERINGS
In the first quarter of 1999, we sold 233,500 shares of common stock,
pursuant to rule 506 of regulation D under the Securities Act of 1933, as
amended. We raised $467,000 from this private placemnt in order to provide
bridge financing for this offering. In addition, we have issued securities
to officers, directors, and consultants as compensation for services
rendered to us.
PRINCIPAL SHAREHOLDERS
The following table identifies the beneficial ownership of the common stock as
of December 31, 1998 by:
Each beneficial owner of more than 5% of the outstanding shares of
common stock; Each of our directors ; Each of our executive officers;
and All directors and executive officers as a group
Unless noted each beneficial owner has sole investment and voting power for the
shares beneficially owned.
Shares Owned
-------------------------------------------------------------------------
Prior to Offering After Offering
---------------------------------- -- -----------------------------------
Name and Address of Owner Number Percent Number Percent
- --------------------------------------------- --------------- -------------- ---------------- --------------
James D. Rupp (1) 1,155,000 38.2% 1,155,000 28.7%
200 Walter Avenue, Hasbrouck Heights, NJ
07604
Gayle Essary (2) 890,000 29.4% 890,000 22.1%
5605 Woodview, Austin, Texas 78756
Capital Markets Communications, Inc.(3) 300,000 9.9% 300,000 7.5%
Nicholas Malino 150,000 5.0% 150,000 3.7%
250 W. 90th Street, # PH2A, New York, NY
10024
David Simonetti (4) 75,000 2.5% 75,000 1.9%
1845 Mintwood Place, # 104, Washington, DC
20009
Henry Siegel 0 - 0 0
Robert Wussler 0 - 0 -
--------------- -------------- ---------------- --------------
--------------- -------------- ---------------- --------------
All Executive Officers and Directors as a 2,570,000 85.0% 2,570,000 63.9%
group (6 persons)
--------------- -------------- ---------------- --------------
- -----------
(1) Mr. Rupp's shares are owned through two companies in which Mr. Rupp is the
owner. (2) In addition to Mr. Essary's direct holdings (590,000 shares), the
balance are owned by a company
in which Mr. Essary is the principle shareholder.
(3) This company is controlled by certain executive officers and directors of
Streamedia. (4) Mr. Simonetti's shares are owned through a company in which Mr.
Simonetti is the owner.
DESCRIPTION OF CAPITAL STOCK
n
Stock
Common Stock
We are authorized to issue 20,000,000 shares of common stock, $0.001 par value.
As of December 31, 1998, there were 3,025,000 shares of common stock issued and
held by 46 holders of record. Shareholders are entitled to share ratably in any
dividends paid on the common stock when, as and if declared by the Board of
Directors. Each share of common stock is entitled to one vote. Cumulative voting
is denied. There are no preemptive or redemption rights available to
shareholders of common stock. Upon liquidation, dissolution or winding up of
Streamedia, the holders of common stock are entitled to share ratably in the net
assets legally available for distribution. All outstanding shares of common
stock and the units (and shares underlying these units) to be issued in this
offering will be fully paid and non-assessable.
Stock
Preferred Stock
The Board of Directors, without further action by the shareholders, is
authorized to issue up to 100,000 shares of preferred stock, $0.001 par value.
The preferred shares may be issued in one or more series. The terms as to any
series, as relates to any and all of the relative rights and preferences of
shares, including without limitation, preferences, limitations or relative
rights with respect to redemption rights, conversion rights, voting rights,
dividend rights and preferences on liquidation will be determined by the Board
of Directors. The issuance of preferred stock with voting and conversion rights
could have an adverse affect on the voting power of the holders of the common
stock. The issuance of preferred stock could also decrease the amount of
earnings and assets available for distribution to holders of the common stock.
In addition, the issuance of preferred stock may have the effect of delaying,
deferring or preventing a change in control. We have no plans or commitments to
issue any shares of preferred stock.
Agent and Registrar
Transfer Agent and Registrar
The Transfer Agent and Registrar for the common stock will be American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have 4,258,500 shares of common stock
outstanding. If the underwriters over allotment option is exercised in full,
4,408,500 shares of common stock will be outstanding. Of these shares, the
1,000,000 shares sold in this offering or 1,150,000 shares if the over-allotment
option is exercised in full will be freely tradeable in the market without
restriction under the Securities Act, by persons other than "affiliates" of
Streamedia (as that term is defined in the Securities Act of 1933, as amended,
without restriction or further registration. The remaining 3,258,000 shares will
be "restricted securities" within the meaning of the Securities Act. Restricted
securities cannot be publicly sold unless registered under the Securities Act or
sold in accordance with an exemption from registration, such as that provided by
Rule 144 under the Securities Act. In general, under Rule 144, as currently in
effect, a person (or persons whose shares are aggregated) is entitled to sell
restricted securities if at least one year has passed since the later of the
date such shares were acquired from Streamedia or any affiliate of Streamedia.
