Filed Pursuant to Rule 424B3
File No. 333-69581
Prospectus
Paradise Music & Entertainment, Inc.
Common Stock
2,628,175 Shares
The offering is being made only for the benefit of the selling
stockholders. They may elect from time to time to sell their shares but are not
required to do so. We will not receive any of the sale proceeds. We are paying
all the expenses of the offering.
Our shares currently trade on the Nasdaq Small Cap Market (SM) and on the
Boston Stock Exchange. However, we were recently advised by Nasdaq that they
want to delist us. See "Risk Factors." On December 18, 1998 the last sale price
on NASDAQ was $1.625 per share. (Trading Symbols: Nasdaq Small Cap Market -
PDSE; Boston Stock Exchange - PMU)
Investing in the Company involves a high degree of risk. You should
purchase shares only if you can afford a complete loss. You should carefully
read and review this prospectus including the "Risk Factors" beginning on page 7
before deciding whether to buy shares in this Offering.
The Securities and Exchange Commission has not approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Prospectus dated January 7, 1999.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement which includes this prospectus
covering this offering with the Securities and Exchange Commission ("SEC"). This
prospectus does not contain all the information included in the registration
statement. You can request a copy of the registration statement and the exhibits
from us to get a more complete description of our Company and this offering. We
have provided our address, telephone number and e-mail address in the next
section "Incorporation of Certain Information by Reference" if you wish to
obtain free copies of the registration statement and exhibits.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference room in Washington D.C., New
York, New York and Chicago, Illinois. You can also request copies of these
documents, upon payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC
Internet site at http\\www.sec.gov. The registration statement, of which this
prospectus forms a part, including all exhibits, has been filed in electronic
form with the SEC through EDGAR.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information.
We incorporate by reference the following documents filed by us with the
SEC:
o Our Annual Report on Form 10-KSB for the year ended June 30, 1998 filed
with the SEC on October 8, 1998;
o Our Quarterly Report on Form 10-QSB for the quarter ended September 30,
1998 filed with the SEC on November 20, 1998;
o All other reports and other documents filed by us pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act") since
September 30, 1998;
o Our registration statement on Form 8-A filed on January 9, 1997 and
declared effective on January 22, 1997 registering the Common Stock under
Section 12(b) of the Exchange Act; and
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o All documents and reports subsequently filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and prior to the filing of a post-effective amendment which indicates that all
securities which may be offered hereby have been sold or which deregisters all
securities then remaining unsold.
At your request, we will provide you, without charge, with a copy of any
information incorporated by reference in this prospectus. If you want more
information, write or call us at:
Paradise Music & Entertainment
53 West 23rd Street
New York, New York 1010
(212) 590-2100
Attn: Philip G. Nappo, III
In addition, the Company's information may be obtained electronically from our
web site at http://www.paradiseme.com or by submitting a request via email to
[email protected].
You may also obtain information from the SEC as described in "Where You
Can Find More Information."
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PROSPECTUS SUMMARY
We have provided you with a summary of important information on our
business. You should read all the information in this prospectus for a more
complete understanding. Some of the information has been incorporated from our
SEC filings. You can obtain copies of this incorporated information from us
without charge as described beginning on page 2. Please be sure to read "Risk
Factors" beginning on page 7 for a description of the high risk involved in
acquiring our shares.
THE COMPANY
Principal Executive Paradise Music & Entertainment, Inc.
Offices: 53 West 23rd Street
New York, NY 10010
(212) 590-2100
Our Business: We engage in various music related businesses,
including:
o Production of music videos and music specials for
television and cable through Picture Vision, Inc.
o Music artist management through All Access
Entertainment, Inc.
o Production of original scores for television,
radio and advertising through Rave Music, Inc.
o Production and commercial release of recorded music
through PUSH Records, Inc.
Here are highlights of each business.
