As filed with the Securities and Exchange Commission on April 3, 1997
Registration No. 33-80935
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO FORM SB-2 ON
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Network Event Theater, Inc.
(Exact name of registrant as specified in its Charter)
Delaware 13-3864111
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
149 Fifth Avenue
New York, New York 10010
(212) 779-2740
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
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Harlan D. Peltz
Network Event Theater, Inc.
149 Fifth Avenue
New York, New York 10010
(212) 779-2740
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
---------------
Copies to:
Bertram A. Abrams, Esq.
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036
(212) 969-3000
Facsimile No. (212) 969-2900
---------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement from the
same offering. |_| _________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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Network Event Theater, Inc.
Common Stock
This Prospectus relates to the offering by Network Event Theater, Inc., a
Delaware corporation (the "Company"), of 2,645,000 shares of common stock, par
value $.01 per share ("Common Stock"), issuable upon the exercise of the
Company's outstanding redeemable warrants (the "Warrants").
This Prospectus also relates to (i) the offering and sale from time to time
by Whale Securities Co., L.P. ("Whale") of 230,000 shares of Common Stock
issuable upon the exercise of warrants (the "Underwriter's Warrants") and
230,000 shares of Common Stock issuable upon the exercise of warrants underlying
the Underwriter's Warrants (the "Underlying Warrants"), and (ii) the offering
and sale from time to time by certain securityholders of the Company (the
"Selling Securityholders") of 575,000 shares of Common Stock (including 200,000
shares issuable upon the exercise of warrants). See "Selling Securityholders and
Plan of Distribution."
Each Warrant entitles the registered holder thereof to purchase one share
of Common Stock at a price of $5.00, subject to adjustment in certain
circumstances, at any time through and including April 2, 2001. The Warrants are
redeemable by the Company, with the consent of Whale, at any time upon notice of
not less than 30 days, at a price of $.10 per Warrant, provided that the closing
bid quotation of the Common Stock on all 20 trading days ending on the third day
prior to the day on which the Company gives notice has been at least 150%
(currently $7.50, subject to adjustment) of the then effective exercise price of
the Warrants.
The Underwriter's Warrants entitle Whale and its designees to purchase up
to 230,000 shares of Common Stock at an exercise price of $8.25 per share and/or
up to 230,000 Underlying Warrants at an exercise price of $.165 per warrant,
which Underlying Warrants entitle the holders thereof to purchase shares of
Common Stock at an exercise price of $8.25 per share. Neither the Underwriter's
Warrants nor any of the securities underlying the Underwriter's Warrants are
redeemable by the Company. The Underwriter's Warrants and the Underlying
Warrants are exercisable at any time and from time to time until April 2, 2001.
The exercise price and number of shares of Common Stock issuable upon exercise
of the Underlying Warrants are subject to adjustment in certain circumstances.
The Warrants and Underwriter's Warrants were originally issued by the
Company in connection with its initial public offering in April 1996. The
Company will receive the proceeds from the exercise of the Warrants, the
Underwriter's Warrants and the Underlying Warrants. The Company will not receive
any proceeds from the sale of the shares held by Whale or the Selling
Securityholders.
The Common Stock and Warrants are quoted on the Nasdaq SmallCap Market
under the symbols "NETS" and "NETSW," respectively. On March 27, 1997, the
closing sale price of the Common Stock was $5.25 per share and the closing sale
price of the Warrants was $1.41 per Warrant.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April __, 1997
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement, Registration No. 33-80935 (collectively
with all amendments, exhibits, schedules and supplements thereto, the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus, which forms a part of the Registration Statement, does not contain
all the information set forth in the Registration Statement, as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the securities offered hereby, reference is made to the
Registration Statement. Statements contained in this Prospectus as to the
contents of any contract or other document that has been filed as an exhibit to
the Registration Statement are qualified in their entirety by reference to such
exhibits for a complete statement of their terms and conditions. The Company
also files periodic reports and other information required to be filed pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Registration Statement and such periodic reports and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 or at
certain of the regional offices of the Commission located at 7 World Trade
Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, upon payment of the fees prescribed by the
Commission. Copies of such material may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a Web site (http://www.sec.gov)
through which the Registration Statement and the Company's periodic reports and
other information can be retrieved.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company with
the Commission are incorporated by reference in this Prospectus:
(a) The Company's Transition Report on Form 10-KSB for the transition
period from January 1, 1996 to June 30, 1996;
(b) The Company's Quarterly Reports on Form 10-QSB for the fiscal quarters
ended September 30, 1996 and December 31, 1996;
(c) The Company's Current Report on Form 8-K filed September 28, 1996, as
amended by Form 8-K/A filed on November 26, 1996; and
(d) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed January 17, 1996.
Each document filed subsequent to the date of this Prospectus by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior
to the termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such document.
Any statement contained in a document, all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained or
incorporated by reference herein modified or superseded such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, upon the written or oral
request of any such person, a copy of all such documents which are incorporated
herein by reference (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into the documents that this
Prospectus incorporates). Written or oral requests for copies should be directed
to Bruce L. Resnik, Executive Vice President - Chief Financial Officer, Network
Event Theater, Inc., 149 Fifth Avenue, New York, New York 10010, telephone
number: (212) 779-2740.
THE COMPANY
The Company was incorporated under the laws of the State of Delaware in
December 1995 to be the successor to the business of Universal Access Network,
LP (the "Partnership"), a Delaware limited partnership organized in August 1993.
In April 1996, the Partnership effected a reorganization pursuant to which it
assigned all of its assets to the Company in exchange for 6,354,440 shares of
Common Stock, and distributed those shares to its partners. In April 1996, the
Company sold 2,300,000 shares of Common Stock and 2,645,000 Warrants in a public
offering in which the Company received approximately $10.2 million of net
proceeds, of which $500,000 was used to repay Company debt.
The Company is engaged principally in the growth of its college campus
theater network (the "Network") and in building or acquiring complementary media
and marketing services businesses that focus on the college and young adult
market. It is the Company's intention to provide a comprehensive marketing
service to advertisers, sponsors and entertainment companies by helping them
reach college audiences through a variety of media including the sponsorship of
events presented on the Network, the placement of advertisements in college
newspapers and the placement of posters on general and proprietary bulletin and
wall boards on college campuses.