Rule 144 provides, however, that within any three-month period such person may
only sell up to the greater of 1% of the then outstanding shares of common stock
(approximately 42,585 shares following the completion of this offering) or the
average weekly trading volume during the four calendar weeks immediately
preceding the date on which the notice of the sale is filed with the Commission.
Sales pursuant to Rule 144 also are subject to certain other requirements
relating to manner of sale, notice of sale and availability of current public
information. Anyone who has not been an affiliate for a period of at least 90
days is entitled to sell restricted securities under Rule 144 without regard to
the limitations if at least two years have passed since the date such shares
were acquired from us or any of our affiliates. Any affiliate is subject to such
volume limitations regardless of how long the shares have been owned or how they
were acquired. After this offering, the executive officers and directors will
own 2,570,000 shares of the common stock, which will represent (63.9% of the
total shares outstanding. Our officers, directors and certain shareholders
directors will enter into an agreement with the underwriters agreeing not to
sell or otherwise dispose of any shares for one year after the date of this
prospectus without the prior written consent of the underwriters. The Company
cannot predict the effect, if any, that offer or sale of these shares would have
on the market price. Nevertheless, sales of significant amounts of restricted
securities in the public markets could adversely affect the fair market price of
the shares, as well as impair our ability to raise capital through the issuance
of additional equity shares.
37
PLAN OF DISTRIBUTION
t0lineWidth38100lineStyle1Underwriters
Underwriters
Under the terms and conditions of the Underwriting Agreement, we have agreed to
sell to the underwriters named below, and each of the underwriters, for whom
Redstone Securities, Inc. is acting as the "representative", have agreed to
purchase the number of units set forth opposite its name in the following table.
Underwriters Number of Units
Redstone Securities, Inc.
===========================
Total 1,000,000
=========================
The underwriters have advised us
that they propose to offer the units to the
public at the initial public offering price
per unit set forth on the cover page of this
prospectus and to certain dealers at such
price less a concession of not more than
$___ per unit. These dealers may re-allow
$____ to other dealers. The representative
will not reduce the public offering price,
concession and re-allowance to dealers until
after the offering is completed. Regardless
of any reduction, the Company will receive
the amount of proceeds set forth on the
cover page of this prospectus.
Streamedia and certain selling
shareholders have granted to underwriters an
option, exercisable during the 45-day period
after the date of this prospectus, to
purchase up to 150,000 additional units to
cover over-allotments, if any. The option
purchase price is the same price per unit we
will receive for the 1,000,000 units that
the underwriters have agreed to purchase. If
the underwriters exercise the over-allotment
option in full, the selling shareholders
will sell 30,000 shares of common stock to
the underwriters. None of the selling
shareholders are officers, directors or
affiliates of Streamedia. If the
underwriters exercise such option, each of
the underwriters will purchase its pro-rata
portion of such additional units. The
underwriters will sell the additional units
on the same terms as those on which the
1,000,000 units are being sold.
The underwriters can only offer the
units through licensed securities dealers in
the united States who are members of the
National Association of Securities Dealers,
Inc. and may allow the dealers any portion
of its ten (10%) percent commission.
The underwriters will not confirm
sales to any discretionary accounts without
the prior written consent of their
customers.
Under the terms of the Underwriting
Agreement, the holders of the 3,025,000
shares of common stock that are restricted
securities have agreed that, for one year
after the date of this prospectus and
subject to certain limited exceptions,
without the prior written consent of the
representative, they will not sell, contract
to sell, or otherwise dispose of any shares,
any options to purchase shares, or any
securities convertible into, exercisable
for, or exchangeable for shares.
Substantially all of such shares would be
eligible for immediate public sale following
expiration of the lock-up periods, and
subject to the provisions of Rule 144.
We have agreed to pay the
Representative a non-accountable expense
allowance of 2.% of the gross amount of the
units sold at the closing of the offering.
This expense allowance will total $170,000
based on the sale of the units offered. The
Representative will pay the underwriters'
expenses in excess of the 2% allowance. If
the expenses of underwriting are less than
the 2% allowance, the excess shall be
additional compensation to the underwriters.