PICTURE VISION
Picture Vision produces:
o Music videos used to promote music artists
o Music specials for television and cable featuring
music artists. Recent productions include Janet
Jackson's "Velvet Rope Concert" and Garth Brooks'
"Live From Central Park Concert" for HBO.
These services are provided on a fixed budget basis
with profitability dependent on estimating and managing
budget costs. Picture Vision has produced music videos
and specials for many well-known artists and has
received numerous industry awards for its work.
ALL ACCESS
All Access provides a full range of management services
to music artists. The number of artists represented by
All Access is limited and consists of both well-known
artists such as Daryl Hall and John Oates and
developing artists such as Sheppard (with Mosh
Productions, an affiliate of Sony Music), Kim Sozzi, a
Columbia Records recording artist, and FAT, a DV8
Records recording artist. All Access receives its fees
as a fixed percentage of artist revenues. The fee
percentage charged varies based on an artist's prior
commercial success.
RAVE
Rave creates for use on television, radio and film:
o Original music scores, for the television shows
Pokemon, Mr. Men and Little Miss.
o Advertising themes for clients such as Downy
Fabric Softener, Pringles, JIF Peanut Butter and
Dominos Pizza.
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Rave produces original music at its in-house studios
and uses independent musicians, singers and engineers
to produce final soundtracks. A substantial portion of
Rave's revenues are generated from television
commercials. Rave retains the future property rights
to its musical compositions.
PUSH
PUSH is a start-up record label launched by the Company
in early 1997. PUSH has the exclusive rights to records
by established artists such as Daryl Hall and John
Oates, Daryl Hall, Blessid Union of Souls, and by new
and emerging artists such as Luxx and kidneythieves.
Push has released three recordings to date through BMG
Music, a major distribution company.
Push has also negotiated joint ventures to share in the
distribution, marketing and promotion of various jazz
recordings by artists such as Paul Hardcastle,
Jazzmasters and others in exchange for a negotiated
percentage of every record sold.
Our Concept of We offer a broader range of services than most
Combined Services; independent music companies. This combination of
Expansion: services has been structured to foster synergies
between the operating companies, more efficient
business operations, lower costs and greater
convenience to customers. In addition, we intend to
expand through acquisitions in related businesses, if
sufficient capital can be raised to fund the
acquisition program.
Our History Involves The Company was incorporated in Delaware in July
Substantial Losses: 1996 and commenced operations in October 1996. We
originally combined the operations of three established
companies (Rave, Picture Vision and All Access) in
establishing the Company. Following our public offering
in 1997, we launched PUSH, our record label. We have
not yet become profitable on a combined basis and
cannot assure you that we will become profitable. In
the meantime, we have expended substantial capital to,
among other things, cover our operating losses.
Recent Developments: On December 11, 1998, investors represented by The
Cassandra Group, Inc., a registered investment advisor
("Cassandra"), purchased 500,000 shares of Common
Stock at a price of $1 per share or $500,000 in the
aggregate and on December 15, 1998 additional
investors represented by Cassandra purchased an
aggregate of 1,500,00 shares of Common Stock at a
purchase price of $1 per share or $1,500,000 in the
aggregate. The Company received the first payment of
$500,000 on December 11, 1998 and an additional
$100,000 on or about December 23, 1998. The payment
for the remaining 1,400,000 shares is due on the
effective date of this prospectus. See "Selling
Stockholders." The purchase price was higher than the
market price on NASDAQ and the book value on the date
of payment or date of irrevocable commitment.
We agreed with the Cassandra investors to file a
registration statement on Form S-3 registering for
resale the 2,000,000 shares promptly following the
initial funding of $500,000. We are required to have
the registration statement declared effective by the
SEC no later than the 90th day after its filing with
the SEC or the investors have the right to put back to
the Company at a price of $1.00 per share the 600,000
shares purchased and the sale of the remaining
1,400,000 shares could be voided. We also granted
Cassandra the right to designate three directors to
sit on our nine member Board. No directors have been
appointed yet.
