SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13D-2(A)
(AMENDMENT NO. 2)1
Synthonics Technologies, Inc.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
8716Y107
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(CUSIP Number)
Alex Sandel
Argoquest 7, LLC
25136 Anza Drive
Valencia, CA 91355
With a copy to:
Murray Markiles, Esq.
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Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Century City, CA 90067
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
December 22, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13D to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
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1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, SEE
the NOTES).
(Continued on following pages)
Page 1 of 10
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SCHEDULE 13D
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CUSIP NO. 8716Y107 PAGE 2 OF 10 PAGES
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1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Argoquest 7, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* WC (See Response to Item 3).
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES 0 (See Response to Item 5).
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BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 15,266,541 (See Response to Item 5).
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0 (See Response to Item 5).
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PERSON 10 SHARED DISPOSITIVE POWER
WITH 15,266,541 (See Response to Item 5)
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
15,266,541 (See Response to Item 5.)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
30.1% (See Response to Item 5.)
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 2 of 10
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ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") relates to the common
stock, par value $0.01 per share (the "Common Stock"), of Synthonics
Technologies, Inc., a Utah corporation (the "Company" or the "Issuer"), and is
being filed pursuant to Rule 13d-1 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
The address of the principal executive offices of the Company is 31324 Via
Colinas, Suite 106, Westlake Village, California 91362.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) This Statement is hereby filed by Argoquest 7, LLC, a limited liability
company organized in Delaware (the "Reporting Person"). The business address of
the Reporting Person is Argoquest 7, LLC, 25136 Anza Drive, Valencia, CA 91355.
The Reporting Person and Future Media Productions, Inc., a corporation organized
in California ("Future Media"), have common owners. The Manager of the Reporting
Person is Alex Sandel (the "Manager").
(d) During the last five years, neither the Reporting Person nor the Managaer
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) During the last five years, neither the Reporting Person nor the
Manager was a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or State securities laws
or finding any violation with respect to such laws.
(f) The Manager is a citizen of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to that certain Equity Agreement - Summary of Terms, dated as of
June 2, 1999 by and between the Issuer and Alex Sandel, and that certain
Assignment, dated as of June 2, 1999, by Alex Sandel for the benefit of
Argoquest 7, LLC (collectively, the "Agreement"), attached to the Schedule 13D
filed on June 11, 1999 as "Exhibit A" and incorporated herein by reference as
though fully set forth herein (all capitalized terms not otherwise herein
defined shall have the meaning ascribed to them in the Agreement) and that
certain Subscription Agreement, dated as of June 2, 1999, by and between
Argoquest 7, LLC and the Issuer, attached to the Amendment No. 1 to the Schedule
13D filed on December 3, 1999 as "Exhibit B" and incorporated herein by
reference as though fully set forth herein (the "Subscription Agreement"), the
Issuer agreed to sell to the Reporting Person and the Reporting Person agreed to
purchase 2,300,000 shares of the common stock of the Issuer at a purchase price
of $.10 per share, for a total purchase price of $230,000. The Reporting Person
paid for such shares in cash from working capital funds.
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On June 11, 1999, the Reporting Person filed a Schedule 13D inadvertently
reporting beneficial ownership of an incorrect number of shares of Common Stock
and an incorrect aggregate purchase price paid therefor. The Schedule 13D filed
on June 11, 1999 stated that the Reporting Person purchased an option to
purchase 1,371,320 shares of the Common Stock, at a purchase price of $.10 per
share, for an aggregate purchase price of $137,132. However, the option is
exercisable for 1,448,445 shares of the Common Stock, at a purchase price of
$.10 per share, for an aggregate purchase price of $144,844 (the "Option"). The
Option became fully vested upon the signing of the Agreement and the purchase of
the 2,300,000 shares of the Common Stock, as described above. The Option is
outstanding until the later of (1) 90 days from the close of the Issuer's
current stage of financing or (2) 150 days from the date of the Agreement. In
addition, the Reporting Person has the right to purchase stock in the current
stage of the Issuer's financing being raised sufficient for the Reporting Person
to maintain 10% of the outstanding Common Stock (the "Purchase Option"). The
Purchase Option is at the same price or average price per share of the Common
Stock that is obtained in the Issuer's current stage of financing. Pursuant to
the Subscription Agreement, the Purchase Option shall expire if not exercised
within 30 days of the date the Reporting Person receives written notice from the
Issuer of the terms, conditions and anticipated closing date of the Current
Round (as defined in the Subscription Agreement).
