As filed with the Securities and Exchange Commission on April 30, 1998
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
Hollywood Productions, Inc.
(Exact name of Registrant as specified in Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 5130 11-3871821
(State of (Primary standard industrial I.R.S. employer
Incorporation) classification code) identification No.
</TABLE>
14 East 60th Street
New York, NY 10022
(Address and telephone number of Principal Offices)
Harold Rashbaum, President
14 East 60th Street
New York, NY 10022
(212) 688-9223
(Name, Address and Telephone Number of Agent for Service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box: [
]
If any of the securities being registered on this Form S-3 are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, 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 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, please check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. [ ]
If delivery of a prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Title of each class Proposed maximum Proposed maximum Amount ofregistration
of securities Amount to be Registered Offering price Offering price(1) fee
to be registered Per Share (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,280,350 $3.375 4,321,181 $1,490.00
$.01 par value
- ------------------------------------------------------------------------------------------------------------------------------------
Totals........... 4,321,181 $1,490.00
====================================================================================================================================
</TABLE>
(1) Total estimated solely for the purpose of determining the registration
fee, based on the closing price ($3.375) reported by a market maker on April 24,
1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
-ii-
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
<S> <C>
Item in Form S-3 Prospectus Caption
1. Forepart of the Registration Cover Page and Cover Page of Registration
Statement and Outside Front Statement
Cover Page of Prospectus
2. Inside Front and Outside Continued Front Page
Back Cover Pages of
Prospectus
3. Summary Information, Risk Prospectus Summary, Risk Factors
Factors and Ratio of Earnings
to Fixed Charges
4. Use of Proceeds Summary
5. Determination of Offering Plan of Distribution, Cover Page, Risk
Price Factors
6. Dilution Risk Factors
7. Selling Security-Holders Selling Stockholders
8. Plan of Distribution Cover Page, Plan of Distribution
9. Description of Securities Incorporation of Certain Documents by
to be Registered Reference
10. Interests of Named Experts Legal Opinions, Experts
and Counsel
11. Material Changes Prospectus Summary
12. Incorporation of Certain Incorporation of Certain Documents by
Information by Reference Reference
13. Disclosure of Commission Position Item 15. Indemnification of
on Securities Act Liabilities Officers and Directors
</TABLE>
-iii-
<PAGE>
Subject to Completion Dated April 30, 1998
PROSPECTUS
1,280,350 SHARES
Hollywood Productions, Inc.
COMMON STOCK
This Prospectus covers the sale of up to 1,280,350 shares (the
AShares@) of common stock, par value $.01 per share (the ACommon Stock@), of
which 980,350 shares are being offered by the Company=s principal stockholder,
European Ventures Corp. and 300,000 shares are being offered by investors in
the Company=s private placement offering in February 1998, somettimes referred
to herein as the ASelling Stockholders@. The shares may be sold from time to
time in negotiated transactions, at fixed prices, which may be changed, and at
market prices prevailing at the time of sale, or a combination thereof. The
Company will not receive any of the proceeds from the sale of any securities
sold by the Selling Stockholders. See APlan of Distribution.@
The Company's Common Stock and Warrants is quoted on the Nasdaq
SmallCap Stock Market (ANasdaq@) under the symbols AFILM@ and AFILMW@,
respectively. Quotation on Nasdaq does not imply that there is a meaningful
sustained market for the Common Stock or that if one is developed that it will
be sustained for any period of time. In the absence of a listing on Nasdaq,
the Common Stock will be available for trading in the over-the-counter market
on the OTC Bulletin Board. See AMarket for Common Equity.@
THE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION, NOR HAS THE 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 __, 1998.
<PAGE>
The Selling Stockholders will be required to represent that they have
knowledge of Rule 10b-6 and 10b-7 promulgated under the Exchange Act of 1934, as
amended (the AExchange Act@), which proscribe certain manipulative and deceptive
practices in connection with a distribution of securities.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports and other information with the
Securities and Exchange Commission (the ACommission@). Reports, proxy and
information statements and other information filed by the Company with the
Commission pursuant to the informational requirements of the Exchange Act may be
inspected and copies at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. 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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference,
except as superseded or modified herein:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997;
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1998; and
3. The Company's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1997; and
4. The Company's Quarterly Report on Form 10-QSB/A for the quarter ended
June 30, 1997; and
5. The Company's Report on Form 8-K dated January 29, 1997; and
6. A description of the Company's securities is contained in the Company's
registration statement on Form 8-A filed July 29, 1996.
7. All other reports filed by the Registrant pursuant to Section 13(a) or
15(d) of the Exchange Act, since the end of the fiscal year covered by the
Annual Report referred to in (1) above, are incorporated herein by reference.
<PAGE>
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering shall be deemed to be incorporated by reference in this
Prospectus and shall be a part hereof from the date of filing of such document.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any document described above (other than exhibits). Requests
for such copies should be directed to Hollywood Productions, Inc., 14 East 60th
Street, New York, NY 10022, telephone (212) 688-9223.