If this offering is terminated before its
successful completion, we may be obligated
to pay the Representative a maximum of
$50,000 on an accountable basis for expenses
incurred by the underwriters in connection
with this offering. In addition to the
non-accountable expense allowance, the
management estimates that the Company will
incur other costs of approximately $200,000
for legal, accounting, listing, printing and
filing fees.
We have agreed that, for a period of five
years from the closing of the sale of the
units, we will nominate for election as a
director a person designated by the
Representative. If the Representative has
not exercised that right, the Representative
shall have the right to designate an
observer, who shall be entitled to attend
all meetings of the Board and receive all
correspondence and communications sent by us
to the members of the Board. The
Representative has not yet identified the
person who is to be nominated for election
as a director or designated as an observer.
The Underwriting Agreement provides
for indemnification among Streamedia and the
underwriters against certain civil
liabilities, including liabilities under the
Securities Act. In addition, the
underwriters' warrants provide for
indemnification among Streamedia and the
holders of the underwriters' warrants and
underlying shares against certain civil
liabilities, including liabilities under the
Securities Act, and the Exchange Act.
We have been advised that it is the position
of the Securities and Exchange Commission
that insofar as indemnification for
liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to
directors, officers and controlling persons
of Streamedia pursuant to the foregoing
provisions, or otherwise, such
indemnification is against public policy as
expressed in the Securities Act and is
therefore unenforceable.
Warrants
Underwriters' Warrants
Upon the closing of this offering, we have agreed to sell to the underwriters
for nominal consideration, the underwriters' warrants to purchase shares of
common stock. The underwriters' warrants are exercisable at 120% of the public
offering price for a four-year period starting one year from the effective date
of this offering. The underwriters' warrants may not be sold, transferred,
assigned or hypothecated for a period of one year from the date of this offering
except to the officers of the underwriters and their successors and dealers
participating in the offering and/or their partners or officers. The
underwriters' warrants will contain anti-dilution provisions providing for
appropriate adjustment of the number of shares subject to the warrants under
certain circumstances. The holders of the underwriters' warrants have no voting,
dividend or other rights as shareholders of Streamedia with respect to shares
underlying the underwriters' warrants until the underwriters' warrants have been
exercised. For four years from the one year anniversary of this offering, we
have agreed to give advance notice to the holders of the underwriters' warrants
or underlying shares of our intention to file a registration statement, other
than in connection with employee stock options, mergers, or acquisitions. The
holders of the underwriters' warrants and underlying shares shall have the right
to require us, subject to certain conditions to include their shares in such
registration statement at our expense.
For the term of the underwriters' warrants, the holders of the warrants will be
given the opportunity to profit from a rise in the market value of the shares,
with a resulting dilution in the interest of other shareholders. The holders of
the underwriters' warrants can be expected to exercise the underwriters'
warrants at a time when we would, in all likelihood, be able to obtain needed
capital by an offering of its unissued shares on terms more favorable than those
provided by the underwriters' warrants. This could adversely affect the terms on
which we could obtain additional financing. Any profit realized by the
underwriters on the sale of the underwriters' warrants or shares issuable upon
exercise of the underwriters' warrants will be additional underwriting
compensation.
of Offering Price
Determination of Offering Price
The initial public offering price was determined by negotiations between the
representative and Streamedia. The factors considered in determining the public
offering price include:
The industry in which we operate,
Our business potential and earning
prospects, and The general
condition of the securities markets
at the time
of the offering.
The offering price does not bear any
relationship to our assets, book value, net
worth or other recognized objective criteria
of value.
Prior to this offering, there was no public
market for the units, and we cannot assure
that an active market will develop.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE UNITS, INCLUDING
OVERALLOTMENT, ENTERING STABILIZATION BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS, AND IMPOSING PENALTY BIDS.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE UNITS ON NASDAQ ACCORDANCE WITH RULE 103 OF
REGULATION M.
SmallCap Market
Nasdaq SmallCap Market
We will apply for listing of the units, common stock, and warrants on the Nasdaq
SmallCap Market under the trading symbols "." The listing is contingent, among
other things, upon our obtaining 400 shareholders.
LEGAL MATTERS
Kogan & Taubman, L.L.C., New York, New York,
will pass on the validity of the issuance of
the shares. Winstead, Sechrest & Minick,
P.C. Dallas, Texas, will pass on certain
legal matters for the underwriters in
connection with the sale of the shares.