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We raised an additional $100,000 through the sale of
100,000 shares to an unaffiliated investor. In
addition, certain trade vendors and professionals
agreed to convert $528,175 owed to them for 528,175
shares, the same price paid by the other investors. We
also agreed to register these shares for resale in this
S-3.
THE OFFERING
Securities Offered: 2,628,175 shares. The shares are being offered by the
selling stockholders. See "Plan of Distribution."
Shares Outstanding: There were 2,407,200 shares issued and outstanding
prior to the share issuances described in "Recent
Developments" (the "Investment"). Pursuant to the
Investment, a total of 2,628,175 shares have been
issued. Accordingly, there are 5,035,375 shares issued
and outstanding as of the date hereof (excluding
shares which can be purchased under existing warrants
and options).
Estimated Offering $35,000.
Expenses:
Risk Factors: Investing in our shares is very risky. Investors
should be able to bear the complete loss of their
investment.
Use of Proceeds: The proceeds of this offering will be paid to the
selling stockholders. None of the proceeds will be
paid to the Company. See "Use of Proceeds."
Trading Symbols: Nasdaq SCM BSE
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Common Stock PDSE PMU
Warrants PDSEW PMUW
Special Note Regarding Forward-looking Statements
Some of the statements contained in this prospectus, including information
incorporated by reference, discuss future expectations, contain projections of
future results of operations or financial condition or state other
"forward-looking" information. Those statements are subject to known and unknown
risks, uncertainties and other factors that could cause the actual results to
differ materially from those contemplated by the statements. The forward-looking
information is based on various factors and was derived using numerous
assumptions.
Important factors that may cause actual results to differ from projections
include, for example:
o the relative success or failure of our efforts to implement our
business plans;
o our ability to raise sufficient capital to fully implement our business
plans, including the release and promotion of new albums on our record
label;
o our ability to provide music related services which appeal to the
current trends in the music industry;
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o our ability to attract quality music artists and professionals;
o our ability to negotiate and maintain favorable distribution
arrangements for our record label;
o the effect of changing economic conditions;
o changes in government regulations, tax rates and similar matters;
o our ability to attract and retain quality employees; and
o other risks which may be described in our future filings with the SEC.
We do not promise to update forward-looking information to reflect
actual results or changes in assumptions or other factors that could
affect those statements.
RISK FACTORS
Investing in our shares is very risky. You should be able to bear a
complete loss of your investment. You should carefully consider the following
factors, among others, before making an investment decision.
Our Shares may be removed from Our tangible net asset value as of September
Nasdaq SmallCap. 30, 1998 was below the required Nasdaq SmallCap
requirements. On November 3, 1998, Nasdaq
notified us that they wanted to delist our
shares on November 10, 1998. Prior to November
10, 1998, we requested an oral hearing which is
scheduled for January 8, 1999. On December 15,
1998 we submitted a written business plan in
support of our request to continue to be listed
on Nasdaq. We cannot be sure that our plan will
be acceptable to Nasdaq or what the outcome
will be at the oral hearing. If our shares are
delisted, the price of the shares would be
harmed.
We have been experiencing The Company has for some time been experiencing
substantial cash shortages. a cash shortage. Because of this cash shortage,
there have been delays in making timely
payments which have hurt our relationship with
some of our suppliers. In addition, our
landlord has recovered certain rent concessions
that were previously granted based on our
payment delays.
We will need to raise more We have for some time been actively seeking
money in the future. additional financing for our business. We have
recently raised $2,100,000 in cash as described
above and an additional $528,175 in debt
conversions also as described above. To date
$700,000 has been paid in cash, all of the debt
conversions have taken place and the balance of
$1,400,000 in cash investments will be paid
promptly following the date of this Prospectus.
More funds will have to be obtained in order to
support our business plans. If we cannot get
more funds, we will have to curtail some of our
plans. We cannot assure you that we can obtain
more capital. We also don't know if the terms
requested by future financing sources will be
acceptable to us.