<PAGE>
SUMMARY
The following summary is intended to set forth certain pertinent facts and
highlights from material contained in the body of this Prospectus. The summary
is qualified in its entirety by the detailed information and financial
statements appearing elsewhere in this Prospectus. Unless otherwise indicated,
the information in this Prospectus gives effect to the 1-for-3 reverse stock
split in February 1998.
Hollywood Productions, Inc. (the ACompany@) is a Delaware Corporation,
which was organized in December, 1995. The Company was formed for (i) the
purpose of acquiring screen plays and producing independent motion pictures with
budgets ranging between $1,000,000 to $3,000,000, using named talent and (ii) to
acquire Breaking Waves, Inc., a New York corporation (ABreaking Waves@). The
Company consummated a public offering of its securities in September 1996 at
which time it sold 800,000 shares of Common Stock and 1,600,000 Warrants and
received net proceeds of $3,813,294. Unless the context otherwise requires, all
references to the ACompany@ include its wholly owned subsidiary, Breaking Waves.
The Company formed a wholly-owned subsidiary, DL Production, Inc. in April
1996 to finance, produce and distribute a motion picture based on the ADirty
Laundry@ screen play. In March 1995, the Company entered into a property
acquisition agreement and a co-production agreement with Rogue Features, Inc.,
an unaffiliated entity, to acquire the rights to and co-produce a motion picture
of the Dirty Laundry screenplay ADirty Laundry@. Pursuant to the terms of the
purchase agreement and production agreement, the Company provided all but
$100,000 of the financing for the production of Dirty Laundry. The Company
completed the filming of Dirty Laundry in June, 1996 and completed the editing
in December, 1996. The Company is presently seeking to obtain distribution for
Dirty Laundry and has entered into an agreement with Trident Licensing Inc.,
with respect to its distribution abroad. D.L. Production, Inc., was dissolved in
November 1997, at which time all rights title and interest in Dirty Laundry was
transferred to the Company.
In April 1998 the Company entered into a co-production agreement with
Norfolk Films, Inc. (ANorfolk@) for the production of a new film entitled Battle
Studies. The Company and Norfolk have agreed to form a limited liability company
to finance, produce and distribute the film, which commenced production on April
20, 1998. The film was written and is being directed and co-produced by Efraim
Horowitz. The film is a contemporary ghost story about power, greed, love and
Leornardo Da Vinci=s lost notebook. The estimated budget is approximately
$440,000 of which the Company has committed to fund 50%. In accordance with the
terms of the co-production agreement the proceeds of the film will be
distributed first to reimburse 135% of the costs of the picture and the
remaining proceeds shall be distributed 60%, 40% to Norfolk and the Company,
respectively.
Simultaneously with the closing of the Company=s initial public offering in
September 1996 the Company acquired Breaking Waves, pursuant to a stock purchase
agreement, dated May 31, 1996 (the AAgreement@) entered into between Hollywood
Productions, Inc. and the prior stockholders of Breaking Waves. Breaking Waves
designs, manufactures and distributes a line of private label girls swimwear and
accessory items, including ABreaking Waves,@ AAll Waves,@ AMaking Waves,@ ASmall
Waves@ and a line of a brand name label called ADaffy Waterwear.@ The Daffy
Waterwear label is used pursuant to a licensing agreement between the Company
and Beach Patrol, Inc. The Company sells its swimwear and accessory items
through its showroom sales staff and through independent sales representatives.
The Company's customers include the Dillard and Federated department store
groups as well as Kids R Us, Sears, Wal-Mart, T.J. Maxx and Marshalls.
The Company has also entered into a licensing agreement with Kawasaki to
use the trademark AJet Ski@ for a line of girl=s, boy=s and men=s swimwear. AJet
Ski@ is the brand name used for all of Kawasaki=s personal watercraft though out
the world. The license agreement commenced July 1, 1997 and shall continue
through May 31, 1999. In addition, the Company has the right to extend the
agreement for an additional one-year period. Under the terms of the agreement,
the Company shall pay to Kawasaki 5% of the net sales price of the goods sold
under this line.
The Company's executive offices are located at 14 East 60th Street, Suite
402, New York, New York 10022. Breaking Waves has a showroom is located at 112
West 34th Street, New York, New York 10016 and leases an office at 8410 N.W.
53rd Terrace, Miami, Florida 33166. The Company's telephone number at its
principal office is (212) 688-9223.
<PAGE>
The Offering
<TABLE>
<CAPTION>
<S> <C>
Securities Outstanding:
Common Stock(1) 2,336,944 Shares
Warrants 1,466,667
Risk Factors This offering involves a high degree of risk. See Risk Factors.
Use of Proceeds All of the proceeds of this Offering will be paid to the respective
Selling Stockholders and none of the proceeds will be received by the
Company. All the expenses of this Offering will be paid by the Company.