EXPERTS
Our financial statements as of December 31,
1998 and for the period from April 29, 1998
(date of inception) to December 31, 1998
included in this prospectus have been
included in reliance on the report of Grant
Thornton LLP, independent certified public
accountants, given on the authority of Grant
Thornton, LLP as experts in auditing and
accounting.
GLOSSARY
Bandwidth The measure of transmission capacity through wires and
cables, over fiber optic lines, or via satellite. The
general rule of thumb is that as bandwidth is increased,
data can be transferred quicker. Streaming media is
bandwidth-intensive; its quality improves when users
connect at higher speeds--that is, via higher bandwidth
connections.
Broadband A type of data transmission in which a single medium
(such as a wire) can carry several channels at once.
Cable TV is a broadband transmission.
Broadcast A method of transmission of audio, video, or other formats of
information. Specifically, 'broadcast' refers to a mode within which one source
sends the same data or programming to all users at the same time. Contrast:
"narrowcast."
Browser The software application that enables a user to see pages on the World
Wide Web.
Channel On television and cable systems, the term refers to,
usually, the numerical location, as on a dial or LED
readout, of a broadcast station's varied content.
Example: in New York City, NBC can be seen on Channel 4.
On the Internet, the term 'channel' also refers to a
location for a given set of programming, but often refers
to a generic category of content, such as a 'basketball
channel,' or to a highly specific source of programming,
such as the "New York Knicks" channel, or even the
"Patrick Ewing" channel.
Convergence A blur of the distinctions between entertainment,
information, telecommunications, computers, television,
print, and cable.
Downlink The transmission of radio frequency signals from a satellite to an
earth station.
Download Transferring a file from a server to a client, such as your
computer. Downloading files enables you to see and hear content on the web. See:
"streaming."
Enabling Providing the tools, talent, and equipment, and resources
to assist an individual or organization to become a
broadcaster. Prior to the advent of streaming media
technologies and applications, becoming a global
broadcaster was difficult and costly.
Intranet A set of computers linked to one another outside the
public Internet. Often, large corporations build
Intranets to facilitate internal communications.
Multimedia content can be streamed across an Intranet to,
for example, enable geographically dispersed divisions of
a company to attend an address by its CEO, or demonstrate
the proper use of on a new product prior to its
commercial launch.
Mini-portal A focused, subject-oriented portal. See "portal."
Multicast A means by which several users can connect to one data
stream simultaneously. Thus, multicasting can accommodate
larger audiences with greater efficiency than unicasting
(see: unicasting). Multiple users could, for example,
watch the same streaming video file at once, rather than
requiring the server to send one stream per user.
Multimedia The use of computers to present integrated text, graphics, video,
animation, and audio.
Narrowcast To send data to a specific list of recipients. Cable
television is the ultimate example of narrowcasting.
Cable signals are sent only to homes that have subscribed
to the cable service. Network TV, by contrast, is a true
broadcast model. It sends out data. Everyone close enough
with an antenna can receive the signals. On the Internet,
narrowcasting has also come to refer to programming
developed for 'niche' interest groups.
On demand The power to 'time-shift,' or access programming
when you want it, as distinct from the time a broadcaster
wants to send it.
Player A software application, such as those developed by
RealNetworks and Microsoft, among others, that 'plays'
the video and audio clips on your computer.
Portal Originally, a site or online service, such as AOL, that
offered a range of information, entertainment, and
services such as email, forums, chatrooms, and search
engines. Increasingly, however, sites are launched to
become 'portals' to a specific category of content, as in
a 'financial portal.'
Push The mechanisms which deliver data to one's desktop,
usually on a subscription basis. Email is a simple push
service; PointCast is an elaborate push service. The data
is delivered to you automatically.
Rich Commonly used in reference to 'rich media' and,
specifically, to 'rich media advertising.' Rich media
advertising is distinguished from commonplace banner ads
with static graphics; rich media ads are animated, and
often streamed, so that they appear more like television
commercials. Indeed, some are repurposed television
commercials. They can be embedded in web pages as well as
inserted into or between video clips, or, using SMIL,
they can be streamed concurrent to audio programming.
Seamless Streaming a pre-programmed series of multimedia content
segments in succession, without requiring the audience to
select a new program to see or hear. The effect is
similar to watching one television channel for an
extended period of time. One content segment flows into
the next.
SMIL See Synchronized Multimedia Integration Language.