We are a recently combined While our operating companies other than the
business which has record label have been individually in business
experienced substantial for many years, we have only operated together
losses since the since October 1996. We have not yet operated
combination. the combined business on a profitable basis. We
cannot assure you when, if ever, the combined
business will be profitable.
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PUSH Records is a high risk Although large amounts of money have been
business which has never been invested in PUSH it has never been profitable.
profitable. PUSH must generate revenues from successful
releases which are sufficient to overcome any
losses from unsuccessful releases. PUSH must
also put out enough releases to support its
overhead and marketing activities. We have no
assurance that PUSH will achieve profitability.
PUSH's records are distributed through BMG
Music, one of the five largest music
distribution companies in the world. PUSH has
not met the sales levels required under its
distribution agreement with BMG. While BMG has
orally agreed not to terminate the distribution
agreement at this time, BMG could decide to
terminate at any time in the future. BMG's
termination would significantly harm the PUSH
business.
We depend on our Senior Our business depends on the skill, creativity
Management and Key Employees. and business relationships of our employees and
particularly our senior management. The loss of
members of our senior management, including
John Loeffler, Jon Small, Brian Doyle, Philip
G. Nappo III and Richard Flynn would be harmful
to us.
We are dependent on the Our artist management business and our record
success of independent artists label business have relationships with a
with whom we have limited number of artists. It is difficult to
relationships. secure these relationships. Once they have been
secured we depend on the success of these
artists, which success cannot be predicted, in
order to realize revenues.
Our acquisition program has Our acquisition program has yet to be
yet to be successful. successful. It will be difficult to fund and
finance acquisitions unless we raise more money
and our stock price rises. Even if we complete
acquisitions, we cannot be sure that these
acquisitions will benefit our operations.
Competition is intense in all Our record business competes with numerous
our businesses. other independent record labels, many of whom
have greater financial resources than us. In
addition, there are six major companies with
which our record label cannot compete directly
due to the substantial financial resources and
talent pool of their companies.
Our artist management, video production and
original score/production businesses also
compete with numerous other similar businesses,
many of whom have greater financial resources
than us.
We are dependent on some large One advertising agency/client generated
customers. $303,000 and $361,000 of commercial music
production revenues for the years ended June
30, 1998 and June 30, 1997, respectively.
Two music artists produced $750,000 and
$675,000 of music artist management revenues
for the years ended June 30, 1998 and June 30,
1997, respectively.
Video production for two music artists in 1998
and one music artist in 1997 generated
approximately $7,402,000 and $1,867,000, of
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video production revenues for the years ended
June 30, 1998 and June 30, 1997, respectively.
The loss of a large customer or the loss of a
significant production would hurt our
businesses.
No dividends have been paid. We have never declared or paid a cash dividend
and we do not expect to have available cash
with which to pay cash dividends in the
foreseeable future.
A large block of shares can be Owners of a large block of shares which were
sold under Rule 144. previously restricted can be sold under Rule
144. The sale of a large number of these shares
could lower the price of our shares or make it
harder to attract new investors.
Additionally, the Company has granted warrants
and options to certain directors, officers,
employees and consultants of the Company to
purchase an aggregate of 329,000 shares of
Common Stock.
We must deal with Year 2000 We have conducted a review of our computer
Compliance Issues. systems to identify the "Year 2000" problem.
The year 2000 problem is the result of computer
programs being written using two digits rather
than four to define the applicable year. Any
programs that have time-sensitive software may
recognize a date using "00" as the year 1900
rather than the year 2000. This could result in
a major systems failure or miscalculations. We
believe that our computer systems and software
products are fully year 2000 compatible.
However, computer systems or software products
of our suppliers or customers may not accept
input of, store, manipulate and output dates in
the year 2000 or thereafter without error or
interruption. We have retained a consultant to
help us with compliance.