The Network is designed to deliver entertainment and educational events and
programming via satellite to a nationwide network of electronically linked
campus theaters for display through high resolution video projectors on movie
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theater sized screens and thereby to reach a geographically dispersed audience
of college students, faculty, administrators and community residents.
On September 13, 1996, American Passage Media, Inc. ("American Passage"), a
newly organized wholly owned subsidiary of the Company, acquired from American
Passage Media Corporation ("APMC") substantially all of APMC's assets relating
to its college and high school media and marketing business. The acquired
businesses included APMC's college newspaper placement operations, college
campus postering operations, high school focused GymBoards(TM) operations and
various other advertiser and event sponsorship related activities. APMC has been
involved in the young adult marketing business since 1976.
On February 21, 1997, another newly organized wholly owned subsidiary of
the Company, Campus Voice, L.L.C. ("Campus Voice"), acquired from SCCGS, Inc.
("SCCGS") substantially all of the assets previously owned by Gates
Communications, L.P. ("Gates") relating to a network of giant advertising wall
boards and kiosks on college campuses. SCCGS acquired those assets from Gates at
a foreclose sale in December 1996.
The Network
The Company has commenced initial operations of the Network and anticipates
that it will broadcast on average three to four events each month during the
1996-97 academic year. The Company's goal is to broadcast at least six events
per month. Beginning this fiscal year, the Company has begun to generate
operating revenues from the Network primarily from charges paid by entertainment
program providers such as movie studios, record companies, cable TV companies
and TV broadcasters for the use of the Network and to defray certain expenses of
its operation and the promotion of particular events. Revenues earned from
ticket sales have not been significant to date.
The Company's proposed plan of operations for its Network will be largely
dependent upon the Company's ability to attract revenues from sponsors,
advertisers and entertainment companies and to enter into agreements with a
significant number of colleges and universities for the installation of
theaters. The Company is focusing its initial marketing efforts on installing
its equipment at 100 of the nation's largest colleges and universities. As of
March 31, 1997, the Company had installed Network theater equipment at 32 campus
theaters and had entered into contracts with five other schools. The Company
intends to enter into agreements with approximately ten additional colleges and
universities during the remainder of the current fiscal year. The number of
installations will be dependent upon the number of school contracts the Company
is able to enter into. The Company currently has three full-time employees
engaged in marketing the Network to colleges and universities across the United
States.
The Company has entered into a number of licensing agreements with content
providers such as Miramax, Don King Productions, Mercury Records, Warner
Brothers and ABC for individual productions. In August 1996, the Company entered
into an agreement with HBO to show one program a month during the 1996-1997
academic year on its Network. In the Fall of 1996, among other events, the
Company presented three HBO programs and premiered two movies for Miramax,
including Swingers and Scream. The Network also premiered the R.E.M. Road Movie
for Warner Brothers and presented a live concert featuring Rusted Root for
Polygram. So far in the Spring of 1997, the Company has presented two HBO
programs and an interview with Milos Forman, a live production from the Los
Angeles Laugh Factory and a world premiere of the first two episodes of the new
FOX comedy "Pauly" featuring Pauly Shore. During the next twelve months, the
Company plans to develop further relationships with these and other content
providers to acquire rights to special events. However, there can be no
assurance that the Company will attract and retain a sufficient number of
schools and obtain the programming necessary to generate meaningful revenues or
achieve profitable operations from its Network.
The Company has initiated marketing activities relating to growth of its
Network and intends to substantially increase its marketing efforts in order to
create awareness and demand by programmers, sponsors and advertisers. It is
anticipated that students will generally be informed of Network events through
advertisements in school newspapers, and on posters, flyers and other
promotional activities.
The Company believes that the acquisitions of American Passage and Campus
Voice will enhance its marketing and promotional efforts with respect to
programs distributed via its Network. First, the Company plans to utilize the
knowledge and experience of American Passage's marketing and media placement
professionals to gain access to and develop relationships with both advertisers
and school administrators and to facilitate the promotions of the Network's
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events. Second, the Company believes that American Passage's businesses should
allow it to provide an integrated and comprehensive program of marketing
opportunities for a broad array of content providers, sponsors and advertisers
who are targeting the college and young adult markets. The Company also
anticipates that American Passage's full-time sales force could assist the
Network in selling such integrated programs to sponsors and advertisers and that
its extensive field force of independent representatives can be used to place
posters on college campuses and otherwise augment the Network's own field force
to publicize events being shown on the Network's screens. The Company also
anticipates that the Campus Voice network of giant wall boards and kiosks will
be an additional medium for advertising and promoting the Network's events and
in achieving additional recognition for the Network on college campuses.
The Company anticipates that the Network's principal sources of revenues
will be from fees paid by content providers and from sponsorship of Network
events. The Company also anticipates earning revenues from ticket sales to
selected events. When students are charged for admission to events, ticket
prices are set by the Company and ticket receipts are collected by student
organizations and remitted to the Company after the deduction of small amounts
to reimburse the costs of collection.
American Passage
American Passage is active in a number of businesses including the
placement of print advertising in college newspapers, postering of campus
bulletin boards, postering on distribution racks that contain college newspapers
on campus (AdRaX(TM)), its high school focused GymBoards(TM) message centers and
other advertising and event sponsorship related activities.
American Passage represents on a non-exclusive basis virtually every
college newspaper that accepts national advertising. The college newspapers that
American Passage represents have a combined circulation of over six million and
enrollment at these schools totals over ten million students. American Passage's
national advertising customers include, among others, American Express, AT&T,
TIAA/CREF, The Wall Street Journal, Nike and Microsoft. American Passage's
resources also include a database of all major college newspapers and
demographic and consumer data that enable it to create customized targeted media
programs for its advertising clients. In addition to providing marketing and
research assistance to advertisers, American Passage assists in the development
and distribution of advertising materials to college newspapers. American
Passage's revenues are generated principally from sales of advertisements to be
run in college newspapers.
American Passage's campus postering service entails the placement of
posters and other advertising messages on bulletin boards on college campuses
throughout the country. Through a network of approximately 250 full-time and
student representatives, American Passages' postering service cover more than
1,250 college campuses with enrollment totaling over ten million students.
