As filed with the Securities and Exchange Commission on January 19, 2001
REGISTRATION NO. 333-87075
REGISTRATION NO. 333-47498
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2 TO
REGISTRATION STATEMENT ON FORM SB-2
AND
AMENDMENT NO. 1 TO
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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MDI ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 73-1515699
(State or jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
201 ANN STREET
HARTFORD, CONNECTICUT 06103
(860) 527-5359
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
STEVEN M. SAFERIN, PRESIDENT
201 ANN STREET
HARTFORD, CONNECTICUT 06103
(860) 527-5359
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Copies to:
KENNETH R. KOCH, ESQ.
MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
CHRYSLER CENTER
666 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 935-3000 / (212) 983-3115 (FAX)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. |_|
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, 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 STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. |_|
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(C) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING.|_|
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. |_|
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
==================================== ================= ===================== =================== ===================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE
SECURITIES TO BE REGISTERED BE PRICE OFFERING AMOUNT OF
REGISTERED PER SHARE PRICE REGISTRATION FEE
------------------------------------ ----------------- --------------------- ------------------- -------------------
------------------------------------ ----------------- --------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.001 2,373,621 $1.53 $3,631,640 $349
per share (1) (2)(3) (4)
------------------------------------ ----------------- --------------------- ------------------- -------------------
==================================== ================= ===================== =================== ===================
</TABLE>
(1) Includes shares of common stock underlying warrants and a convertible
subordinated debenture.
(2) Determined pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, on the basis of fluctuating market prices, solely for the
purpose of calculating the registration fee.
(3) Pursuant to Rule 416 of the Securities Act of 1933, as amended, the
Registrant hereby registers such additional shares as may be issuable
pursuant to certain anti-dilution provisions of the warrants and
convertible subordinated debenture.
(4) MDI has previously paid $1,254 of registration fees in connection with
the registration of 1,461,942 shares of common stock.
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.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 19, 2001
PROSPECTUS
MDI ENTERTAINMENT, INC.
201 ANN STREET
HARTFORD, CONNECTICUT 06103
(860) 527-5359 (PHONE)
(860) 527-5920 (FAX)
2,373,621 SHARES OF COMMON STOCK
Certain stockholders of MDI Entertainment, Inc. are offering and
selling up to 2,373,621 shares of MDI's common stock under this prospectus. Of
such shares, 108,205 shares are issuable upon the exercise of warrants and
375,000 shares are issuable upon conversion of a convertible subordinated
debenture, in the principal amount of $750,000, due 2009. See the "Plan of
Distribution" on page 13.
We will not receive any proceeds from the sale of the common stock by
the selling stockholders.
Information concerning the selling stockholders may change from time to
time and will be set forth in supplements to this prospectus.
Nasdaq SmallCap Market-- "LTRY"
On January 18, 2001, the closing bid price of the common stock as
reported by the Nasdaq SmallCap Market was $1.59.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY POTENTIAL INVESTORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is __________, 2000
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILES WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
PROSPECTUS SUMMARY
You should read all of this prospectus, especially the section "Risk
Factors" starting on page 4, and the current public information and audited
financial statements described in "Where You Can Find More Information" on page
16 of this prospectus, before deciding whether to purchase the common stock
offered in this prospectus.
SUMMARY OF MDI ENTERTAINMENT, INC.
We specialize in creating, marketing and implementing
entertainment-based promotions to North American lotteries. Our principal
business has been the scratch ticket segment of the government lottery industry,
although we have run on-line entertainment-based promotions with a lotto and
daily numbers type games featuring one of our licensed properties. Our lottery
promotions feature well-known brand names and entertainment properties licensed
to us and designed to attract new lottery players while providing a new
experience for existing lottery players. Our current promotions feature a wide
variety of such brand names and entertainment properties including:
o Wheel of Fortune(R)
o Jeopardy(TM)
o Harley-Davidson(R)
o Twilight Zone(TM)
o Times Square 2000(TM)
o Betty Boop(TM)
o Louisville Slugger(R)
o Dick Clark's American Bandstand(R)
o The Nashville Network(R)/TNN
o Country Music Television(R)/CMT
o Heroes of Space(TM)
o James Bond 007(TM)
o The Pink Panther(TM)
o The Outer Limits(TM)
o Dale Earnhardt(R)
o Dale Earnhardt, Jr.(R)
o Jeff Burton(R)
o Mark Martin(R)
o Bill Elliott(R)
o Matt Kenseth(R)
o Let's Get Ready To Rumble(R)
o Hummer(R)
o Sports Legends(R)
o Ray Charles(R)
o SPAM(R)
o CowParade(R)
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<PAGE>
o Hollywood Sign(TM)and Hollywood Walk of Fame(TM)
o Elvis Presley(R)
o Emmett Kelly, Jr.(R)
Prizes awarded in our promotions typically include a number of "second
chance" prizes related to the licensed property, including collectible logo
bearing merchandise such as logo bearing T-shirts and caps, and other related
merchandise such as posters, money clips, telephones, playing cards, film cells,
stadium blankets, carryall bags, jackets, electronic games, video and music
collections, watches, clocks, credit cards with prepaid credit, trips and, in
the case of Harley-Davidson(R), Harley-Davidson 1200 Sportster motorcycles.