NASDAQ Symbols (2) Common Stock - FILM
Warrants - FILMW
</TABLE>
(1) Does not give effect to the issuance of (I) 1,466,667 shares of Common
Stock reserved for issuance upon the exercise of the Warrants; (ii) 83,333
shares of Common Stock reserved for issuance under the Company's 1996 Senior
Management Incentive Plan; or (iii) 50,000 shares of Common Stock reserved for
issuance upon the grant of options underlying the Non-Executive Director Stock
Option Plan.
(2) Quotation on Nasdaq does not imply that there is a meaningful market
for the Company's securities or that if a market develops, that it will be
sustained for any period of time. In the absence of a listing on Nasdaq, the
Company's securities will be available for trading on the OTC Bulletin Board.
<PAGE>
RISK FACTORS
An investment in the securities offered hereby are speculative and
involve a high degree of risk. In addition to the other information contained in
this Prospectus, the following factors should be carefully considered before
purchasing the securities offered by this Prospectus. The purchase of the
securities offered hereby should not be considered by anyone who cannot afford
the risk of loss of their entire investment.
Statements contained in this registrations statement which are not
historical facts may be considered forward looking information with respect to
plans, projections, or future performance of the Company as defined under the
Private Securities Litigation Reform Act of 1995. These forward looking
statements are subject to risks and uncertainties which could cause actual
results to differ materially from those projected.
Risks Associated with the Company's Film Business
1. No Significant Operating History; Accumulated Deficit; Limited
Experience of Management. Prior to the acquisition and production of Dirty
Laundry and the acquisition of Breaking Waves the Company, had limited
operations, consisting primarily of its formation and the consummation of its
initial public offering. The Company's officers had limited experience, prior to
the production of Dirty Laundry of assessing the potential of a screenplay,
producing a motion picture, or in distributing and marketing a motion picture.
The lack of experience of management may adversely affect the operations of the
Company and ultimately, the value of an investment in the Company. In addition,
the likelihood of success of the Company must be considered in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with a business with a limited operating history and
the competitive environment in which the Company operates. Further, there can be
no assurances that the Company's management will be able to successfully
implement its business plan or that unanticipated result in increased costs,
material delays in its implementation or ability to implement such plan. As of
March 31, 1998 the Company had an accumulated deficit of $78,461, which could
adversely affect the Company's ability to conduct its operations. See
AManagement.@
2. No Guarantee of Return of Initial Investment; No Assurances of the
Receipt of Revenues; Need for Additional Capital. The co-production agreements
for Dirty Laundry and Battle Studies provide that the Company and the
co-producer shall have the right to recover 100% and 135%, respectively, of
their investment with respect to the production costs of the films from
revenues, if any, from the release, distribution and exploitation of the film.
The Dirty Laudry agreement requires the first proceeds to be paid $50,000 to
each of Jay Thomas and Tess Harper pursuant to their participation agreements.
Additional proceeds received shall be distributed pursuant to the terms of the
agreements. To date the Dirty Laundry has generated revenues of $150,000
pursuant to its licensing agreement with Trident Licensing, Inc.
The production release of a motion picture is subject to numerous
uncertainties, and there can be no assurance that the Company's strategy will be
successful, that its release schedule will be met or that it will achieve its
financial goals. There can be no assurance that any revenues will be realized
from the distribution of the Dirty Laundry or Battle Studies, or any motion
picture produced by the Company, therefore, there can be no assurances that an
investment in the production of a motion picture will be repaid. Even in the
event revenues are generated from the distribution of a film, there can be no
assurances that the Company will receive any of such revenues, due to revenue
sharing rights of artists and creative personnel in additional to arrangements
with other investors. In addition, in the event that the Company receives
revenues from the distribution of a film, there can be no assurances that such
revenues will be sufficient to return to the Company the full amount of its
investment in the Dirty Laundry or Battle Studies or that future motion pictures
acquired, produced and released by the Company will earn sufficient revenues to
repay any investment or cost incurred in their production. Though aggregate
revenues in the film industry from all markets are substantial, the costs of
producing films are also substantial. The combination of these and other factors
has caused a large portion of films produced to be unprofitable.
<PAGE>
The Company estimates that between 36 and 52 weeks will elapse between the
commencement of expenditures by the Company in the acquisition of a screenplay,
the production of a motion picture and the release of such film. Additionally,
it is anticipated that no revenues will be received from the exploitation of
such film for an additional period of between 16 weeks and 36 weeks thereafter,
if at all. Therefore, the Company may not have the capital needed, at times, for
production or distribution costs of additional films due to the delay in the
receipt of revenues from its prior investments.
