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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED).
For the fiscal year ended June 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED).
For the transition period from ___________ to ___________
Commission file number: 0-27556
NETWORK EVENT THEATER, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3864111
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
529 Fifth Avenue
New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
(212) 622-7300
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
(Title of Class)
Warrants, each to purchase one share of Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ______
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [_]
State issuer's revenues for its most recent fiscal year. $11,188,000
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
October 23, 1998: $20,844,039
State the number of shares outstanding of each of the issuer's classes of
common equity, as of October 23, 1998: 11,346,880 shares of Common Stock,
2,645,000 Warrants
Transitional Small Business Disclosure Format (check one):
Yes _____ No ___X___
DOCUMENTS INCORPORATED BY REFERENCE
None.
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<PAGE>
NETWORK EVENT THEATER, INC.
AMENDMENT TO THE ANNUAL REPORT ON FORM 10-KSB
TABLE OF CONTENTS
Item No. Page
- -------- ----
Part III
9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act................... 1
10. Executive Compensation.............................................. 3
11. Security Ownership of Certain Beneficial Owners and Management...... 5
12. Certain Relationships and Related Transactions...................... 6
Signatures ................................................................. 7
<PAGE>
ITEM 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The directors and executive officers of the Company are as follows:
Name Age Position
- ----- ---- -------
Harlan D. Peltz .............. 33 Chairman of the Board and Chief
Executive Officer
Don Leeds .................... 47 President and Director
Bruce L. Resnik .............. 52 Executive Vice President, Chief
Financial Officer and Secretary
Freddie Fields ............... 75 Director
Jan Miller ................... 51 Director
Metin Negrin ................. 32 Director
George Lindemann ............. 62 Director
Howard Klein.................. 41 Director
Harlan D. Peltz has been Chairman of the Board and Chief Executive Officer
of the Company since its incorporation in December 1995. From August 1993 to
December 1995, Mr. Peltz was the President of Universal Access Network, Inc.,
the general partner of Universal Access Network, LP, the predecessor of the
Company. From September 1991 to July 1993, Mr. Peltz was an associate at
Veronis, Suhler & Associates Inc., an investment banking firm specializing in
the media industry. From July 1990 to May 1991, Mr. Peltz worked for Home Box
Office in the area of international business development in Eastern Europe and
South America.
Don Leeds has been a director of the Company since December 1995. He was
elected Executive Vice President-Strategic Planning and Business Development of
the Company in June 1996 and then President in September 1996. From 1989 to June
1996, Mr. Leeds was a Managing Director at Veronis, Suhler & Associates Inc.
Bruce L. Resnik has been Executive Vice President, Chief Financial Officer
and Secretary of the Company since October 1996. From August 1992 to September
1996, Mr. Resnik was the Director of Finance of the International Division of
Grey Advertising.
Freddie Fields has been a director of the Company since February 1996 and
a consultant to the Company since January 1995. Since September 1993, Mr. Fields
has been the Chairman of The Fields & Hellman Company, a motion picture and
television production company. Mr. Fields was also the Executive Producer of
"The Montel Williams Show." In 1990, Mr. Fields produced the motion picture
"Glory." Mr. Fields has also served as the President and Chief Executive Officer
of the talent agency, Creative Management Associates (now known as International
Creative Management, Inc.), and as the President of the Metro Goldwyn Mayer and
United Artists motion picture studios. Mr. Fields is a member of the Board of
Directors of The Sports and Entertainment Commission of the City of Los Angeles.
Jan Miller has been a director of the Company since February 1996. Since
January 1980, Ms. Miller has been the President and Chief Executive Officer of
Dupree, Miller & Associates, a literary agency whose clients include Anthony
Robbins, Stephen Covey, Les Brown and Maria Shriver.
1
<PAGE>
Metin Negrin has been a director of the Company since December 1995. Since
August 1993, Mr. Negrin has been the Chief Operating Officer and a Managing
Director of The Athena Group, a real estate investment firm. From July 1990 to
July 1993, Mr. Negrin was an associate in the New York office of LaSalle
Partners, a Chicago-based real estate investment firm.
George Lindemann has been a director of the Company since August 1996.
Since February 1990, Mr. Lindemann has been the Chairman and Chief Executive
Officer of Southern Union Company, one of the largest natural gas distributors
in the United States, and since May 1982, has been the President of Cellular
Dynamics, Inc., the general partner of Activated Communications, L.P., a
diversified communications firm. Mr. Lindemann founded Metro Mobile CTS, Inc., a
cellular telephone company, in 1982 and served as its Chairman and Chief
Executive Officer until it merged with Bell Atlantic Corporation in 1992. Mr.
Lindemann also served as President of Vision Cable Communications, a pioneer in
the cable television industry, from 1972-1981.