Advertisers pay American Passage a fee for these postering services. American
Passage's AdRaX(TM) Location media college newspaper distribution racks with
large advertising display spaces above the newspaper bin. American Passage has
placed over 1,250 AdRaX(TM) units at prime locations at over 200 college
campuses. Revenues are generated from monthly advertisements appearing on each
unit. GymBoards(TM) are gender specific message and information centers that are
installed in boys' and girls' high school locker rooms at no cost to the school
and are customized with each school's colors and mascot or nickname.
GymBoards(TM) consist of a coach's message board and two advertising panels
which are protected by acrylic covers. GymBoards(TM) are posted in more than
4,500 high schools nationwide with more than four million students representing
about one third of the total high school market. Advertising is sold on a
monthly basis from September through May.
In connection with its acquisition of assets from APMC, American Passage
entered into an agreement to serve as the exclusive representative for the sale
of national advertising for APMC's Directory of Classes publication. Directory
of Classes is the official class guide and registration manual at approximately
eighty college campuses with total enrollments of over 1.3 million students.
This agreement, under which American Passage will receive specified sales
commissions for as long as it achieves certain minimum sales levels, has enabled
American Passage to retain the right to sell national advertising for the
Directory of Classes without assuming responsibility for publishing it. Other
American Passage activities include servicing as the exclusive representative
for consumer advertising for the National Association of Colleges and Employers
(NACE) Job Choices publication and marketing and executing Spring Break programs
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and promotions at the six resort properties operated by Paradise Found Resorts &
Hotels, in Panama City Beach, Florida.
Campus Voice
Campus Voice operates a network of giant poster wall boards and kiosks with
approximately 3,500 poster frames located in almost 400 colleges and
universities in the United States which reach a combined enrollment of over 3.6
million college students. The Company plans to increase the number of poster
frames in the future. Each month during the academic year, Campus Voice
publishes multiple versions of its giant posters which are displayed on its
proprietary network of giant campus wallboard poster frames. The posters consist
of content of general interest to college students which is produced by Campus
Voice under contract or supplied by regular print content providers such as
established magazines. In addition, the posters contain space which is available
to sponsors and advertisers for their messages. Campus Voice anticipates earning
revenues from the sale of space on its posters to advertisers and from the sale
of editorial content, particularly to magazines interested in reaching college
students.
Other Acquisitions
The Company plans to continue to expand its college media and marketing
businesses either through internal growth or acquisitions.
The Company has signed letters of intent to acquire two other companies
engaged in various aspects of the college media and marketing business, and
these transactions are subject to the completion of due diligence and to the
preparation and execution of definitive agreements. The Company is also
currently engaged in discussions with several other entities that may lead to
future acquisitions. There can be no assurance that the Company will consummate
these or any other transactions. The Company may pay for these or other
acquisitions with either cash, Common Stock or both. The number of shares of
Common Stock which might be issued in connection with these or any future
acquisitions could be substantial in relation to the total number of shares that
are presently outstanding. Any such issuance would result in dilution to the
interests of the Company's present shareholders.
The Company believes that the acquisition of American Passage, Campus Voice
and other college media and marketing businesses will allow it to provide an
integrated and comprehensive program of media and marketing opportunities for a
broad array of entertainment companies, sponsors and advertisers which are
targeting the young adult market. For example, a motion picture studio which is
previewing a major motion picture using the Network could launch a simultaneous
and comprehensive marketing program (including advertisements in college
newspapers, on-campus postering and other marketing vehicles and tools in the
Company's portfolio) at campuses nationwide, not just those at which a Network
theater has been installed. The Company believes that this added reach will
enable it to build long term relationships with its clients. American Passage's
full-time marketing force has already assisted the Network in selling such
integrated programs to sponsors and advertisers. In addition, its staff placed
advertisements in college newspapers relating to Network programs, its field
force of independent representatives placed posters on college campuses and
otherwise augmented the Network's own field force to publicize events being
shown on the Network's screens.
The Company is now generating operating revenues on a consolidated basis.
These revenues result from the operations of American Passage and payments from
program providers using the Network's screens. Because of expenses required to
install Network theater equipment at colleges and to obtain programming for
these theaters, the Company is still generating operating losses on a
consolidated basis. These losses may continue and may remain significant until
the Network begins to generate greater revenues from sponsorship, advertising
and ticket sales.
The Company's principal executive offices are located at 149 Fifth Avenue,
New York, New York 10010, and its telephone number is (212) 779-2740.
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RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk. Prospective investors should carefully consider the following risk factors
before making an investment decision. As used herein, unless the context
otherwise requires, the "Company" means Network Event Theater, Inc. and its
subsidiaries.
1. Uncertainty of Plan of Operation. The Company's plan of operation and
prospects will be dependent upon the success of its Network and the success of
its acquisitions. The success of the Network will be dependent upon the
Company's ability to enter into agreements with a significant number of colleges
and universities; establish and maintain satisfactory relationships with college
administrators and student organizations; successfully obtain and install
satellite transmission, projection and audio equipment on a timely and cost
effective basis; and successfully expand its Network to attract programmers
willing to provide currently popular programming suitable for college student
audiences on commercially reasonable terms. The Company has limited experience
in developing and operating its Network and in effectuating rapid Network
expansion and there is limited information available concerning the Network's
potential performance. There can be no assurance that the Company will be able
to successfully implement its business plan with respect to its Network or that
unanticipated expenses, problems or technical difficulties will not result in
material delays in its implementation. In addition, the Company's success in
operating the businesses it acquires will depend on its ability to integrate its
acquisitions with its present operations and marketing strategies. The Company
has had only limited experience in operating the businesses of American Passage
and Campus Voice. There can be no assurance that the Company can operate these
businesses successfully or integrate them into a coherent marketing strategy
which will be attractive to advertisers and sponsors.
2. Significant and Continuing Losses. For the period from inception to
December 31, 1996, the Company incurred a net loss of $7,026,241. Since December
31, 1996, the Company has continued to incur significant losses and anticipates
that it will continue to incur significant losses until, at the earliest, the
Company generates sufficient revenues to offset the substantial up-front capital
expenditures and operating costs associated with Network expansion. There can be
no assurance that the Company will attract and retain a sufficient number of
schools and obtain the programming necessary to generate meaningful revenues
from its Network or achieve profitable operations. Since its acquisition,
American Passage has generated sufficient revenues to meet its expenses and debt
service requirements. Campus Voice has generated a small operating loss since
its acquisition.
