SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-K/A
(X) Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 1999 Commission File No. 0-26884
NETTER DIGITAL ENTERTAINMENT, INC.
(Exact name of Small Business Issuer in its Charter)
Delaware 95-3392054
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
5125 Lankershim Boulevard
North Hollywood, California 91601
(Address of principal executive office) (Zip Code)
818-753-1990
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange
Which Registered
------------------- ----------------
Common Stock, $.01 Par Value NASDAQ
Common Stock Purchase Warrants NASDAQ
Securities registered pursuant to Section 12(g) of the Exchange Act:
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Company, based upon the closing price of the Common Stock on the NASDAQ
Automated Quotation System on September 23, 1999 was $1,590,000. Shares of
Common Stock held by each officer and director and by each person who
owns 5% or more of the outstanding Common Stock have been excluded in that
such persons may be deemed affiliates.
As of September 23, 1999, there were 3,334,405 shares of common stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Pursuant to General Instruction G(3) to this form, the information required by
Items 10, 11, 12 and 13 of Part III hereof is incorporated by reference from the
registrant's definitive Proxy Statement for its Annual Meeting of Stockholders
scheduled to be held on November 19, 1999.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. FINANCIAL STATEMENTS
Reports of Independent Auditors.
Consolidated Balance Sheets as of June 30, 1999 and 1998.
Consolidated Statements of Income for the years ended June 30, 1999, 1998,
and 1997.
Consolidated Statements of Stockholders' Equity for the years ended June
30, 1999, 1998, and 1997.
Consolidated Statements of Cash Flows for the years ended June 30, 1999,
1998, and 1997.
Notes to Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have
been omitted.
3. Exhibits (numbered in accordance with Item 601 of regulation S-K).
Exhibit Description
Number
- ------- -----------
2.1 Agreement and Plan of Merger and Reorganization, as amended. (5)
2.2 Amendment No. 2 to the Agreement of Merger and Reorganization. (6)
2.3 Amendment No. 3 to the Agreement of Merger and Reorganization. (7)
2.4 Amendment No. 4 to the Agreement of Merger and Reorganization. (7)
2.5 Amendment No. 5 to the Agreement of Merger and Reorganization. (7)
3.1 Certificate of Incorporation. (1)
3.2 Bylaws. (1)
4.1 Certificate of Designation. (8)
4.2 Purchase Agreement dated March 29,1999 between the Company and AIB.
(14)
4.3 Warrant dated March 29, 1999. (14)
4.4 Standstill Agreement dated March 29, 1999. (14)
4.5 Note Payable between the Company and Allco Financial Group Limited
dated June 10, 1999. (15)
10.1 Mr. Netter's Employment Agreement. (1)
10.2 Mr. Copeland's Employment Agreement. (1)
10.3 "Babylon 5" Production Agreement. (1)
10.4 1995 Stock Option Plan. (1)
10.5 Talbot Consulting/Completion Fee Agreement. (6)
10.6 Warrant, dated September 4, 1997, issued to W.J. Gallagher &
Company. (9)
10.7 Letter Agreement, dated September 1, 1997, between the Company and
H.D. Brous & Co., Inc. (9)
10.8 Stock Option Agreement, dated September 1, 1997, between the
Company and H.D. Brous & Co., Inc. (9)
10.9 Lease for premises at 5125 Lankershim Blvd., North Hollywood, CA.
(9)
17
10.10 Equipment and furniture lease with Lyon Credit Corporation. (9)
10.11 Equipment lease with Terminal Marketing Company. (9)
10.12 Installment note and Loan and Security Agreement with Comerica
Bank. (9)
10.13 Mr. Costa's Employment Agreement. (9)
10.14 Mr. Francis's Employment Agreement. (9)
10.15 Mr. Cercone's Employment Agreement. (9)
10.16 Letter agreement, dated October 20, 1997, between the Company and
Martin E. Janis & Company, Inc. (10)
10.17 Consulting Agreement, dated October 1, 1997, by and between Netter
Digital Entertainment, Inc. and Geoffrey Talbot. (11)
10.18 Stock Option Agreement, dated October 1, 1997, by and between
Netter Digital Entertainment, Inc. and Geoffrey Talbot. (11)
10.19 Equipment lease with Comerica Leasing Corporation. (12)
10.20 Equipment lease with Digital Financial Services. (12)
10.21 Amendment to Employment Agreement, Douglas Netter. (13)
10.22 Amendment to Employment Agreement, John Copeland. (13)
10.23 Employment Agreement, Jay Fukuto. (15)
20 Press release, dated March 31, 1999. (14)
21 List of Subsidiaries. (9)
23.1 Consent of Independent Certified Public Accountants (16)
27 Financial Data Schedule. (13)
---------------------------
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (Registration Number is 33-97402-LA) declared effective November 20, 1995.