USE OF PROCEEDS
All of the shares which may be sold pursuant to this prospectus will be
sold from time to time by the selling stockholders for their own accounts or by
pledgees, donees, transferees or other successors in interest thereof. The
Company will receive no proceeds from any such sales of shares.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the selling stockholders as of December 18, 1998,
the number of shares owned by them covered by this prospectus and the amount and
percentage of shares to be owned by each selling stockholder after the sale of
all of the shares offered by this prospectus. The number of shares indicated
includes the number of shares of Common Stock issuable upon exercise of
currently exercisable options and convertible debentures. The list of selling
stockholders includes Thomas J. Edelman, Paul Thomas Cohen, directors of the
Company, John Loeffler, Brian Doyle and Richard Flynn, directors and officers of
the Company, and Philip G. Nappo, III, an officer of the Company, each of whom
received their shares covered by this prospectus in exchange for amounts owed to
them. The selling stockholders also includes the law firm of Davis & Gilbert
LLP, counsel to the Company, who received its shares covered by this prospectus
in exchange for corporate legal services rendered to the Company. Except for
Messrs. Edelman, Cohen, Nappo, Loeffler, Doyle and Flynn and for other employees
marked with an "E" and trade vendors marked with a "V", none of the selling
shareholders has had any position, office or other material relationship with
the Company within the past three years other than as a result of the ownership
of the shares or other securities of the Company. The information included below
is based on information provided by the selling shareholders. Because the
selling stockholders may offer some or all of their shares, no definitive
estimate as to the number of shares that will be held by the selling
stockholders after such
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offering can be provided and the following table has been prepared on the
assumption that all shares of Common Stock offered hereby will be sold.
Shares Percentage
Shares of Owned of Shares
Beneficially Shares After Owned After
Name Owned Offered Offering(1) Offering(1)(2)
- ---- ----- ------- -------- --------------
Lawrence Bortoluzzi-E 8,500 8,500 0 0
Pamela Butler-E 1,000 1,000 0 0
Daniel Caldwell-E 12,500 12,500 0 0
P. Thomas Cohen(3) 45,489 23,960 21,529 *
Davis & Gilbert LLP-V 98,129 88,129 10,000 *
Brian Doyle 189,250 43,750 145,500 2.88
Thomas J. Edelman(4) 97,279 60,000 37,279 *
Richard Flynn 189,250 43,750 145,500 2.88
Jennifer J. 3,000 3,000 0 0
Haagen-Islami-E
Michael Jeon-E 1,000 1,000 0 0
Jacqueline Kotler-E 2,000 2,000 0 0
John Loeffler(5) 349,451 27,084 322,367 6.40
John Loeffler Music 18,600 15,000 3,600 *
Pension Plan Inc. (5)
Jonathan Love-E 2,000 2,000 0 0
Philip G. Nappo 96,882 88,852 8,000 *
Raymond Ovetsky-E 8,000 8,000 0 0
Joseph Parker-V 2,000 2,000 0 0
Michael Rodriguez-E 15,000 15,000 0 0
April Taylor-E 1,650 1,650 0 0
Tiffany Towers-E 6,000 6,000 0 0
Robert Burke 100,000 100,000 0 0
Jesse Dylan 100,000 100,000 0 0
Akiva Goldsman 75,000 75,000 0 0
David Kuhn 25,000 25,000 0 0
Richard and Ann La 100,000 100,000 0 0
Gravenese
Stacey Sher 100,000 100,000 0 0
Margery Simkin 100,000 100,000 0 0
Benjamin Affleck 75,000 75,000 0 0
Allegra Productions
Profit Sharing 10,000 10,000 0 0
Trey Anastasio 70,000 70,000 0 0
Henry Bamberger 10,000 10,000 0 0
Soledad Bastiancich 10,000 10,000 0 0
Steve/Janet 10,000 10,000 0 0
Bergman/Surrey
Marianne Boesky 20,000 20,000 0 0
Broadcast Data 10,000 10,000 0 0
Systems, LP-V
Cecil Trust 75,000 75,000 0 0
Cornerstone Promotion, 10,000 10,000 0 0
Inc.-V
Dan Cortese 20,000 20,000 0 0
Dan Cortese Trust 20,000 20,000 0 0
Claudio Curzi 20,000 20,000 0 0
Matthew P. Damon 75,000 75,000 0 0
Benicio Del Toro 10,000 10,000 0 0
Dennis Gassner & 10,000 10,000 0 0
Associates, Profit
Sharing
Cameron & Billie Diaz 20,000 20,000 0 0
Arthur Dielhenn 20,000 20,000 0 0
Dielhenne Productions 20,000 20,000 0 0
Profit
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Sharing
Dionysian Productions, 100,000 100,000 0 0
Inc.