3. Need for Additional Financing. The capital requirements relating to
implementation of the Company's business plan have been and will continue to be
significant. Since inception, the Company has financed the development of its
Network from sales of Company securities. As of February 28, 1997, the Company
had cash, cash equivalents and investments of approximately $4.0 million
remaining from those sales. The Company's subsidiaries have generated sufficient
revenues to fund their own operations, but not those of the Network. Based on
the Company's current proposed plans and assumptions relating to the
implementation of its business plan (including the timetable of, and costs
associated with, Network development), the Company anticipates that it has
sufficient resources to satisfy its contemplated cash requirements for at least
the next six months. In the event that the Company's plans change, its
assumptions change or prove to be inaccurate or if its current resources
otherwise prove to be insufficient to implement its business plan (due to
unanticipated expenses or technical or other problems), the Company could be
required to seek additional financing sooner than currently anticipated. To the
extent that the Company's current resources are not sufficient to enable the
Company to attract and retain a sufficient audience to generate meaningful
revenues from its Network or achieve profitable operations, the inability to
obtain additional financing will have a material adverse effect on the Company,
including possibly requiring the Company to significantly curtail or cease its
operations. In addition, any implementation of the Company's business plan
beyond the next six months or the origination of Company-produced events will
require capital resources substantially greater than those currently available
to the Company. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, or at all.
4. Limited Number of Contracts and Installations; Uncertainty of Network
Expansion. The Company's Network is currently installed in a limited number of
campus theaters. The process of identifying and establishing relationships with
school administrators and student organizations and obtaining new contracts is
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lengthy and uncertain and Network installation typically requires three months
to complete from the time a new contract is entered into. While the Company is
currently engaged in discussions with numerous colleges and universities
relating to Network installation, there can be no assurance that the Company
will be successful in negotiating satisfactory agreements or in identifying
colleges and universities willing to join the Company's Network. Regulations in
certain states require state colleges and universities to award contracts after
issuances of requests for proposals pursuant to competitive bidding, which could
delay the Company's plans in target markets. The Company has relatively limited
experience in marketing its Network and has limited financial, personnel and
other resources to undertake extensive marketing activities. There can be no
assurance that the Company will be able to successfully expand its Network or
that any expansion will not be subject to unforeseen delays and costs.
5. Dependence on Student Organizations. The Company's Network will be
dependent on the efforts of school administrators and student organizations at
each university, over which it will not have absolute control, to promote, sell
and operate the Company's program events and to account for ticket revenues, if
any. Pursuant to the Company's Network agreements, schools are entitled to
receive a percentage of ticket sales as consideration for organizing, promoting
and operating Network events. However, the Company does not anticipate that
ticket revenues will be a material component of the Network's revenues. Student
organizations typically promote other school events and may not be expected to
increase their efforts on behalf of the Company in the absence of increased
incentives or demand. Although the Company plans to employ regional coordinators
to facilitate promotional efforts made by student organizations, the Company's
ability to successfully promote its events will be limited by the number of
regional coordinators and will be largely dependent on the efforts of such
regional coordinators and student organizations.
6. Uncertainty of Programming Availability. The Company's success will be
largely dependent upon the Company's ability to obtain currently popular
programming for its Network suitable for college student audiences. The Company
has entered into an agreement with Freddie Fields and Jerome Hellman to assist
the Company in identifying and establishing relationships with program
producers, such as record companies, motion picture distributors and television
broadcasters. While the Company believes that Messrs. Fields and Hellman have
established relationships with potential programming sources, there can be no
assurance that such individuals will be successful in obtaining quality
programming for the Company at a reasonable cost, or at all. The Company
currently has no specific multi-year arrangements for the acquisition of any
programming and, accordingly, the Company's ability to obtain programming is
subject to a high degree of uncertainty on an annual basis. Failure to obtain a
sufficient number of popular programming events on acceptable terms,
particularly in instances in which the Company has made significant capital
investments in its Network, would have a material adverse effect on the Company.
7. New Concept; Uncertainty of Market Acceptance. The Company's Network is
a new business concept. As is typical in the case of a new concept in the
entertainment industry, the ultimate level of demand for and market acceptance
of the Company's Network is uncertain. The Company will be required to
substantially increase its marketing efforts to create awareness and demand of
the Company's Network by programmers, colleges and students. The Company's
prospects will be significantly affected by its ability to attract programmers
and advertisers to promote their programs and products using the Network and, at
the same time, attract colleges to participate in the Network. Because
programmers operate on a national scale, it will be important for the Company to
achieve a large enough installed base of theaters to reach a critical mass of
potential student audiences. Programmers may be reluctant to participate in the
Network unless the Company has installed its Network in a large number of campus
theaters. Similarly, since college administrators have limited experience with
commercial activities, colleges may be reluctant to use the Network until a
sufficient number of other colleges have committed to its use. The Company will
also be significantly dependent on the level of initial and continued acceptance
by students which will be essential to market acceptance of the Network.
Inasmuch as demand by programmers, colleges and students are substantially
interrelated, any lack or lessening of demand by any one of these could have an
adverse effect on market acceptance for the Company's Network.
8. Uncertainty of Network Performance; Technological Obsolescence. Although
the Company believes that the Network's satellite, projection and audio systems
perform the principal functions for which they have been designed, the Company
has only conducted limited tests of its Network at a limited number of campus
theaters. Accordingly, there can be no assurance that, upon widespread
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commercial use, the Network will satisfactorily perform all of the functions for
which it has been designed, that it will operate satisfactorily in a significant
number of campus theaters, that it will satisfy current price or performance
objectives, or that unanticipated technical or other problems will not occur
which would result in increased costs or material delays in Network
commercialization. Technologies as complex as those incorporated into the
Company's Network may contain errors which become apparent subsequent to
widespread commercial use. Remedying such errors could delay the Company's plans
and cause it to incur additional costs. In addition, the markets for satellite
transmission and high-resolution video projection systems are characterized by
rapidly changing technology and evolving industry standards, often resulting in
product obsolescence or short product lifecycles. The Company may be required to
adapt its Network to technological changes in the industry, including upgrading
its equipment to a fully digital transmission system capable of delivering High
Definition video when such technology becomes available at a commercially
reasonable cost. There can be no assurance that the Company will be able to
adapt its network to changing technologies or that competitors will not develop
technologies or products that render the Company's Network obsolete or less
marketable.