Howard Klein has been a director of the Company since June 1998. Mr. Klein
is a founding partner of 3 Arts Entertainment, one of the leading
management/production firms in the entertainment industry. Representing some of
the world's most recognizable talent in the areas of film and television, Mr.
Klein is personally responsible for guiding the careers of many writers,
directors and performers.
All directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Directors receive no
cash compensation for serving on the Board of Directors other than reimbursement
of reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board of
Directors, subject to the provisions of certain employment agreements.
The Company has obtained key man life insurance on the life of Mr. Peltz
in the amount of $2 million.
In connection with the Company's initial public offering on April 9, 1996
(the "Offering"), the Company agreed, for a period of three years following the
date of the offering, if so requested by Whale Securities Co., L.P., the
underwriter of the Offering (the "Underwriter"), to nominate and use its best
efforts to elect a designee of the Underwriter as a director of the Company or,
at the Underwriter's option, as a non-voting advisor to the Company's Board of
Directors. The Underwriter has not yet exercised its right to designate such a
person.
Board and Committee Meetings
During the fiscal year ended June 30, 1998, the Board of Directors held
four meetings and acted by unanimous written consent several times. Each member
of the Board attended at least 75% of the meetings of the Board and meetings of
any committees of the Board on which he served that were held during the time he
served.
The Audit Committee of the Board of Directors, which consists of a
majority of independent directors, makes recommendations concerning the
engagement of the Company's independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the independent public accountants,
reviews the independence of the independent public accountants, considers the
range of audit and non-audit fees of the independent public accountants, reviews
the adequacy of the Company's internal accounting controls, and reviews all
related party transactions on an ongoing basis for potential conflict of
interest situations. The members of the Audit Committee are George Lindemann and
Metin Negrin. The Audit Committee did hold any meetings in the fiscal year ended
June 30, 1998.
The Stock Option Committee is made up of a majority of directors who, to
the extent legally required, qualify as "outside directors" under Section 162(m)
of the Internal Revenue Code of 1986, as amended, and as "non-employee
directors" under Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The Stock Option Committee administers the
Company's two stock based stock option plans. The members of the Stock Option
Committee are Harlan D. Peltz, Metin Negrin and Jan Miller. The Stock Option
Committee did not meet in the fiscal year ended June 30, 1998 but acted several
times by written consent.
The Board of Directors does not have a Nominating Committee or a
Compensation Committee.
2
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of the reports and representations furnished to
the Company during the last fiscal year, the Company believes that each of the
persons required to file reports under Section 16(a) of the Exchange Act was in
compliance with all applicable filing requirements with respect to the Company's
most recent fiscal year, except that Bruce L. Resnik failed to file one report
with respect to the option grant described in Item 11 below and Howard Klein
failed to file a report upon his election as a director of the Company.
ITEM 10. Executive Compensation
The following table sets forth certain information for each of the
Company's three fiscal years ended June 30, 1996, 1997 and 1998 with respect to
compensation paid to Harlan D. Peltz, the Company's Chief Executive Officer, Don
Leeds, the Company's President, Bruce L. Resnik, the Company's Executive Vice
President and Chief Financial Officer, and Lawrence Kieves, the Company's former
President. No other executive officer received compensation in any of those
fiscal years that exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
---------------------
Securities
Underlying All Other
Name and Principal Position Fiscal Year Salary($) Bonus($) Options Compensation($)
- ------------------------- --------- -------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Harlan D. Peltz ..................... 1998 112,500 50,000(a) -- 162(b)
Chief Executive Officer 1997 112,500 40,000(a) -- --
1996 112,500 -- -- --
Don Leeds ........................... 1998 200,000 40,000(a) -- 1,722(b)
President 1997 197,000 30,000(a) -- 50,000(c)
1996 -- -- 376,000 --
Lawrence Kieves ..................... 1998 -- -- -- --
Former President 1997 56,250 -- -- --
1998 112,500 -- -- --
Bruce L. Resnik ..................... 1998 175,000 50,000(a) 100,000 7,371(b)
Executive Vice President - 1997 129,230 25,000(a) 50,000 --
Chief Financial Officer 1996 -- -- -- --
</TABLE>
- --------------------
(a) Discretionary bonuses paid pursuant to each executive officer's employment
agreement with the Company and approved by the Board of Directors.
(b) Additional disability insurance and annual life insurance premiums.
(c) Additional compensation in connection with the acquisition of American
Passage Media, Inc.
None of the executive officers of the Company named in the Summary
Compensation Table received any long-term compensation awards or payouts during
the Company's last three fiscal years.