3. High Costs of Motion Picture Production; Likelihood of going over
Budget. The Company anticipates that the motion pictures it produces will cost
between $1,000,000 and $3,000,000, depending on the film. The likelihood of the
success of each film and the Company's ability to stay on budget and on schedule
for each film must be considered in light of the problems, expenses,
difficulties, complications and delays frequently encountered in connection with
the production of a motion picture. Dirty Laundry went approximately $250,000
over budget. Due to unforeseen problems and delays including; illness, weather,
technical difficulty and human error, most films go over budget. In addition,
the lack of experience of management in this industry, the limited operating
history and capital of the Company, and the competitive environment in which the
Company operates, may cause increased expenses due to mistakes and delays in the
production of the films.
4. Inability to Obtain Distribution of the Films; Consumer Preferences.
The success of a film in theatrical distribution, television, home video and
other ancillary markets is dependent upon public taste which is unpredictable
and susceptible to change. The theatrical success of a film may also be
significantly affected by the number and popularity of other films then being
distributed. Accordingly, it is impossible for anyone to predict accurately the
success of any film at the time it enters production. The production of a motion
picture requires the expenditure of funds based largely on a pre-production
evaluation of the commercial potential of the proposed project. The Company has
spent approximately $300,000 for the costs of marketing and distribution of
Dirty Laundry and has only recouped $150,000 in distribution revenues.
There is intense competition within the film industry for exhibition
time at theaters, as well as for distribution in other media, and for the
attention of the movie-going public and other viewing audiences. Competition for
distribution in other media is as intense as the competition for theatrical
distribution and not all films are licensed in other media. There are numerous
production companies and numerous motion pictures produced, all of which are
seeking full distribution and exploitation. Despite the large number of films
produced, only a small number of films receive widespread consumer acceptance,
and thereby account for a large percentage of total box office receipts. See
ABusiness - Competition in Film Industry.@
5. Labor disputes in Film Industry. Most screenwriters, performers,
directors and technical personnel who will be involved in the films are members
of guilds or unions which bargain collectively with producers on an
industry-wide basis from time to time. Any work stoppages or other labor
difficulties could delay the production of the films, resulting in increased
production costs and delayed return of investments. See ABusiness - Employees.@
6. Competition in Film Industry. The Company will be in competition
with other which produce, distribute and exploit and finance films, some of
which have substantial financial and personnel resources, which are greater and
more extensive than the Company's. These companies include the major film
studios, including Disney, Universal, MGM, and Sony as well as the television
networks. There is substantial competition in the industry for a limited number
of producers, directors, actors and properties, which are able to attract major
distribution in all media and all markets throughout the world. See ABusiness -
Competition in Film Industry.@
<PAGE>
Risks Associated with the Company's Swimwear Business
7. Cyclical Apparel Industry; Dependence on Single Product Line. The
apparel industry is a cyclical industry, with consumer purchases of swimwear and
accessory items and related goods tending to decline during recessionary periods
when disposable income is low. Accordingly, a prolonged recession would in all
likelihood have an adverse effect on the operations of the Company. Some of the
Company's customers, including large retail department store chains, have in
recent years experienced financial difficulties and some have filed for
protection under Chapter XI of the federal bankruptcy laws. The Company is
unable to predict what effect, if any, the financial difficulties encountered by
such retailers and other customers will have on the Company's future business.
Additionally, the Company currently operates in only one segment of the apparel
industry, girl=s swimwear and is therefore dependent on the demand for such
goods. Decreases in the demand for swimwear products would have a material
adverse affect on the Company's business. The Company it is in the process of
expanding its operations and market segment to include boy=s and men=s swimwear.
See- Entrance into New Market Segment.@
8. Uncertain Fashion Trends; Inability to Keep Pace with Consumer's
Changing Preferences. The Company believes that its success depends in
substantial part on its ability to anticipate, gauge and respond to changing
consumer demands and fashion trends in a timely manner. The Company designs its
swimwear lines during the months from January to March each year for delivery of
products between November and May of the following year. The Company is
anticipating in advance consumer preferences for the following year. There can
be no assurance, however, that the Company will be successful in this regard. If
the Company misjudges the market for any of its products, it may be faced with
unsold finished goods, inventory and work in process, which could have an
adverse effect on the Company's operations.
9. Entrance into New Market Segment and New Product Line. The Company
presently operates in only one segment of the apparel industry, specifically
girl=s swimwear, in which it has operated for many years. The Company entered
into a licensing agreement with Kawasaki to use the trademark AJet Ski@ for a
line of girl=s, boy=s, and men=s swimwear. The Company=s production and
marketing of boy=s and men=s swimwear is an entrance into a new market segment
for its products. In addition, the Company has not previously marketed any of
its products under the Jet Ski name. There can be no assurance that the Company
will be successful in this market segment or with this new line. If the Company
misjudges the market for this market segment or new line, it may be faced with
unsold finished goods, inventory and work in process, which could have an
adverse effect on the Company's operations.