The Company will be dependent in the development of the Network on third
parties for the satellite transmission of its programming signal to campus
theaters on a cost effective basis. The Company anticipates that it will lease
facilities necessary to transmit the Network's programming. It is possible that
transmission facilities may from time to time experience system interruptions or
equipment failures. System interruptions and equipment failures resulting in
delays could adversely affect consumer confidence and the Company's reputation.
In addition, to the extent that capacity for transmission by third parties is
limited, the Company's inability, for economic or other reasons, to transmit
signals through existing providers or to obtain transmission services from
additional providers could have an adverse affect on the Company.
The Company relies on third-party manufacturers for all of its supply of
satellite dishes and receivers, high-resolution video projectors and audio
equipment incorporated into its Network. The Company has not entered into
agreements with any equipment manufacturer and purchases equipment components
pursuant to purchase orders placed from time to time in the ordinary course of
business. The Company is substantially dependent on the ability of its
manufacturers to provide adequate supplies of high quality equipment components
on a timely basis and on favorable terms. There can be no assurance that such
manufacturers will have sufficient production capacity to satisfy the Company's
scheduling requirements during any period of sustained demand or that the
Company will not be subject to the risk of price fluctuations and periodic
delays. Failure or delay by any of the Company's manufacturers in supplying
components to the Company on favorable terms could result in material
interruptions in the Network's operations and adversely affect the Company's
ability to implement Network expansion. The Company's Network will also be
dependent upon third parties for the installation of its equipment.
9. Factors Affecting the Entertainment Industry. The Company's activities
will be subject to all of the risks generally associated with the entertainment
industry. Program acquisition costs, as well as promotion and marketing expenses
and third-party participations payable to producers and others, which reduce
potential revenues derived from programming events, have increased significantly
in recent years. The Company's future operating results will depend on numerous
factors beyond its control, including the popularity, price and timing of
programming and special events being released and distributed, national,
regional and local economic conditions (particularly adverse conditions
affecting consumer spending), changes in student demographics, the availability
of other forms of entertainment, critical reviews and public tastes and
preferences, which change rapidly and cannot be predicted. The Company's ability
to plan for program development and promotional activities will be significantly
affected by the Company's ability to anticipate and respond to relatively rapid
changes in tastes and preferences of college students. College students also
have finite disposable income, which may make it more difficult for the Company
to price its events at levels which result in profitable operations. In
addition, the Company expects that its operating results will fluctuate between
school semesters and the summer months when most students are on recess.
10. Competition. The Company will face intense competition for a finite
amount of student discretionary spending from numerous other businesses in the
entertainment industry. The Company will compete with various forms of
entertainment which provide similar value, both on and off campus, such as music
groups and other entertainers (who tour colleges and universities), movies,
video and audio cassettes, broadcast television, cable programming, special
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pay-per-view events, sporting events and other forms of entertainment which may
be less expensive or provide other advantages to college students. The Company
will also compete for advertising dollars with traditional media. While the
Company believes that Network Event Theater is the only network of its kind
currently installed on college campuses, there can be no assurance that other
companies are not developing or will not seek to develop similar networks. The
Company is aware that certain closed-circuit television operators are delivering
music videos, current events, sports and campus news in student cafeterias. If
the Network is successful, the Company expects that other companies may seek to
enter or capitalize on college markets and compete directly with the Company.
Many of these companies have substantially greater financial, personnel,
technical and other resources than the Company and have well-established
reputations for success in the development, promotion and marketing of
entertainment events. There can be no assurance that the Company will be able to
compete successfully. In addition, American Passage and Campus Voice face
competition in their respective businesses. Such competitors may be larger and
better financed than American Passage and Campus Voice and pose significant
competition challenges.
11. Potential Liability and Insurance. Pursuant to the Company's agreements
with schools, the Company is required to obtain comprehensive general liability
insurance which covers personal injury, libel, slander and false advertising and
which names the school as an additional insured. The Company currently maintains
liability insurance in the aggregate amount of $4 million, with a limit of $3
million per occurrence. There can be no assurance that such insurance will be
sufficient to cover potential claims or that an adequate level of insurance will
be available in the future at a reasonable cost. A partially or completely
uninsured claim against the Company, if successful and of sufficient magnitude,
would have a material adverse effect on the Company.
12. Dependence on Key Personnel and Consultants. The success of the Company
will be dependent on the personal efforts of Harlan D. Peltz, its Chairman and
Chief Executive Officer, and other key personnel. Although the Company has
entered into an employment agreement with Mr. Peltz terminating in April 1999,
the loss of his services could have a material adverse effect on the Company's
prospects. The Company anticipates that in addition to its executive officers it
will continue to be dependent on the services of independent consultants. The
Company's agreement with an entity owned by Messrs. Fields and Hellman provides
that it will be entitled to receive annual consulting fees of $450,000 and
$550,000 in 1996 and 1997, respectively, annual overhead expense reimbursements
of $262,500 and $275,625 in 1996 and 1997, respectively, and 10% of the
Company's pre-tax income through 1999, whether or not the Company obtains
programming for its Network through their efforts. Messrs. Fields and Hellman
have agreed to devote a majority of the business time of one of such individuals
and a substantial portion of the other's time to the Company's affairs and not
to engage in any business activity which is competitive with the Company. The
Company expects, however, that such individuals will devote a significant
portion of their time and efforts to other entertainment-related business
activities without being required to offer any particular programming
opportunities to the Company. The success of the Company is also dependent upon
its ability to hire and retain additional qualified marketing, technical,
financial and other personnel. Competition for qualified personnel in the
entertainment industry is intense and there can be no assurance that the Company
will be able to hire or retain additional qualified personnel.
13. Possible Adverse Effect from Future Sales of Restricted Shares;
Registration Rights. The Company currently has 8,654,440 shares of Common Stock
outstanding, of which 2,300,000 shares of Common Stock are freely tradable
without restriction or further registration under the Securities Act. All of the
remaining 6,354,440 shares of Common Stock outstanding are "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act, and may be sold in limited amounts without registration pursuant
to such rule, commencing April 29, 1997. The shares of Common Stock held by the
Selling Securityholders or issuable upon exercise of the warrants held by the
Selling Securityholders, and the securities issuable upon exercise of the
Underwriter's Warrants, have been included in the Registration Statement of
which this Prospectus forms a part. No prediction can be made as to the effect,
if any, that sales of shares of Common Stock or even the availability of such
shares for sale will have on the market prices prevailing from time to time. The
possibility that substantial amounts of Common Stock may be sold in the public
market may adversely affect the prevailing market price for the Common Stock and
could impair the Company's ability to raise capital through the sale of its
equity securities.