Streaming A stream is a continuous digital signal, which delivers
audio and/or video to an end user. Streaming refers to
the manner by which a stream is sent. Streaming does not
require that a user download an entire large file to his
computer before he can watch or listen to it. Rather, the
streaming process sends out the digital signal in
continuous, tiny packets of data, and buffering enough of
the data so that user can experience the programming
seamlessly, while downloading the next segment in the
background.
StreamStation(TM) Streamedia Communications' trademarked term for the
non-proprietary sites it will license to carry its
programming and information feeds. In concept, it is
similar to the relationship between network television
broadcasters and their local affiliate stations.
StreamStations will be a means by which the Company
syndicates its content across web sites it does not own,
thereby enhancing its market penetration.
Switching hub A broadcast signal pool feed that enables port to
port redirection of data. Any system connected to a port
on the network can be 'switched' to receive or transmit
to another port on that network. Rather than rebroadcast
all data to every port, switching hubs forward data only
to the required recipient.
Synchronized A markup language that enables a programmer to combine formats in
one production, such as Multimedia an audio stream with images and text. In this
way, an internet broadcaster can stream a Integration radio station signal,
while showing advertising imagery, and scrolling information in Language print,
all in the same media player.
Teleport A teleport or "telecommunications port" is a hub that
provides its users with fast, convenient, cost-effective
access to advanced and high-bandwidth services. Teleports
are high-bandwidth communication gateways for satellite,
optical fiber and microwave transmission. Teleports feed
video, data and voice to the world's constellation of
satellites and network of optical fiber. They deliver
television and radio programming to audiences around the
globe.
Traffic A total of users to a site or file. Traffic is measured
in various ways, such as hits, impressions, page views,
and unique users.
Unicast Each user connects to a separate stream of an audio or video file.
Contrast: "multicast."
Uplink The transmission of radio frequency signals to a satellite from an earth
station.
URL Uniform Resource Locator. An Internet URL is like an electronic street
address. Example: http://www.streamedia.net
Videoconferencing Conducting a conference between two or more participants
in different locations by using computer networks to
transmit audio and video data. Multipoint
videoconferencing allows three or more participants to
sit in a "virtual" conference room and communicate as if
they were sitting right next to each other.
Webcast A broadcast or narrowcast of audio or video over on the
World Wide Web. Using a streaming protocol, servers
deliver audio and/or video, in real time (live), or on a
delayed basis (on demand.)
INDEX TO FINANCIAL STATEMENTS
STREAMEDIA COMMUNICATIONS, INC.
Page
Report of Independent Certified Public Accountants F-1
Financial Statements
Balance Sheet - December 31, 1998 F-2
Statement of Operations for the Period from April 29, 1998 F-3
(date of inception) to December 31, 1998
Statement of Stockholders' Equity (Deficit) for the Period from F-4 April
29, 1998 (date of inception) to December 31, 1998
Statement of Cash Flows for the Period from August 29, 1998 F-5
(date of inception) to December 31, 1998
Notes to Financial Statements for the Period from April 29, 1998 F-6 - F-10
(date of inception) to December 31, 1998
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Streamedia Communications, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Streamedia Communications,
Inc. (the "Company") (a development stage company) as of December 31, 1998, and
the related statements of operations, stockholders' equity (deficit) and cash
flows for the period from April 29, 1998 (date of inception) to December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Streamedia Communications, Inc.
(a development stage company) as of December 31, 1998, and the results of its
operations and its cash flows for the period from April 29, 1998 (date of
inception) to December 31, 1998 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is a development stage
enterprise engaged in providing internet-based media programming and content on
the Web. To date, the Company has engaged in organizational and pre-operating
activities and needs to secure additional capital and customers to continue
operations. As discussed in Note A to the financial statements, the Company's
existence is dependent upon its ability to obtain additional capital, among
other things, which raises substantial doubt about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note A. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
GRANT THORNTON LLP
Melville, New York
March 9, 1999
Streamedia Communications, Inc.
(A Development Stage Company)
BALANCE SHEET
December 31, 1998
ASSETS
CURRENT ASSETS
Cash $ 1,225
----------
Total current assets 1,225
COMPUTER EQUIPMENT 1,802
Less accumulated depreciation 602
1,200
DEFERRED OFFERING COSTS 75,000
Total assets $ 77,425
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accrued payroll $ 59,000
Accrued offering costs 25,000
Accrued professional fees 12,000
Accrued consulting fees 38,500
Accounts payable and other accrued liabilities 4,185
---------
Total current liabilities 138,685
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $.001 par value; authorized - 100,000
shares; none issued and outstanding -
Common stock, $.001 par value; authorized - 20,000,000
shares; issued and outstanding - 3,025,000 shares 3,025
Additional paid-in capital 232,475
Deficit accumulated during development stage (296,760)
--------
Total stockholders' equity (deficit) (61,260)
Total liabilities and stockholders' equity (deficit) $ 77,425
=========
The accompanying notes are an integral part of this statement.