On or about October 19, 1999, the Reporting Person exercised a portion of
the Option to acquire 800,000 shares of the Common Stock at a purchase price of
$.10 per share for an aggregate purchase price of $80,000. The Reporting Person
still retains such portion of the Option to acquire 648,445 shares of the Common
Stock.
In addition, pursuant to the Agreement, the Issuer, among other things,
agreed to (1) give Future Media, the exclusive right to service the Issuer's
CD-ROM replication needs, based on prevailing market prices for such services,
and (2) collaborate on a joint marketing program and presentation with respect
to the development and positioning of certain programs. Any proceeds from the
joint marketing program and presentation are for the full benefit of the Issuer
and will not be shared with the Reporting Person or any affiliates of the
Reporting Person, other than through participation of the Reporting Person's
share of the Common Stock.
The Reporting Person paid for such shares in cash from working capital
funds. No part of the purchase price for the Common Stock, Option and/or
Purchase Option issued to the Reporting Person pursuant to the Agreement has
been obtained or will be represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring, holding, trading or voting the
securities.
On December 22, 1999, the Issuer issued to Future Media a convertible note
exercisable into 11,518,096 shares of the Common Stock (the "Note"). The Note
may be converted until the first anniversary of the date of issuance. In the
event the Note is not converted within such time, the principal amount due
thereunder will be due on the second anniversary of the date of issuance. The
Note bears no interest for the first year from the date of issuance and
thereafter will accrue interest at the rate of interest of outstanding
borrowings made in the ordinary course of business of Future Media, unless the
Note is converted. Future Media purchased the Note from the Issuer for (i)
$500,000 in cash and (ii) services
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provided by Future Media for the benefit of the Issuer consisting of replication
and packaging services at the expense of Future Media of up to two million
CD-ROMS (in the aggregate) for digital catalog programs entered into by the
Issuer with its customers and establishment by Future Media of a separate entity
wholly owned by Future Media to develop and produce 3D digital catalogs on
behalf of the Issuer for the Issuer's customers. Under the terms and conditions
of the Note, Future Media has agreed that in the event it does not elect to
convert the Note, the services to be provided by Future Media for the benefit of
the Issuer as described above will remain contractual obligations of Future
Media.
Future Media paid for the Note, in such part as described above, in cash
from working capital funds. No part of the purchase price for the shares of
Common Stock issuable under the Note has been obtained or will be represented by
funds or other consideration borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the securities.
ITEM 4. PURPOSE OF THE TRANSACTION.
The Reporting Person acquired the Common Stock, Option and Purchase Option
pursuant to the Agreement for investment purposes. Pursuant to the Agreement,
the Reporting Person agreed that neither it nor any affiliate of the Reporting
Person would purchase any additional shares of the Common Stock, without the
permission of the Board of Directors of the Issuer, in the open market or other
transactions which would raise the Reporting Person's share of the Common Stock
in excess of 10% of the outstanding shares on a fully diluted basis of the
Issuer, at such time, PROVIDED, HOWEVER, that the Reporting Person may through
the open market or other private transactions acquire an additional 10% of the
outstanding shares of the Common Stock, PROVIDED, THAT, the Reporting Person (1)
gives advance notice of such purchases to the Board of Directors of the Issuer
and (2) executes a standstill agreement stating that such purchases are for
investment purposes only and neither the Reporting Person nor any of its
affiliates will take action to acquire control of the Issuer (the "Standstill
Agreement"), a copy of which is attached to the Amendment No. 1 to the Schedule
13D filed on December 3, 1999 as "Exhibit C" and incorporated herein by
reference as though fully set forth herein. In addition, pursuant to the
Agreement, the Chief Financial Officer of Future Media will act as the principal
financial officer of the Issuer for twelve months following the date of the
Agreement. This service will be provided to the Issuer pursuant to the
transactions contemplated in the Agreement with no additional charge to the
Issuer, until such time as the Issuer completes its current stage of financing
pursuant to the terms of the Agreement. Pursuant to the Agreement, the Reporting
Person also has the right to nominate one member to the Board of Directors of
the Issuer, PROVIDED, THAT, such nominee must be approved by the Issuer, such
approval which shall not be unreasonably withheld by the Issuer.