Stock Options
During the fiscal year ended June 30, 1998, the Company granted Mr. Resnik
an option under the Company's 1997 Employee Stock Option Plan to purchase, at a
price of $4.69 per share, up to 33,333 shares of Common Stock, par value $0.01
per share ("Common Stock"), of the Company on and after January 6, 1999, up to
an additional 33,333 shares of Common Stock on and after January 6, 2001 and up
to an additional 33,334 shares of Common Stock on and after January 6, 2001. The
option expires in fiscal 2008.
None of the executive officers of the Company named in the Summary
Compensation Table exercised any options during the fiscal year ended June 30,
1998.
Employment Agreements
On April 2, 1996, the Company entered into a three-year employment
agreement with Harlan D. Peltz, its Chairman of the Board and Chief Executive
Officer. The agreement requires Mr. Peltz to devote substantially all of his
business time to the management and operations of the Company and provides for a
base annual salary of $110,000 during the term of the agreement, subject to
increase as determined by the Board of Directors. Mr. Peltz also may be granted
annual bonuses at the discretion of the Board of Directors. The agreement
provides that if Mr. Peltz is terminated without cause, he will continue to
receive the base salary during the remainder of the contract term. The agreement
also provides that the Company will continue to pay the base salary to Mr. Peltz
or his legal representative in the event of his termination due to disability or
death, for a period ending on the earlier of the one-year anniversary of such
termination or the end of the employment term. The agreement contains provisions
prohibiting Mr. Peltz from competing with the Company during the term of
employment and for a period of one year thereafter.
3
<PAGE>
On June 17, 1996, the Company entered into a three-year employment
agreement with Don Leeds to serve as its Executive Vice President-Strategic
Planning and Business Development. (Mr. Leeds was elected President in September
1996.) The agreement requires Mr. Leeds to devote substantially all of his
business time to the management and operations of the Company and provides for a
base annual salary of $200,000 during the term of the agreement, subject to
increase as determined by the Board of Directors. Mr. Leeds may also be granted
annual bonuses at the discretion of the Board of Directors. The agreement
requires the Company to provide and maintain certain insurance benefits for Mr.
Leeds. The agreement provides that in the event of Mr. Leeds' termination due to
disability or death, the Company will continue to pay the base salary to him or
his estate for a period ending on the earlier of the one-year anniversary of
such termination or the end of the contract term. The agreement also provides
that Mr. Leeds may terminate his employment for Good Reason (as defined), in
which event he will be entitled to receive his base salary for the remainder of
the contract term. The agreement contains provisions prohibiting Mr. Leeds from
competing with the Company during the term of employment and, upon the
satisfaction of certain conditions, for a period of one year thereafter. In
connection with his employment by the Company, Mr. Leeds also received a $50,000
fee for consulting services he rendered to the Company prior to his employment
and options from the Company and Harlan D. Peltz.
On September 26, 1996, the Company entered into a three-year employment
agreement with Bruce L. Resnik to serve as its Executive Vice President-Chief
Financial Officer. The agreement provides for a base annual salary of $175,000
during the term of the agreement, subject to increase as determined by the Board
of Directors. Mr. Resnik may also be granted annual bonuses at the discretion of
the Board of Directors. The agreement provides that in the event of Mr. Resnik's
termination due to disability or death, the Company will continue to pay the
base salary to him or his estate for a period ending on the earlier of the
six-month anniversary of such termination or the end of the contract term. The
agreement contains provisions prohibiting Mr. Resnik from competing with the
Company during the term of employment and for a period of one year thereafter.
In connection with his hiring, Mr. Resnik was granted an option pursuant to the
Company's 1996 Employee Stock Option Plan to purchase up to 50,000 shares of the
Common Stock at the fair market value of the stock on the date of grant.
4
<PAGE>
ITEM 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial
ownership of the Common Stock as of October 23, 1998 by (i) each person known by
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, (ii) each of the Company's executive officers and directors and
(iii) all executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature of Beneficial Percentage of
Name and Address of Beneficial Owner(1) Ownership(2) Outstanding Shares
- ------------------------------------ --------------------- ------------------
<S> <C> <C>
Harlan D. Peltz ...................................... 2,392,813(3) 21.1%
George Lindemann ..................................... 630,757(4) 5.6
c/o Cellular Dynamics, Inc.