14. No Assurance of Public Market; Possible Volatility of Market Price of
Common Stock and Warrants. There can be no assurance that a regular trading
market for the Common Stock or Warrants will be sustained. The market prices of
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the Company's securities may be highly volatile as has been the case with the
securities of other emerging companies. Factors such as the Company's operating
results and announcements by the Company or its competitors may have a
significant impact on the market price of the Company's securities. In addition,
in recent years, the stock market has experienced a high level of price and
volume volatility and market prices for the stock of many companies have
experienced wide price fluctuations which have not necessarily been related to
the operating performance of such companies.
The Company's Common Stock and Warrants are currently listed on Nasdaq. In
order to continue to be listed on Nasdaq, however, the Company must maintain
$2,000,000 in total assets, a $200,000 market value of the public float and
$1,000,000 in total capital and surplus. (Nasdaq has proposed amending those
maintenance standards to $2,000,000 in net tangible assets (total assets less
total liabilities and goodwill) or $35,000,000 market capitalization or $500,000
of net income in two of the last three years, and $1,000,000 market value of the
public float.) In addition, continued inclusion requires two market-makers and a
minimum bid price of $1.00 per share; provided, however, that if the Company
falls below such minimum bid price, it will remain eligible for continued
inclusion on Nasdaq if the market value of the public float is at least
$1,000,000 and the Company has $2,000,000 in capital and surplus. The failure to
meet these maintenance criteria in the future may result in the delisting of the
Common Stock from Nasdaq, and trading, if any, in the Company's securities would
thereafter be conducted in the non-Nasdaq over-the-counter market. As a result
of such delisting, an investor could find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's securities.
In addition, if the Common Stock were to become delisted from trading on
Nasdaq and the trading price of the Common Stock were to fall below $5.00 per
share, trading in the Common Stock would also be subject to the requirements of
certain rules promulgated under the Exchange Act, which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a penny stock (generally, any non-Nasdaq equity security that has a
market price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally institutions). For these types of transactions, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. The additional burdens imposed upon broker-dealers by such requirements
may discourage broker-dealers from effecting transactions in the Common Stock,
which could severely limit the market price and liquidity of the Common Stock
and the ability of purchasers in this offering to sell the Common Stock in the
secondary market.
The Common Stock is not eligible for margin account.
15. Possible Inability to Exercise Warrants or Sell Securities in Certain
States. Although the Warrants were not knowingly sold by the Company to
purchasers in jurisdictions in which the Warrants were not registered or
otherwise qualified for sale, purchasers may buy Warrants in the after-market or
may move to jurisdictions in which the Warrants and the Common Stock underlying
the Warrants are not so registered or qualified. In this event, the Company
would be unable to issue Common Stock to those persons desiring to exercise
their Warrants unless and until the Warrants and the underlying Common Stock are
qualified for sale in jurisdictions in which such purchasers reside, or an
exemption from such qualification exists in such jurisdictions.
The securities offered hereby may not be qualified for sale in all states.
Prospective investors should consult their brokers before making any purchase.
Notice to California Investors. Each purchaser of Common Stock and Warrants
in California must be an "accredited investor," as that term is defined in Rule
501(a) of Regulation D promulgated under the Securities Act, or satisfy one of
the following suitability standards: (i) minimum actual gross income of $65,000
and a net worth (exclusive of home, home furnishings and automobiles) of
$250,000; or (ii) minimum net worth (exclusive of home, home furnishings and
automobiles) of $500,000.
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<PAGE>
USE OF PROCEEDS
The Company expects to use the net proceeds, if any, from the exercise of
the Warrants, the Underwriter's Warrants and the Underlying Warrants for working
capital and general corporate purposes, and for the possible acquisition of
other college media and marketing services businesses. The Company will not
receive any proceeds from the sale of shares by Whale or the Selling
Securityholders.
SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
Common Stock issuable upon exercise of the Warrants is distributed when and
as such Warrants are exercised by Warrant holders. No Warrants have been
exercised as of the date of this Prospectus.
Whale acted as the Company's underwriter in the Company's initial public
offering in April 1996 and purchased the Underwriter's Warrants from the Company
in connection with that offering.
The Company has agreed, until April 2, 1999, if so requested by Whale, to
nominate and use its best efforts to elect a designee of Whale as a director of
the Company, or, at Whale's option, as a non-voting advisor to the Company's
Board of Directors. The Company's officers, directors and holders of 5% of more
of the Company's securities have agreed to vote their shares of Common Stock in
favor of such designee. Whale has not yet exercised its right to designate such
a person.
The Company has agreed, in connection with the exercise of the Warrants
pursuant to solicitation, to pay to Whale a fee of 5% of the exercise price for
each Warrant exercised; provided, however, that Whale will not be entitled to
receive such compensation in Warrant exercise transactions in which (i) the
market price of Common Stock at the time of exercise is lower than the exercise
price of the Warrants; (ii) the Warrants are held in any discretionary account;
(iii) disclosure of compensation arrangements is not made, in addition to the
disclosure provided in this Prospectus, in documents provided to holders of
Warrants at the time of exercise; (iv) the exercise of the Warrants is
unsolicited by Whale; and (v) the solicitation of exercise of the Warrants was
in violation of Rule 101 promulgated under the Exchange Act.
Rule 101 may prohibit Whale from engaging in any market making activities
with regard to the Company's securities for a period from nine business days (or
such other applicable period as Rule 101 may provide) prior to any solicitation
by Whale of the exercise of Warrants under the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any right
that Whale may have to receive a fee for the exercise of Warrants following such
solicitation. In addition, Rule 101 will require that Whale refrain from market
making activities during any period when Whale may be unable to continue to
provide a market for the company's securities during certain periods while the
Warrants are exercisable.