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from April 29, 1998 (date of inception) to December 31, 1998
Revenue $ -
-------
Operating expenses
Payroll and related expenses 239,000
General and administrative expenses 57,760
NET LOSS $(296,760)
Basic and diluted loss per common share $(.10)
====
Shares used in computing basic and diluted loss
per share 2,922,409
The accompanying notes are an integral part of this statement.
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Period from April 29, 1998 (date of inception) to December 31, 1998
Deficit
accumulated
Additional during
Preferred stock Common stock paid-in evelopment
Shares Amount Shares Amount capital stage Total
----------- ---------- --------- ------- -------- ---------- -------
Issuance of common stock 2,910,000 $2,910 $ 2,590 $ 5,500
Issuance of common stock
for services 115,000 115 229,885 230,000
Net loss for the period $(296,760) (296,760)
----------------------- -------- --------
Balance at December 31, 1998 - - 3,025,000 $3,025 $232,475 $(296,760) $ (61,260)
=========== =========== ========= ===== ======= ======= ==========
The accompanying notes are an integral part of this statement.
Streamedia Communications, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from April 29, 1998 (date of inception) to December 31, 1998
Cash flows from operating activities
Net loss $(296,760)
Adjustments to reconcile net loss to net cash used in
operating activities
Common stock issued for services 180,000
Depreciation 602
Changes in operating assets and liabilities
Accrued payroll 59,000
Accrued professional fees 12,000
Accrued consulting fee 38,500
Accounts payable and other accrued liabilities 4,185
----------
Net cash used in operating activities (2,473)
Cash flow used in investing activities
Purchase of fixed assets (1,802)
Cash flows provided by financing activities
Issuance of common stock 5,500
Cash at December 31, 1998 $ 1,225
==========
The accompanying notes are an integral part of this statement.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
NOTE A - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Nature of Operations
Streamedia Communications, Inc. (the "Company") was incorporated in the
State of Delaware and is positioning itself as a vertically-integrated New
Media content generator, enabler and aggregator. The Company's three
divisions are Streamedia Broadcast(TM), Streamedia Webcast
Technologies(TM), and Streamedia Publishing.
Streamedia Broadcast(TM) intends to create a suite of topical broadcast
networks to deliver or "stream" live and on-demand audio and video
programming. Network sites intend to offer programming in areas such as,
but not limited to, business, sports, women's issues, parenting, travel,
education, religion, politics, health, teen and children's interests,
shopping, real estate, music, technology, personal fitness, movies,
entertainment and lifestyles. The Company has chosen BusinessBroadcast.com
(pursuant to a joint venture agreement - Note B) as its initial network
launch, to capitalize on the projected, revenue-generating opportunities of
financial and investment related programming.
Streamedia Webcast Technologies(TM) will market internet and intranet
broadcasting services to a wide spectrum of enterprises, such as, but not
limited to, businesses, associations, electronic publishers and "off-line"
media generators, who are attempting to obtain an internet broadcast
presence. The division will attempt to deliver multimedia and text through
a variety of push, poll and proprietary electronic mail mechanisms.
The Streamedia Publishing division will focus upon its StreamWire(TM)
content. StreamWire(TM) will consist of a series of focused,
subject-oriented, edited news and information products, such as wires
devoted to NASDAQ or Amex-listed companies. It is intended that each
newswire developed by the Streamedia Publishing division will have its
broadcast network correlative. The Broadcast and Publishing divisions have
been devised to integrate vertically to create bundled, multimedia Internet
networks.
The Company's operations are subject to certain risks and uncertainties,
including actual and potential competition by entities with greater
financial resources, experience and market presence, risks associated with
the development of the Internet market, risks associated with consolidation
in the industry, the need to manage growth and expansion, certain
technology and regulatory risks and dependence upon sole and limited
suppliers.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE A (continued)
Basis of Presentation
The accompanying financial statements have been prepared on the basis that
the Company will continue as a going concern which assumes the realization
of assets and settlement of liabilities in the normal course of business.