10. Dependence on Suppliers. The swimwear designs are principally sent
to a manufacturer, Zone Company, Ltd., in Korea, which Company provides the
knitting and printing for approximately 65% of the fabrics ordered by the
Company. Previously during fiscal 1997 and 1996 this company provided
approximately 19% and 95% knitting and printing. Once the fabrics are produced,
they are principally shipped to P.T. Kizone International, Inc., a company in
Indonesia which company sews the garments into finished products. This company
provided 95% and 71% of the Company's sewing needs for the years ended December
31, 1997 and 1996, respectively. Although the management of Breaking Waves is of
the opinion that there are numerous manufacturers of fabrics and companies which
provide sewing on similar terms and prices, there can be no assurances that
management is correct in such belief. The unavailability of fabrics or the
sewing thereof at current price levels could adversely affect the operations of
the Company.
11. Risks Associated with Concentration of Customers. For the years
ended December 31, 1997 and 1996, Breaking Waves has two and two customers which
comprise 36% and 12%, and 16% and 12% of net sales, respectively. For the three
months ended March 31, 1998 and 1997, Breaking Waves had four and two customers
which comprise 16%, 15%, 11%, and 10%; and 23% and 14% of net sales,
respectively. Some of the Company's customers, including large retail department
store chains, have recently experienced financial difficulties and some have
<PAGE>
filed for protection under the federal bankruptcy laws. The Company is unable to
predict what effect, if any, the financial difficulties encountered by such
retailers and other customers will have on the Company's future business. The
loss of either customer or any group of customers could have a material adverse
affect on the Company's results of operations.
12. Seasonality of Business Operations. The Company believes that its
business may be considered seasonal with a large portion of its revenues and
profits being derived between December and June for shipments being made between
November and May. Each year from June to November the Company engages in the
process of designing and manufacturing the following seasons swimwear lines,
during which time the Company incurs the majority of its expenses, with limited
revenues. There can be no assurances that revenues received during December to
June will support the Company's operations for the rest of the year.
13. Competition in Swimwear Industry. The Company's business is highly
competitive, with relatively insignificant barriers to entry and with numerous
firms competing for the same customers. The Company is in direct competition
with local, regional, national and international swimwear manufacturers, many of
which have greater resources and more extensive distribution and marketing
capabilities than the Company. Competitive factors include quality, price,
style, design, creativity, originality and service at the wholesale level. In
addition, many large retailers have recently commenced sales of Astore brand@
products, which compete with those sold by the Company. Management believes that
the Company's market share is insignificant in the markets in which it sells.
See ABusiness - Competition.@
14. Protection of Intellectual Property. The Company relies on common
law trademarks for use of its private label swimwear lines. In addition, the
Company has entered into a licensing agreements with Beach Patrol, Inc. and
Kawasaki, to use the trademarks ADaffy=s Waterwear and AJet Ski@, respectively.@
In the event the Company, Beach Patrol, Inc. or Kawasaki, breaches their
licensing agreement and the Company is unable to continue to use the trademarks,
the loss thereof may adversely affect the Company's operations. The Company has
also filed to register additional trademarks in the United States, which
applications are currently pending. There can be no assurance that such
additional trademarks will be registered or if registered, that such marks, as
well as the Company's registered mark or marks licensed by the Company will be
adequately protect against infringement. In addition, there can be no assurance
that the Company will not be found to be infringing on another company's
trademark.
In the event the Company finds another party infringing upon its trademark,
if registered, or is found by another company to be infringing upon such
company's trademark, there can be no assurances that the Company will have the
financial means to litigate such matters.
Risks Relating to the Offering
15. Non-U.S. Residence of Principal Stockholder May Result in Special
Risks. Ilan Arbel, is the sole officer and director of European Ventures Corp.
(AEVC@), a British Virgin Island corporation, a Selling Securityholder and the
majority stockholder of the Company. Substantially all of the assets of EVC are
or may be located outside of the United States. As a result, it may be difficult
for investors to effect service of process within the United States upon any of
such persons or affiliates, or to enforce against any of them any judgments that
may be obtained in the United States courts predicated upon the civil liability
provisions of the Act, or the Exchange Act. In addition, there can be no
assurance that foreign courts would enforce such judgments, either predicated
upon the civil liability provisions of the federal securities laws or otherwise.