An aggregate of 575,000 shares of Common Stock may be offered and sold
pursuant to this Prospectus by the Selling Securityholders. Except as set forth
below, none of the Selling Securityholders has ever held any position or office
with the Company or had any other material relationship with the Company. The
Company will not receive any of the proceeds from the sale of the Selling
Securityholders' shares. The following table sets forth certain information with
respect to Whale and the Selling Securityholders:
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<PAGE>
Beneficial Beneficial
Ownership Ownership
of Common of Common Percentage
Shares Prior Shares Shares Owned
to Sale Offered After Sale After Sale
------- ------- ---------- ----------
Whale Securities Co., L.P.(1) 460,000 460,000 -- --
Selling Stockholder
- -------------------
Norton Herrick................ 200,000 200,000 -- --
Merv Adelson(2)............... 200,000 200,000 -- --
A. Alfred Taubman(3)(11)...... 788,889 49,778 739,111 8.5%
George Lindemann(4)(11)....... 630,757 39,830 590,927 6.8
Crescent International
Holdings(11)................ 563,060 35,555 527,505 6.1
Roy F. Zurkowski(5)(11)....... 450,448 28,444 422,004 4.9
Freddie Fields(6)(8)(11)...... 332,587 3,556 329,031 3.8
Jerome Hellman(7)(8)(11)...... 332,587 3,556 329,031 3.8
Louis M. Dubin(9)(11)......... 150,288 9,540 140,748 1.6
Metin Negrin(10)(11).......... 75,276 4,741 70,535 --
- ------------
(1) Includes 230,000 shares issuable upon exercise of the Underwriter's
Warrants and 230,000 shares issuable upon exercise of the Underlying
Warrants held in the name of Whale for the account of investors in Whale
and employees and former employees of Whale. Does not include any shares of
the Company or any shares held in Whale's trading or customer accounts.
(2) Assumes exercise of warrants to purchase 200,000 shares of Common Stock.
(3) As trustee of the A. Alfred Taubman Restated Revocable Trust.
(4) All shares owned by Activated Communications Limited Partnership ("ACLP"),
which is entirely owned, directly or indirectly, by Mr. Lindemann and his
family members. Mr. Lindemann is the President, and he and his family
members are the sole shareholders, of the general partner of ACLP. Mr.
Lindemann is a director of the Company.
(5) As trustee of the Roy F. Zurkowski Trust.
(6) Includes 276,280 shares issuable upon exercise of an option owned by a
family trust of which Mr. Fields is a trustee. Mr. Fields is a director of
the Company.
(7) Includes 276,280 shares issuable upon exercise of an option.
(8) The Company is party to a consulting agreement with a corporation owned by
Messrs. Fields and Hellman pursuant to which the Company has agreed to pay
that corporation annual consulting fees and overhead expense reimbursements
through 1997 and 10% of its pre-tax income through 1999.
(9) Includes 27,710 shares owned by NET Portfolio Corp., a corporation wholly
owned by Mr. Dubin.
(10) Mr. Negrin is a director of the Company.
(11) These shareholders have agreed to enter into a shareholders agreement with
Harlan Peltz, the Chairman and Chief Executive Officer of the Company who
owns 27.6% of the outstanding shares of Common Stock, pursuant to which Mr.
Peltz has agreed to vote all of his shares in favor of the election of
nominees of a majority of these shareholders so that they would be entitled
to designate at least one-third of the directors of the Company, and the
shareholders have agreed to vote all of their shares in favor of the
election by Mr. Peltz and his nominees so that Mr. Peltz would be entitled
to designate at least a majority of the directors of the Company.
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The Selling Securityholders' shares may be offered and sold from time to
time as market conditions permit in the over-the-counter market, or otherwise,
at prices and terms then prevailing or at prices related to the then-current
market price, or in negotiated transactions. The Selling Securityholders' shares
may be sold by one or more of the following methods, without limitation: (i) a
block trade in which a broker or dealer so engaged will attempt to sell the
shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (ii) purchases by a broker or dealer as principal
and resale by such broker or dealer for its accounts pursuant to this
Prospectus; (iii) ordinary brokerage transactions and transactions in which the
broker solicits purchases; and (iv) transactions between sellers and purchasers
without a broker/dealer. In effecting sales, brokers or dealers engaged by the
Selling Securityholders may arrange for other brokers or dealers to participate.
Such brokers or dealers may receive commissions or discounts from Selling
Securityholders in amounts to be negotiated. Such brokers and dealers and any
other participating brokers and dealers may be deemed to be "underwriters"
within the meaning of the Securities Act, in connection with such sales.
In order to comply with certain state securities laws, if applicable,
shares of Common Stock offered by Selling Securityholders may be sold in such
jurisdictions only through registered or licensed brokers or dealers. In certain
states, such shares of Common Stock may not be sold unless such shares have been
registered or qualified for sale in such states or an exemption from
registration or qualification is available and is complied with.
Under the Exchange Act and the regulations thereunder, during any period
when it is engaged in a distribution of the securities offered by this
Prospectus, Whale may not simultaneously engage in market making activities with
respect to the Common Stock during any applicable "cooling off" periods prior to
the commencement of such distribution. In addition, and without limiting the
foregoing, Whale will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder including, without limitation, Rules
101 and 104, which may limit the timing of purchases and sales of Common Stock
by Whale.
The Registration Statement that includes this Prospectus is filed pursuant
to registration rights granted by the Company in favor of Whale and certain of
the Selling Securityholders. The Company has agreed to indemnify Whale and those
Selling Securityholders for certain losses, claims and liabilities in connection
with the sale of Securities pursuant to the Registration Statement of which this
Prospectus forms a part. The Company also has agreed to pay the expenses in
connection with the Registration Statement that includes this Prospectus. Whale
and the Selling Securityholders will pay any brokerage or other fees or
commissions, as well as their incidental expenses, in connection with the
offering.
DESCRIPTION OF SECURITIES
The Underwriter's Warrants entitle Whale and its designees to purchase up
to 230,000 shares of Common Stock at an exercise price of $8.25 per share and/or
up to 230,000 Underlying Warrants at an exercise price of $.165 per warrant,
which Underlying Warrants entitle the holders thereof to purchase shares of
Common Stock at an exercise price of $8.25 per share. Neither the Underwriter's
Warrants nor any of the securities underlying the Underwriter's Warrants are
redeemable by the Company. The Underwriter's Warrants and the Underlying
Warrants are exercisable at any time and from time to time until April 2, 2001.