(2) Incorporated by reference to the Company's Registration Statement on Form
8-A dated November 20, 1995.
(3) Incorporated by reference to the Company's Form 10-QSB for the quarter ended
December 31, 1995.
(4) Incorporated by reference to the Company's Form 10-QSB for the quarter ended
March 31, 1996.
(5) Incorporated by reference to the Company's Proxy Statement , dated June 26,
1996 for the approval/disapproval of the proposed merger between the Company and
Videssence, Inc.
(6) Incorporated by reference to the Company's Form 10-KSB for the year ended
June 30, 1996.
(7) Incorporated by reference to the Company's Form 8-K dated January 10, 1997.
(8) Incorporated by reference to the Company's Form 10-QSB for the quarter ended
September 30, 1996.
(9) Incorporated by reference to the Company's Form 10-KSB for the year ended
June 30, 1997.
(10) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended September 30, 1997.
(11) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended December 31, 1997.
(12) Incorporated by reference to the Company's Form 10-QSB for the quarter
ended March 31, 1998.
18
(13) Incorporated by reference to the Company's Form 10-KSB for the year ended
June 30, 1998.
(14) Incorporated by reference to the Company's Form 10-Q for the quarter ended
March 31, 1999.
(15) Incoporated by reference to the Company's Form 10-K for the year ended June
30, 1999 as filed on September 24, 1999.
(16) Filed herewith.
(b) REPORTS ON FORM 8-K
During the last quarter of the period covered by this report, the Company filed
one report on Form 8-K. In that report, filed on April 8, 1999, the Company
reported, that on March 29, 2000, (i) it obtained the $1.0 million Facility
from AIB, with each increment of principal drawn on the funding facility being
evidenced by a non-interest bearing Senior Subordinated Convertible Note,
due March 29, 2002, convertible into shares of the Company's common stock at a
conversion rate of $2.00 per share, subject to anti-dilution adjustments, and
(ii) the Company issued AIB five-year warrants to purchase up to 750,000 shares
of the Company's common stock, at an exercise price of $2.50 per share, subject
to anti-dilution adjustments. For further discussion of the Facility, see
"Liquidity and Capital Resources."
19
SIGNATURE
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
NETTER DIGITAL ENTERTAINMENT, INC.
Dated: February 25, 2000 By: /s/Chad Kalebic
Chad Kalebic, Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/Douglas Netter Chairman of the Board of February 25, 2000
Douglas Netter Directors, Chief Executive
Officer, and President
(Principal Executive Officer)
/s/John Copeland Executive Vice President and February 25, 2000
John Copeland Secretary/Director
/s/Chad Kalebic Chief Financial Officer February 25, 2000
Chad Kalebic (Principal Financial and
Accounting Officer)
/s/Dr. Leonard Silverman Director February 25, 2000
Dr. Leonard Silverman
/s/Kate Netter Forte Director February 25, 2000
Kate Netter Forte
/s/Lennart Ringquist Director February 25, 2000
Lennart Ringquist
20
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTNATS
We consent to the incorporation by reference in Registration Statement Nos.
333-76457 and 333-43477 on Form S-8 and No. 333-56963 on Form S-3 of Netter
Digital Entertainment, Inc. and Subsidiaries of our report, dated August 13,
1999, appearing in the annual report on Form 10-K of Netter Digital
Entertainment Inc. and Subsidiaries for the year ended June 30, 1999.
/s/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
August 13, 1999