Gabe Doppelt 10,000 10,000 0 0
Jay Faires 75,000 75,000 0 0
Alan Finkelstein-V 7,500 7,500 0 0
Jay Finkelstein-V 7,500 7,500 0 0
Jonathan Fishman 20,000 20,000 0 0
Morgan Freeman 10,000 10,000 0 0
Brian Gibson 30,000 30,000 0 0
Burt Goldstein 25,000 25,000 0 0
Mike Gordon 30,000 30,000 0 0
Lara Harris 75,000 75,000 0 0
Lauren Holly 75,000 75,000 0 0
Hopalong Company, Inc.
Profit Sharing 10,000 10,000 0 0
Ted Hope 10,000 10,000 0 0
James Yoshinobu Iha 30,000 30,000 0 0
Craig Kanarick 75,000 75,000 0 0
Kathy Sue Enterprises 10,000 10,000 0 0
Michelle Kydd 30,000 30,000 0 0
Law offices of Glinert 3,000 3,000 0 0
& Chidekel-V
Victoria Leacock 10,000 10,000 0 0
David Lonner 10,000 10,000 0 0
Amir Malin 10,000 10,000 0 0
Margaret Martin 10,000 10,000 0 0
Menchel Family Trust 75,000 75,000 0 0
Amy Ness 25,000 25,000 0 0
Diarmuid Quinn 10,000 10,000 0 0
Tim Roth 20,000 20,000 0 0
David Salle 20,000 20,000 0 0
David Salle Profit Sharing 10,000 10,000 0 0
September Productions, 20,000 20,000 0 0
Inc. Profit Sharing
Sheldon Kahn 20,000 20,000 0 0
Retirement Trust
Shepard Family Trust 20,000 20,000 0 0
James Shepard Rev. 20,000 20,000 0 0
Trust
Leslie Simitch 20,000 20,000 0 0
Martin Spencer 10,000 10,000 0 0
Norman Steinberg 20,000 20,000 0 0
Ken Sunshine 10,000 10,000 0 0
T-Bone Films, Inc.-V 4,000 4,000 0 0
The Roland Trust 20,000 20,000 0 0
Tom Anthony 33,000 33,000 0 0
Woodworking-V
Jay Walkingshaw 20,000 20,000 0 0
Sally Wilcox 10,000 10,000 0 0
- ----------
* Less than 1%
(1) Assumes sale of all shares owned by the selling stockholders.
(2) Based on 5,035,405 shares of Common Stock outstanding on the date of this
prospectus.
(3) Includes options to purchase 15,000 shares.
(4) Includes options to purchase 30,000 shares.
(5) Includes options to purchase 5,000 shares, 18,600 shares owned by Mr.
Loeffler's Pension Plan and 3,800 shares owned by Mr. Loeffler's wife.
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PLAN OF DISTRIBUTION
The shares are being registered in order to facilitate their sale from
time to time by the selling stockholders, or by pledgees, donees, transferees or
other successors in interest thereof, as market conditions permit in one or more
transactions. No underwriting arrangements have been entered into by the selling
stockholders. In addition, as none of the selling stockholders have advised the
Company whether or not they have any current intention of selling any of the
shares, the Company is unable to predict whether or when any of the selling
stockholders will determine to proceed with sales of the shares, as such
determination will be made solely at the discretion of each selling stockholder.