The exercise price and number of shares of Common Stock issuable upon exercise
of the Underlying Warrants are subject to adjustment in certain circumstances,
including in the event of a stock dividend, recapitalization, reorganization,
merger or consolidation of the Company.
The Company's Certificate of Incorporation eliminates the liability of a
director of the Company for monetary damages for breach of duty as a director,
subject to certain exceptions. In addition, the Certificate of Incorporation
provides for the Company to indemnify each director and officer of the Company
to the fullest extent permitted by the Delaware General Corporation Law. The
foregoing provisions may reduce the likelihood of derivative litigation against
directors and may discourage or deter stockholders or management from suing
directors for breaches of their duty of care, even though such an action, if
successful, might otherwise benefit the Company and its stockholders.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
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that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
LEGAL MATTERS
The legality of the securities offered by this Prospectus has been passed
upon for the Company by Proskauer Rose Goetz & Mendelsohn LLP, New York, New
York.
EXPERTS
The financial statements of Network Event Theater, Inc. appearing in
Network Event Theater, Inc.'s Transition Report on Form 10-KSB for the
transition period from January 1, 1996 to June 30, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such financial statements
are incorporated by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Young Adult Marketing Divisions (operating
divisions of American Passage Media Corporation), appearing in Network Event
Theater, Inc.'s Current Report on Form 8-K dated August 2, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.
15
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================================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representation not contained in this prospectus, and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company. This prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such an offer or solicitation in such jurisdiction. Neither the delivery of this
prospectus nor any sale made hereunder shall under any circumstances create any
implication that there has been no change in the affairs of the Company since
the date hereof or that the information contained herein is correct as of any
time subsequent to the dates as of which such information is furnished.
TABLE OF CONTENTS
Page
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 3
The Company............................................................... 3
Risk Factors.............................................................. 7
Use of Proceeds........................................................... 12
Selling Securityholders and Plan of Distribution.......................... 12
Description of Securities................................................. 14
Legal Matters............................................................. 15
Experts................................................................... 15
================================================================================
================================================================================
NETWORK EVENT THEATHER, INC.
Common Stock
----------------
PROSPECTUS
----------------
April __, 1997
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth all expenses in connection with the sale and
distribution of the securities being registered in the offering described in
this Registration Statement, all of which are payable by the Registrant. All
amounts shown are estimates:
Accounting fees and expenses............................... $ 2,000
Legal fees and expenses.................................... 15,000
Blue Sky fees and expenses................................. 5,000
Miscellaneous expenses..................................... 10,000
-------
Total......................................... $32,000
=======
Item 15. Indemnification of Directors and Officers
The Company is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees,
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceeding. The Certificate of Incorporation of
the Company provides for indemnification of directors and officers to the
fullest extent permitted by the General Corporation law of the State of
Delaware.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty or loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. The Company's Certificate of Incorporation contains
such a provision.
Item 16. Exhibits
Exhibit No. Description of Exhibit
- ----------- ----------------------
1.1 Form of Underwriting Agreement.(1)
2.1 Form of Contribution Agreement.(1)
2.2 Election to Dissolve.(1)
3.1 Certificate of Incorporation.(1)
3.2 Form of Certificate of Amendment of Certificate of Incorporation.(1)
3.3 Bylaws.(1)
4.1 Form of Warrant Agreement.(1)
4.2 Form of Underwriter's Warrant.(1)
5.1 Opinion of Proskauer Rose Goetz & Mendelsohn LLP with respect to the
legality of the securities being registered.(1)
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Proskauer Rose Goetz & Mendelsohn LLP (included in
Exhibit 5.1).
II-1
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(1) Previously filed and incorporated by reference to the Registrant's
Registration Statement on Form SB-2 (33-80935).
Item 17. Undertakings
(a) The Registrant hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective Registration
Statement;
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of 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 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the 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 1933 Act
and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on April 3, 1997.
NETWORK EVENT THEATER, INC.
By /s/ Harlan D. Peltz
----------------------------------
Harlan D. Peltz
Chief Executive Officer and
Chairman of the Board
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.
Signatures Title Date
---------- ----- ----
/s/ Harlan D. Peltz April 3, 1997
- ------------------------------
Harlan D. Peltz Chief Executive Officer
and Chairman of
the Board (Principal
Executive Officer)
April 3, 1997
/s/ Don Leeds
- ------------------------------
Don Leeds President and Director
April 3, 1997
/s/ Bruce L. Resnik
- ------------------------------
Bruce L. Resnik Executive Vice President,
Chief Financial Officer
and Secretary (Principal
Financial Officer and
Principal Accounting Officer)
/s/ *
- ------------------------------
Freddie Fields Director April 3, 1997
/s/ *
- ------------------------------
Jeffrey Berg Director April 3, 1997
/s/ *
- ------------------------------
Jan Miller Director April 3, 1997
/s/ *
- ------------------------------
Metin Negrin Director April 3, 1997
/s/ *
- ------------------------------
Joseph Tahl Director April 3, 1997
II-3
<PAGE>
- ------------------------------
George Lindemann Director
*By:/s/ Harlan D. Peltz
----------------------
Harlan D. Peltz,
as Attorney-in-Fact
II-4
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Post
Effective Amendment No. 1 to the Registration Statement (Form S-3)(No. 33-80935)
and related Prospectus of Network Event Theater, Inc. for the registration of
3,680,000 shares of its Common Stock, and to the incorporation by reference
therein of our report dated October 17, 1996 with respect to the financial
statements of Network Event Theater, Inc. included in its Transition Report
(Form 10KSB) for the period ended June 30, 1996, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, New York
April 3, 1997
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Post
Effective Amendment No. 1 to the Registration Statement (Form S-3)(No. 33-80935)
and related Prospectus of Network Event Theater, Inc. for the registration of
3,680,000 shares of its Common Stock, and to the incorporation by reference
therein of our report dated July 30, 1996 with respect to the financial
statements of Young Adult Marketing Divisions (Operating Divisions of American
Passage Media Corporation) included in Network Event Theater, Inc.'s Current
Report on Form 8-K dated August 2, 1996 filed with the Securities and Exchange
Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, New York
April 3, 1997