Since its inception, the Company has been engaged in organizational and
pre-operating activities. Further, the Company has generated no revenues
and incurred losses. Continuation of the Company's existence is dependent
upon its ability to obtain additional capital, secure and execute strategic
alliances to develop news and information content and sustain profitable
operations. The uncertainty related to these conditions raises substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Management's plans include the completion of a private placement offering
(the "Private Placement") and the filing of a registration statement
relating to an initial public offering ("IPO") of shares of common stock
should market conditions permit.
The Private Placement includes the sale of up to 500,000 shares of the
Company's common stock at a price of $2.00 per share for gross proceeds of
$1,000,000. The proceeds will be used to provide working capital to the
Company. Subsequent to December 31, 1998, the Company sold 233,250 shares
of its common stock through the Private Placement for gross aggregate
proceeds of $466,500 through March 1999.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Company's significant accounting
policies:
Depreciation
Computer equipment is depreciated on a straight-line basis over its
estimated useful life of three years.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE B (continued)
Fair Value of Financial Instruments
The fair values of the Company's accounts payable and accrued liabilities
approximate the related carrying values due to the short maturities of
these instruments.
Income Taxes
The Company records income taxes using the asset and liability method,
which requires the recognition of deferred tax assets and liabilities for
the expected future tax consequences of temporary differences between the
financial reporting basis and tax basis of assets and liabilities. A
valuation allowance is recognized to the extent a portion or all of a
deferred tax asset may not be realizable.
Deferred Offering Costs
Costs incurred in connection with an equity offering are deferred until the
transaction is consummated or, in the event the offering is unsuccessful,
against operations in the period in which the offering is aborted.
Loss Per Share
Basic loss per share is computed using the weighted average number of
shares of common stock outstanding during the period. Diluted loss per
share is computed using the weighted average number of shares of common
stock, adjusted for the dilutive effect of potential common shares issued
or issuable pursuant to stock options and stock appreciation rights. The
Company has no potential common shares outstanding at December 31, 1998.
Investment in Joint Venture
The Company accounts for its 50% investment in its joint venture,
Businessbroadcast.com, under the equity method, that is, at cost increased
or decreased by the Company's share of earnings or losses, less dividends
and distributions.
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE B (continued)
In accordance with the joint venture agreement, each party shares equally
in the distribution of profits and operational costs. Each party may
increase their ownership percentage through capital contributions. The
formation of the joint venture did not require any initial capital
contribution by the Company. The joint venture did not generate any
revenues or incur any operational costs through December 31, 1998.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the revenues and expenses during the reporting
period. Actual results may differ from those estimates.
NOTE C - STOCKHOLDERS' EQUITY (DEFICIT)
The Company was originally organized as a New Jersey limited liability
company ("LLC"). On December 21, 1998, pursuant to a Plan and Agreement of
Merger, the LLC was merged into the Company, with the Company continuing as
the surviving entity. Each membership unit of the LLC was converted into
30,000 shares of common stock of the Company.
In connection with an employment agreement, the Company granted 135,000
shares of the Company's common stock to an officer, of which 90,000 shares
had been issued in December 1998 and the remaining 45,000 shares will be
earned upon the achievement of certain business objectives to be
determined. The Company recorded compensation expense of $180,000
representing the fair value of the 90,000 shares issued at such date.
Compensation expense will be recorded for the fair value of the 45,000
shares on the date the specified objectives are met.
In December 1998, the Company issued 25,000 shares of common stock for
legal services to be provided in connection with the Company's IPO (Note
A). The Company recorded $50,000 of deferred offering costs representing
the fair value of the common stock at the date of issuance.
Subsequent to December 31, 1998, through March 1999, the Company sold
233,250 shares of its common stock for aggregate gross proceeds of
approximately $466,500 (Note A).
Streamedia Communications, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1998
NOTE D - INCOME TAXES
The Company generated a taxable loss of approximately $58,000 for the
period April 29, 1998 (date of inception) to December 31, 1998, which
carryforward expires in 2018.
A deferred tax asset of approximately $20,000 arises from the Company's net
operating loss carryforward at December 31, 1998. The Company has provided
a deferred tax asset valuation allowance since realization of these
benefits cannot be reasonably assured.
NOTE E - COMMITMENTS AND CONTINGENCIES
Office Lease
In January and February 1999, the Company entered into one year
noncancelable operating lease agreements (one of which is with its joint
venture partner) for office space. An aggregate security deposit of $4,200
was required as a condition of such leases. The minimum lease payments
under the noncancelable leases are summarized as follows:
1999 $29,025
2000 2,175
-------
$31,200
Employment Agreements
The Company maintains employment agreements with certain executive
officers. These agreements provide for monthly base salaries and benefits
(when annualized, aggregating $272,000 in executive compensation) and are
cancelable by either party upon written notice. In addition, the Company's
employment contracts contemplate the issuance of common stock and common
stock options to the executives based upon achievements to be established.