767 Fifth Avenue
New York, New York 10153
Freddie Fields ....................................... 312,280(5) 2.7
c/o The Fields & Hellman Company
8899 Beverly Boulevard
Los Angeles, California 90048
Don Leeds ............................................ 437,713(6) 3.7
Metin Negrin ......................................... 70,535 *
Bruce L. Resnik ...................................... 33,333(7) *
Jan Miller ........................................... 2,000 *
Howard Klein ......................................... 128,500(8) 1.1
All executive officers and directors
as a group (8 individuals) ......................... 4,007,931 34.1
Warburg, Pincus Counsellors, Inc. .................... 1,904,762 16.8
466 Lexington Avenue
New York, New York 10017
A. Alfred Taubman .................................... 764,111(9) 6.7
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
John Hancock Advisers, Inc. .......................... 782,300 6.9
c/o John Hancock Mutal Life Insurance Company
John Hancock Place
Post Office Box 111
Boston, MA 02117
The Dreyfus Corporation .............................. 630,900 5.6
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburg, PA 15258
</TABLE>
- --------------------------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise indicated, the address of each beneficial owner identified
is 529 Fifth Avenue, New York, New York 10017.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days from the date of this Form 10-KSB/A upon the exercise of options,
warrants or convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that convertible securities, options or
warrants that are held by such person (but not those held by any other
person) and which are exercisable within 60 days of the date of this Form
10-KSB/A have been exercised.
(3) Includes 63,544 shares owned by Universal Access Network, Inc., a Delaware
corporation wholly owned by Mr. Peltz.
(4) All shares owned by Activated Communications, L.P. ("ACLP"), which is
wholly 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.
(5) Includes 276,280 shares issuable upon exercise of options owned by a family
trust of which Mr. Fields is a trustee.
(6) Includes 376,000 shares issuable upon exercise of options granted under the
Company's 1996 Employee Stock Option Plan and by Harlan D. Peltz.
(7) Shares issuable upon exercise of options granted under the Company's 1996
Employee Stock Option Plan.
(8) Includes 122,500 shares Mr. Klein owns jointly with his wife and 6,000
shares held in a retirement plan with his partners.
(9) Shares owned as trustee of The A. Alfred Taubman Restated Revocable Trust.
Harlan D. Peltz may be deemed a "promoter" of the Company, as such term is
defined in the Securities Act of 1933, as amended.
5
<PAGE>
Item 12. Certain Relationships and Related Transactions
In connection with the Company's hiring of Don Leeds as Executive Vice
President in June 1996, the Company granted Mr. Leeds an option under the
Company's 1996 Employee Stock Option Plan to purchase, at a price of $3.875 per
share, up to 66,666 shares of Common Stock immediately, up to an additional
66,667 shares of Common Stock on and after June 17, 1997, and up to an
additional 66,667 shares of Common Stock on and after June 17, 1998. In
addition, Harlan D. Peltz granted to Mr. Leeds an option to purchase up to
176,000 shares of his Common Stock at the same price and in equal proportions
over the same vesting periods.
In connection with the Company's hiring of Bruce L. Resnik as Executive
Vice President and Chief Financial Officer in October 1996, the Company granted
Mr. Resnik an option under the Company's 1996 Employee Stock Option Plan to
purchase, at a price of $3.44 per share, up to 16,666 shares of Common Stock on
and after October 7, 1997, up to an additional 16,667 shares of Common Stock on
and after October 7, 1998, and up to an additional 16,667 shares of Common Stock
on and after October 7, 1999.
Effective January 1995, the Company entered into a consulting agreement
with The Fields & Hellman Company ("F&H"), a corporation owned by Freddie Fields
and Jerome Hellman. In December 1995, the Company and F&H amended and restated
the consulting agreement entitling F&H to receive, among other things, annual
consulting fees of $450,000, $550,000 and $275,000 in 1996, 1997 and 1998,
respectively, annual overhead expense reimbursements (primarily relating to the
Company's office in Los Angeles, California) of $262,500, $275,625 and $137,813
in 1996, 1997 and 1998, respectively, and 10% of the Company's pre-tax income
through 1999. The Company also granted F&H an option to purchase 552,560 shares
of Common Stock at an exercise price of $1.58 per share, which option was
assigned 50% to each of Jerome Hellman, personally, and a family trust of which
Freddie Fields is a trustee. For the year ended December 31, 1995, the Company
paid consulting fees of $300,000 and overhead expenses of $250,000 under such
agreement.
On May 20, 1997, the Company entered into a revised agreement with F&H.
The revised agreement relieved Messrs. Fields and Hellman of their obligation to
devote a substantial portion of their business time to the Company, but provided
that each would continue to be available to perform consulting services for the
Company and that Mr. Fields would continue to serve as a director of the Company
at his election. The revised agreement further provided that the Company would
continue to pay F&H the monthly consulting fees and expense reimbursements
provided for in the original agreement (totaling $412,812 for the period from
July 1, 1997 through December 31, 1997), but that the Company could at any time
elect to pay 50% of the remaining balance in a single cash payment and 50% by
issuing to Messrs. Fields and Hellman registered shares of Common Stock. The
revised agreement terminated December 31, 1997.
6
<PAGE>
SIGNATURES
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, hereunto duly
authorized.
NETWORK EVENT THEATER, INC.
By: /s/ Harlan D. Peltz
---------------------------
Harlan D. Peltz
Chief Executive Officer and
Chairman of the Board
Date: October 28, 1998
7