Pursuant to the terms and conditions of the Note purchase by Future Media,
Alex Sandel, the Chairman of the Board of Directors, Chief Executive Officer and
President of Future Media, will join the Board of Directors of the Issuer. In
addition, the Issuer and Future Media have agreed that Future Media will have
the right to transfer its interest in the shares of the Common Stock to an
entity similarly owned and controlled by shareholders of Future Media.
The Reporting Person from time to time intends to review its investment in
the Issuer on the basis of various factors, including the Issuer's business,
financial condition, results of
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operations and prospects, general economic and industry conditions, the
securities markets in general and those for the Issuer's securities in
particular, as well as other developments and other investment opportunities.
Based upon such review and subject to the provisions of the Agreement, the
Reporting Person will take such actions in the future as it may deem
appropriate, consistent with the securities laws, in light of the circumstances
existing from time to time. If the Reporting Person believes that further
investment in the Issuer is attractive, whether because of the market price of
the Issuer's securities or otherwise, it may acquire Common Stock, pursuant to
the exercise of the Option and/or the Purchase Option.
The Reporting Person currently has no plans or proposals to dispose of the
Common Stock, the Option and/or the Purchase Option or some or all of the Common
Stock the Reporting Person may acquire by the exercise of the Option and/or the
Purchase Option, PROVIDED, HOWEVER, that depending on market and other factors,
in the future, the Reporting Person may determine to dispose of some or all of
the Common Stock acquired by exercise of the Option and/or Purchase Option in
privately negotiated transactions, subject to certain transfer restrictions and
rights of first refusal of the Issuer as set forth in the Agreement.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Schedule 13D filed by the Reporting Person on June 11, 1999
inadvertently reported beneficial ownership of an incorrect number of shares of
the Common Stock, an incorrect percentage of the shares of the outstanding
Common Stock that the Reporting Person's beneficial ownership of the Issuer's
securities represents and an incorrect number of shares of the outstanding
Common Stock. The Schedule 13D filed on June 11, 1999 stated that the Reporting
Person is the beneficial owner of 3,671,320 shares of the Common Stock, or
approximately 10% of the Common Stock based on a total of 36,713,182 shares of
the Common Stock outstanding on a fully diluted basis as of June 2, 1999. The
Schedule 13D filed on June 11, 1999 also stated that such ownership includes the
Option to acquire up to 1,371,320 shares of the Common Stock. However, pursuant
to the Agreement, as of June 2, 1999, the Reporting Person was the beneficial
owner of 3,748,445 shares of the Common Stock, or approximately 9.6% of the
Common Stock based on a total of 37,484,452 shares of the Common Stock
outstanding on a fully diluted basis (including shares of the Common Stock and
the Common Stock issuable upon exercise of the Option issued to the Reporting
Person pursuant to the Agreement) as of June 2, 1999. Such ownership includes
the Option to acquire up to 1,448,445 shares of the Common Stock. Pursuant to
the Agreement, as described in Item 3 of this statement, the Reporting Person
also beneficially owns the Purchase Option to acquire such number of shares of
the Common Stock in the Issuer's current stage of financing sufficient to
maintain 10% of the shares of the outstanding Common Stock. However, upon
consummation of the Note purchase by Future Media, the Reporting Person shares
beneficial ownership with Future Media of (i) the 3,748,445 shares of the Common
Stock and the shares of the Common Stock issuable under the Purchase Option of
which beneficial ownership was reported on the Amendment No. 1 to the Schedule
13D filed on December 3, 1999 and (ii) the Note and the 11,518,096 shares of the
Common Stock issuable thereunder. As of December 22, 1999, the Reporting Person
shares beneficial ownership in the aggregate of 15,266,541 shares of the Common
Stock and such shares that may be issuable under the Purchase Option. The
15,266,541 shares of which the Reporting Person is reporting beneficial
ownership in this statement represents 30.1% of the Common Stock
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outstanding on a fully diluted basis as of December 22, 1999 based on a total of
50,679,624 shares of the Common Stock outstanding on December 22, 1999. Future
Media also will file a Schedule 13D reporting shared beneficial ownership of the
shares of the Common Stock reported in this statement.