16. Indemnification of Officers and Directors. As permitted under the
Delaware General Corporation Law, the Company's Certificate of Incorporation
provides for the indemnification and elimination of the personal liability of
the directors to the Company or any of its shareholders for damages for breaches
of their fiduciary duty as directors. As a result of the inclusion of such
provision, shareholders may be unable to recover damages against directors for
actions taken by them which constitute negligence or gross negligence or that
are in violation of their fiduciary duties. The inclusion of this provision in
the Company's Certificate of Incorporation may reduce the likelihood of
derivative litigation against directors and other types of shareholder
litigation. See AManagement.@
<PAGE>
17. Limited Public Market for Securities. At present there is a limited
public market for the Company's Securities. There is no assurance that a regular
trading market will develop, or if one does develop, that it will be sustained
for any period of time. Therefore, purchasers of the Company=s securities may be
unable to resell such securities at or near their original offering price or at
any price. Furthermore, it is unlikely that a lending institution will accept
the Company's securities as pledged collateral for loans even if a regular
trading market develops. The underwriter of the Company's public offering, was a
dominant influence in the market for the Company's securities until February
1997. In February 1997, Euro-Atlantic=s clearing firm WS Clearing Corp., ceased
operations, which froze all the accounts of Euro-Atlantic including its client=s
accounts and firm trading account. Euro-Atlantic ceased operations immediately
thereafter. The market for the Company's securities have been significantly
affected and may continue to be affected by the loss of Euro-Atlantic's
participation in the market. The loss of Euro-Atlantic's market making
activities of the Company's securities has decreased significantly the liquidity
of an investment in such securities. Since the ceasing of operations by the
Underwriter, the Company considers the Underwriting Agreement and Underwriter's
Warrant Agreement terminated.
18. No Dividends and None Anticipated. The Company has not paid any
dividends nor, because of its present financial status and its contemplated
financial requirements, does it contemplate or anticipate paying any dividends
upon its Common Stock in the foreseeable future. See ADividend Policy.@
19. Increase Public Float Through Shares Available for Resale. A total of
2,336,944 shares of Common Stock have been issued by the Company of which
1,367,294 shares may be deemed Arestricted securities@ (as such term is defined
in Rule 144 issued under the Act) and, in the future, may be publicly sold only
if registered under the Act or pursuant to an exemption from registration. Of
the restricted shares 1,280,350 shares are being registered for resale in
accordance with this Registration Statement and all but 14,444 of the remaining
restricted shares have been held for in excess of one year and therefore are
eligible for resale in accordance with Rule 144. Any sales under Rule 144 or
pursuant to this registration statement would, in all likelihood, have a
depressive effect on the market price for the Company's Common Stock and
Warrants.
20. Possible Future Dilution. The Company has authorized capital stock of
20,000,000 shares of Common Stock, par value $.001 per share. Inasmuch as the
Company may use authorized but unissued shares of Common Stock without
stockholder approval in order to acquire businesses, to obtain additional
financing or for other corporate purposes, there may be further dilution of the
stockholders' interests.
21. Restrictions on Exercise of Warrants; Necessity for Updating
Registration Statement. The Warrants offered hereby are not exercisable unless,
at the time of the exercise, the Company has a current prospectus covering the
shares of Common Stock issuable upon exercise of the Warrants and such shares
have been registered, qualified or deemed to be exempt under the securities laws
of the state of residence of the exercising holder of the Warrants. The Company
has filed a post-effective amendment, which was declared effective on September
24, 1997, whereby the Warrants may be exercised. The Company has undertaken to
use its best efforts to have all of the shares of Common Stock issuable upon
exercise of the Warrants registered or qualified on or before the exercise date
and to maintain a current prospectus relating thereto until the expiration of
the Warrants, there is no assurance that it will be able to do so. The Company
will notify all Warrantholders and its transfer agent that the Warrants may not
be exercised in the event there is no current prospectus.
22. Possible delisting of Securities from NASDAQ System; Risks of Low
Priced Stocks. In August 1997 Nasdaq increased its maintenance whereby in order
to continue to be listed on Nasdaq, the Company is required to maintain (i) net
tangible assets of at least $2,000,000, (ii) a minimum bid price of $1.00, (iii)
two market makers, (iv) 300 stockholders, (v) at least 500,000 shares in the
public float and (vi) a minimum market value for the public float of $200,000.
In the event the Company's Securities are delisted from Nasdaq, trading, if any,
in the Securities would thereafter be conducted in the over-the-counter market
on the OTC Bulletin Board. Consequently, an investor may find it more difficult
to dispose of, or to obtain accurate quotations as to the price of the Company's
Securities. The Company has applied for a listing on Nasdaq of the Securities
being offered hereby. Quotation on Nasdaq does not imply that a meaningful,
sustained market for the Company's Securities will develop or if developed, that
it will be sustained for any period of time.
<PAGE>
23. Penny Stock Regulation. Broker-dealer practices in connection with
transactions in Apenny stocks@ are regulated by certain penny stock rules
adopted by the Securities and Exchange Commission. Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on Nasdaq provided
that current price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in connection with the transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a transaction in
a penny stock, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. If the
Company's securities become subject to the penny stock rules, investors in this
Offering may find it more difficult to sell their securities.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information at March 31, 1998 and as
adjusted to reflect the sale of the shares of Common Stock by the Selling
Stockholders.