The distribution of the shares by the selling stockholders and/or their
pledgees, donees, transferees or other successors in interest, may be effected
in one or more transactions that may take place on the Nasdaq SCM, the BSE, the
over-the-counter market, including ordinary brokers transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
the shares as principals, or a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The shares may be sold by one or more of
the following methods, without limitation: (a) 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;
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus; (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (d)
face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the selling
stockholder may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the selling
stockholders in amounts to be negotiated immediately prior to the sale. The
selling stockholders and such brokers and dealers and any other participating
brokers or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act, in connection with such sales. The Company has agreed to bear
all expenses of registration of the shares.
The Company will receive no proceeds from any sales of the shares offered
hereby by the selling stockholders. The Company has agreed to pay the filing
fees, costs and expenses associated with the registration statement exclusive
of fees of counsel to the selling stockholders, or any of them, but inclusive
of fees relating to compliance with any state blue sky requirements, commissions
and discounts of underwriters, dealers or agents, if any, and any stock transfer
taxes.
The Company has agreed to indemnify the selling stockholders, or their
transferees or assignees against certain liabilities, including liabilities
under the Securities Act.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder the power to indemnify its officers, directors,
employees and agents on certain conditions against liabilities arising out of
any action or proceeding to which any of them is a party by reason of being such
officer, director, employee or agent. The Certificate of Incorporation also
provides for the indemnification, to the fullest extent permitted by the General
Corporation Law of Delaware, of such persons. Insofar as indemnification for
liabilities arising under the Securities Act, may be permitted to directors,
officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
LEGAL MATTERS
The validity of the shares offered hereby is being passed upon for the
Company by Davis & Gilbert LLP, 1740 Broadway, New York, New York, 10019. Walter
M. Epstein, Esq., a member of the firm, owns 10,000 shares of Common Stock and
Davis & Gilbert LLP owns 88,129 shares of Common Stock.
12
<PAGE>
EXPERTS
The consolidated financial statements as of June 30, 1998 and 1997 and for
the years then ended incorporated by reference in this prospectus, have been
incorporated herein in reliance on the report, which contains an explanatory
paragraph relating to the Company's ability to continue as a going concern, of
Rothstein, Kass & Company, P.C., independent accountants given on the authority
of that firm as experts in accounting and auditing.
13
<PAGE>
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Until February 16, 1999, all dealers that effect transactions in these
securities may be required to deliver a prospectus.
We have not authorized any person to give any information or to make any
representations other than those contained in this prospectus. You must not rely
upon any information or representation not contained or incorporated by
reference in this prospectus as if we had authorized it. If any person does make
a statement that differs from what is in this prospectus, you should not rely on
it. This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the securities to which they relate nor
does this prospectus constitute an offer to sell or the solicitation of an offer
to buy securities in any state or other jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The
information contained in this prospectus is accurate as of the date of its
cover. When we deliver this prospectus or make a sale pursuant to this
prospectus, we are not implying that the information is current as of the date
of the delivery of the sale.
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TABLE OF CONTENTS
Page
----
Where You Can Find More Information ....................................... 2
Incorporation of Certain Information by Reference ......................... 2
Prospectus Summary ........................................................ 4
Risk Factors .............................................................. 7
Use of Proceeds ........................................................... 9
Selling Stockholders ...................................................... 9
Plan of Distribution ...................................................... 12
Disclosure of Commission Position on Indemnification For Securities Act
Liabilities .............................................................. 12
Legal Matters ............................................................. 13
Experts ................................................................... 13
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2,628,175 Shares
PARADISE MUSIC
&
ENTERTAINMENT,
INC.
Common Stock
----------------
PROSPECTUS
----------------
January 7, 1999
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