(b) The Schedule 13D filed by the Reporting Person on June 11, 1999
inadvertently reported an incorrect number of shares of the Common Stock of
which the Reporting Person has the sole power to vote or direct the vote and
dispose or direct the disposition. The Schedule 13D filed on June 11, 1999
stated that the Reporting Person has the sole power to vote or direct the vote
and dispose or direct the disposition of 3,671,320 shares of the Common Stock
and such shares that the Reporting Person purchases pursuant to the Purchase
Option. The Amendment No. 1 to the Schedule 13D filed on December 3, 1999 stated
that the Reporting Person had the sole power to vote or direct the vote and
dispose or direct the disposition of 3,748,445 shares of the Common Stock and
such shares that the Reporting Person purchases pursuant to the Purchase Option.
However, upon consummation of the Note purchase by Future Media, the Reporting
Person has with Future Media the shared power to vote or direct the vote and
dispose or direct the disposition of (i) the 3,748,445 shares of the Common
Stock and such shares that may be issuable under the Purchase Option of which
beneficial ownership was reported in the Amendment No. 1 to the Schedule 13D
filed by the Reporting Person on December 3, 1999 and (ii) the 11,518,096 shares
of the Common Stock issuable under the Note. In the aggregate, the Reporting
Person has the shared power to vote or direct the vote and dispose or direct the
disposition of 15,266,541 shares of the Common Stock.
(c) Except as set forth herein, the Reporting Person has not engaged in any
transactions in the Common Stock during the past sixty (60) days.
(d) Not applicable.
(e) Not applicable.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
The Agreement, attached as "Exhibit A" to the Schedule 13D filed by the
Reporting Person on June 11, 1999, is hereby incorporated herein by reference as
though fully set forth herein.
The Subscription Agreement, attached as "Exhibit B" to the Amendment No. 1
to the Schedule 13D filed by the Reporting Person on December 3, 1999, is hereby
incorporated herein by reference as though fully set forth herein.
The Standstill Agreement, attached as "Exhibit C" to the Amendment No. 1 to
the Schedule 13D filed by the Reporting Person on December 3, 1999, is hereby
incorporated herein by reference as though fully set forth herein.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. "Exhibit A" is the Equity Agreement - Summary of Terms, dated June 2, 1999,
by and between Synthonics Technologies, Inc. and Alex Sandel, and the
related Assignment, dated June 2, 1999, by Alex Sandel for the benefit of
Argoquest 7, LLC. The Agreement, attached as "Exhibit A" to the Schedule
13D filed by the Reporting Person on June 11, 1999, is hereby incorporated
herein by reference as though fully set forth herein.
2. "Exhibit B" is the Subscription Agreement, dated June 2, 1999, by and
between Synthonics Technologies, Inc. and Argoquest 7, LLC. The
Subscription Agreement, attached as "Exhibit B" to the Amendment No. 1 to
the Schedule 13D filed by the Reporting Person on December 3, 1999, is
hereby incorporated herein by reference as though fully set forth herein.
3. "Exhibit C" is the Standstill Agreement, dated June 2, 1999, by and between
Synthonics Technologies, Inc. and Argoquest 7, LLC. The Standstill
Agreement, attached as "Exhibit C" to the Amendment No. 1 to the Schedule
13D filed by the Reporting Person on December 3, 1999, is hereby
incorporated herein by reference as though fully set forth herein.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: December 30, 1999
Argoquest 7, LLC
/s/ ALEX SANDEL
-----------------------------
By: Alex Sandel
Its: Manager
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is signed
on behalf of a person by his authorized representative (other than an executive
officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statements, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name any title of each person who signs the statement shall be typed or
printed beneath his signature.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001)