In connection with the successful completion of an IPO, the Company is
required to compensate its chief financial officer with a $100,000 bonus.
II-2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Delaware General Corporation Law
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
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
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145(b) of the DGCL 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 or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 145(c) of the DGCL provides that to the extent that a present
or former director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of Section 145, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the present or former director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in subsections (a) and (b) of Section 145. Such
determination shall be made, with respect to a person who is a director or
officer at the time of such determination, (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by a committee of such directors designated by
majority vote of such directors, even though less than a quorum, or (3) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders.
Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in
Section 145. Such expenses (including attorneys' fees) incurred by former
directors and officers or other employees and agents may be so paid upon such
terms and conditions, if any, as the corporation deems appropriate.
Item 25. Other Expenses of Issuance and Distribution
Estimated expenses in connection with the public offering by the Company
of the securities offered hereunder are as follows:
Securities and Exchange Commission Filing Fee $6,945
NASD Filing Fee* 7,000
NASDAQ Small Cap Market Application and Listing Fee* 20,000
Accounting Fees and Expenses* 40,000
Legal Fees and Expenses* 120,000
Printing* 40,000
Fees of Transfer Agent and Registrar* 5,000
Underwriters' Non-Accountable Expense Allowance 170,000
Miscellaneous* 16,055
Total* $425,000
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* Estimated.
Item 26. Recent Sales of Unregistered Securities
In the first quarter of 1999, the Company sold 233,500 shares of common
stock, pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as
amended. The Company raised $467,000 from this private placement in order to
provide bridge financing for this offering.
Item 27. Exhibits
Exhibit No Item
Exhibit 1.1 Form of Underwriting Agreement.(2)
Exhibit 1.2 Form of Underwriters' Warrant Agreement.(2)
Exhibit 3.1 Certificate of Incorporation of the Registrant. (1)
Exhibit 3.2 Bylaws of the Registrant (1)
Exhibit 3.3 Amended Bylaws(1)
Exhibit 5.1 Opinion of Kogan & Taubman, L.L.C..(1)
Exhibit 10.1 Employment Agreement between Streamedia and James D. Rupp
(1) Exhibit 10.2 Employment Agreement between Streamedia and Gayle
Essary (1) Exhibit 10.3 Employment Agreement between Streamedia and
Nicholas J. Malino (1) Exhibit 10.4 Indemnification Agreement between
Streamedia and Directors (1) Exhibit 10.5 Consulting Agreement between
Streamedia and IC Enterprises (1). Exhibit 23.1 Consent of Grant
Thornton LLP, Certified Public Accountants.(1)
Exhibit 23.2 Consent of Kogan & Taubman, L.L.C. is contained in the
opinion filed as Exhibit 5.1 to this registration statement.(1)
Exhibit 27 Financial Data Schedule (1)
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(1) Filed herewith
(2) To be filed by amendment
Item 28. Undertakings
The undersigned registrant hereby undertakes as follows:
(1) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
(2) For the purpose of determining any liability under the
Securities Act, treat each post-effective amendment that
contains a form of prospectus as 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 of those securities.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised
that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy, as
expressed in the Act and is, therefore, unenforceable.
(4) 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 registrant in the successful defense
of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
shares of the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
(5) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of
prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the 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.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorizes this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hasbrouck Heights, State of New Jersey on May 14,
1999.
Streamedia Communications, Inc.
By: /s/ Gayle Essary
Gayle Essary, Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below constitutes and appoints Gayle Essary and James Douglas
Rupp, and each for them, his true and lawful attorney-in-fact and agent, with
full power of substitution and re-substitution, for him and in his name, place
and stead, in any and all capacities (until revoked in writing), to sign any and
all further amendments to this Registration Statement (including post-effective
amendments), and to file same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
such attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents, and each of them, or their substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Gayle Essary Chairman of the Board May 14, 1999
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Gayle Essary (Principal Executive Officer)
/s/ James Douglas Rupp President and CEO, Director May 14, 1999
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James Douglas Rupp (Principal Operating Officer)
/s/ Nicholas J. Malino Chief Financial Officer and Director May 14, 1999
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Nicholas J. Malino (Principal Financial Officer)
/s/ David J. Simonetti Director May 14, 1999
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David J. Simonetti