<TABLE>
<CAPTION>
Shares of
Common Stock Shares Percentage of
Name & Address of Owned Prior Shares Owned After Shares Owned
Stockholder to the Offering Offered Offering After Offering (1)
- ----------------- ---------------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
European Ventures Corp. (2) 980,350 980,350 0 0
P.O. Box 47
Road Town, Tortola, British
Virgin Islands
Full Moon Development, Inc. 105,000 105,000 0 0
c/o Valorinvest SA
Via Contonale, #16
Lugano, Switzerland
Volcano Trading, Inc. 95,000 95,000 0 0
c/o Valorinvest SA
Via Contonale, #16
Lugano, Switzerland
American Telecom Corp. 100,000 100,000 0 0
448 West 16th Street
New York, NY 10048
- ------------------------------------------
</TABLE>
(1) Does not give effect to the issuance of (i) 1,466,667 shares of Common
Stock reserved for issuance upon the exercise of the Warrants; (ii) 83,333
shares of Common Stock reserved for issuance under the Company's 1996 Senior
Management Incentive Plan; or (iii) 50,000 shares of Common Stock reserved for
issuance upon the grant of options underlying the Non-Executive Director Stock
Option Plan.
(2) Harold Rashbaum is the father-in-law of Ilan Arbel, the sole officer
and director of EVC, and Alain Le Guillou.
Plan of Distribution for the Securities of the Selling Securityholders
This Prospectus covers the offering of 1,280,350 shares of Common
Stock owned by the Selling Stockholders. See ASelling Stockholders.@ This
Prospectus shall be delivered by said Selling Securityholders upon the sale of
any securities by said holders. The shares of Common Stock and the shares of
Common Stock issuable upon the exercise of such Options, may be sold, from time
to time by the Selling Securityholders. Sales of such securities or even the
potential of such sales at any time may have an adverse effect on the market
prices of the Securities offered hereby. See ARisk Factors.@
The sale of the securities by the Selling Securityholders may be
effected from time to time in negotiated transactions, at fixed prices which may
be changed, and at market prices prevailing at the time of sale, or a
combination thereof. The Selling Securityholders may effect such transactions by
selling directly to purchasers or to or through broker-dealers which may act as
agents or principals, including in a block trade transaction in which the broker
<PAGE>
or dealer will attempt to sell the securities as agent but may position and
resell a portion of the block as principal to facilitate the transactions or
purchases by a broker or dealer as principal and resale by such broker or dealer
for its own account pursuant to this Prospectus, or in ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, brokers or dealers engaged by the Selling Securityholders may
arrange for other brokers or dealers to participate. Such broker-dealers may
receive compensation in the form of discounts, concessions, or commissions from
the Selling Securityholders and/or the purchasers of the securities, as
applicable, for which such broker-dealers may act as agents or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). The Selling Securityholders and any
broker-dealers that act in connection with the sale of the shares of Common
Stock and/or by the Selling Securityholders might be deemed to be Aunderwriters@
within the meaning of Section 2(11) of the Act. In that connection, the Company
has agreed to indemnify the Selling Securityholders and the Selling
Securityholders has agreed to indemnify the Company, against certain civil
liabilities including liabilities under the Act.
At the time a particular offer of its securities is made by or on
behalf of the Selling Securityholders, to the extent required, a prospectus
supplement will be distributed which will set forth the number of shares of
Common Stock being offered and the terms of the offering, including the name or
names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for shares purchased from the Selling Securityholders and any
discounts, commission or concessions allowed or re-allowed or paid to dealers,
and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended (the AExchange
Act@), and the rules and regulations thereunder, any person engaged in a
distribution of Company's Securities offered by this Prospectus may not
simultaneously engage in market-making activities with respect to such Company
securities during the applicable Acooling off@ period (nine days) prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, the Selling Securityholders will be subject to applicable provisions
of the Exchange Act and rules and regulations thereunder, including without
limitation, Rules 10b-6 and 10b-7, in connection with transactions in such
securities, which provisions may limit the timing of purchases and sales of
Company securities by the Selling Securityholders.
Reports to Shareholders
The Company has adopted December 31 as its fiscal year end. The Company
will furnish annual reports to its shareholders containing audited consolidated
financial statements, together with an opinion by independent certified public
accountants. In addition, the Company may, in its discretion, furnish to
shareholders interim quarterly reports containing unaudited financial
information.
LEGAL OPINIONS
Legal matters relating to Shares of Common Stock offered hereby will be
passed on for the Company by its counsel, David S. Klarman, Esq.
EXPERTS
The consolidated financial statements of the Company for the years ended
December 31, 1997 and 1996 included in Form 10-KSB for the Company's fiscal year
ended December 31, 1997, incorporated by reference in this Prospectus, have been
audited by Scarano & Tomaro PC, Independent Certified Public Accountants, to the
extent and for the periods set forth in their report incorporated herein by
reference, and are incorporated herein in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 under the Securities Act of 1933, as amended
with respect to the shares of Common Stock to which this Prospectus relates. As
permitted by the rules and regulations of the Commission, this Prospectus does
not contain all of the information set forth in the Registration Statement, some
of which is incorporated by reference from prior filings of the Company. For
further information with respect to the Company and the shares offered hereby,
reference is made to the Registration Statement and all reports incorporated
herein by reference, including the exhibits thereto, which may be copied and
inspected at the Public Reference Section of the Commission at its principal
office at 450 Fifth Street, N.W., Washington, D.C., 20549.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee $ 1,490.00
Accounting Fees 2,500.00 (1)
Legal Fees 10,000.00 (1)
Printing Fees 2,500.00 (1)
Miscellaneous 36,490 (1)
---------------
Total $ 20,000.00 (1)
</TABLE>
(1) Estimated.
Item 15. Indemnification of Directors and Officers.
As permitted under the Delaware Corporation Law, the Company's Certificate
of Incorporation and By-laws provide for indemnification of a director or
officer under certain circumstances against reasonable expenses, including
attorneys fees, actually and necessarily incurred in connection with the defense
of an action brought against him by reason of his being a director or officer.
In addition, the Company's charter documents provide for the elimination of
directors' liability to the Company or its shareholders for monetary damages
except in certain instances of bad faith, intentional misconduct, a knowing
violation of law or illegal personal gain.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to any charter, provision, by-law, contract, arrangement,
statute or otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer, or controlling person of the Company in the successful
defense of any such action, suit or proceeding) is asserted by such director,
officer or controlling person of the Company in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-1
<PAGE>
Item 16. Exhibits.
The following exhibits are hereby filed with the Commission with the
Company's Registration Statement on Form S-3, dated June 27, 1997. * to be filed
on Form SE.
<TABLE>
<CAPTION>
<S> <C>
5.0 - Opinion of David S. Klarman, Esq.
10.27* - Co-Production Agreement for Battle Studies
23(a) - Consent of Scarano & Tomaro, PC
23(b) - Consent of David S. Klarman, Esq. is included in the opinion filed as Exhibit 5.0
</TABLE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
Post-Effective Amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
Post-Effective Amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement,
including but not limited to any addition or deletion of a managing
Underwriter.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such Post-Effective Amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of Post-Effective Amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
(5) For purposes of determining any liability under the Securities Act of
1933, each filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company,
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<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
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, on the 27th day of
April, 1998.
Hollywood Productions, Inc.
By: \s\ Harold Rashbaum
Harold Rashbaum
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
\s\ Harold Rashbaum Chief Executive Officer 04/27/98
Harold Rashbaum President and director Date
\s\ Robert DiMilia Vice President and Director 04/27/98
Robert DiMilia Date
\s\ James Frakes Director 04/27/98
James Frakes Date
\s\ Alain A. Le Guillou, M.D. Director 04/27/98
Alain A. Le Guillou, M.D. Date
</TABLE>
II-4
Exhibit 5.0
Opinion of David S. Klarman, Esq.
Klarman & Associates
Attorneys at Law
2303 Camino Ramon, Suite 200
San Ramon, California 94583
(925) 327-6200
--------
Facsimile
(925) 830-8821
<TABLE>
<CAPTION>
<S> <C>
David S. Klarman* 14 East 60th Street, Suite 402
------- New York, New York 10022
Marie Elena Cocchiaro** (212) 750-7500 (phone)
*Licensed also in NY (212) 688-1797 (fax)
**Licensed in NY, NJ, PA, and MD only
</TABLE>
April 28, 1998
Securities and Exchange Commission
Washington DC 20549
Re: Hollywood Productions, Inc.
Registration Statement on Form S-3
File No. 333-
Ladies and Gentlemen:
As counsel to Hollywood Productions, Inc. (the ARegistrant@) with
respect to the above Registration Statement on Form S-3 relating to the
registration of up to an aggregate 1,280,350 shares of Common Stock to be sold
by certain Selling Stockholders, I have examined the Certificate of
Incorporation and By-Laws of the Registrant, as amended through the date hereof,
and such other materials as I deemed pertinent. It is my opinion that:
The 1,280,350 shares of Common Stock have been duly issued, and are
fully paid and non-assessable.
I consent to the use of this opinion as an exhibit to said Registration
Statement on Form
S-3, and further consent to the use of my name wherever appearing in said
Registration Statement, including the Prospectus constituting a part thereof,
and in any amendment thereto.
Very truly yours,
\s\ David S. Klarman
David S. Klarman, Esq.
Exhibit 23(a) Consent of Scarano & Tomaro, P.C.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Hollywood Productions, Inc.
14 East 60th Street, 4th Floor
New York, NY 10022
We consent to the incorporation by reference in this Registration
Statement of Hollywood Productions, Inc. and Subsidiaries on Form S-3 of our
report dated March 9, 1998, appearing in the Annual Report on Form 10-KSB of
Hollywood Productions, Inc. and Subsidiaries for the year ended December 31,
1997 and to the reference to us under the heading AExperts@ in the Prospectus,
which is part of this Registration Statement.
DRAFT OPINION
Scarano & Tomaro, P.C.
Syosset, New York
April 28, 1998
1