<TABLE>
SUMMARY OF THE OFFERING
<S> <C>
Securities Offered................ 2,373,621 shares of our common stock. Of such shares, 108,205 shares are
issuable upon the exercise of warrants and 375,000 shares are issuable upon
conversion of a convertible subordinated debenture, in the principal amount
of $750,000, due 2009.
Use of Proceeds................... We will not receive any of the proceeds from the sale of the common stock
offered by the Selling Stockholders.
Risk Factors...................... The securities offered hereby involve a high degree of risk. See "RISK
FACTORS" on page 4.
Offering Price.................... All or part of the shares of common stock offered hereby may be sold from
time to time in amounts and on terms to be determined by the Selling Stockholders
at the time of sale.
Nasdaq Trading Symbol............. "LTRY"
</TABLE>
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<PAGE>
RISK FACTORS
An investment in the shares of common stock offered by this prospectus
is subject to many risks. We summarize some of the most serious risks below. MDI
is also subject to more general risks described in the Section "Special Note
Regarding Forward Looking Statements" beginning on page 17. You should read and
understand all of the risk factors before making a decision to invest.
We have had losses.
-------------------
Although we had net income of $1,159,646 for the fiscal year ended May
31, 1999, we incurred a net loss of $(1,985,105) for the fiscal year ended May
31, 2000. We cannot assure you that we will operate profitably in the near
future or at all.
We have a negative net worth.
-----------------------------
We have a negative net worth of $(1,424,756) as of May 31, 2000. We
cannot assure you that we will be able to operate profitably in the future or at
all.
We may continue to need financing or additional equity to meet our future
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capital requirements.
---------------------
As of May 31, 2000, our current liabilities (including "billings in
excess of costs and estimated earnings on uncompleted contracts" totaling
$1,733,288) exceeded our current assets by $1,719,399 and our total liabilities
exceeded our total assets by $1,424,756. We raised $1,750,000 on August 4, 1999,
through the sale of Series A Convertible Preferred Stock in a private sale to an
investor. We raised an additional $750,000 from the issuance of a convertible
subordinated debenture in September of 1999. In September, 2000 we raised an
additional $520,000 in the form of two short-term loans originally maturing on
January 31, 2001 from our President and Chief Executive Officer, and from an
unrelated individual. The loan from the unrelated individual of $260,000 was
subsequently extended until May 15, 2001.
In addition, we raised $200,000 in the form of short-term loans that
mature on May 15, 2001 from unaffiliated parties. However, we will require
additional financing to meet our needs. We have not determined the amount we may
seek to raise or the form of this financing (i.e. debt or equity). We cannot
assure you that we will obtain additional financing for future operations or
capital needs on favorable terms if at all.
We may not be in compliance with Nasdaq's maintenance requirements.
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We have received a letter from Nasdaq to the effect that at the time of
the letter, we were not in compliance with Nasdaq's maintenance requirements.
We have since submitted a plan of compliance to Nasdaq. There can be no
assurance that our plan of compliance will satisfy Nasdaq and that our common
stock will remain listed on the Nasdaq SmallCap Market.
We may be unable to maintain or renew all our current licenses.
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Our success will be dependent upon maintaining our current licenses for
the rights to use names and well known logo bearing merchandise. The terms of
the current licenses are generally for 1.5 to 3 years, although they may be
terminated sooner under certain circumstances. We cannot assure you that the
current licenses will be renewed once they expire.
We may be unable to provide merchandise to the lotteries when needed.
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<PAGE>
We supply the lotteries with logo bearing merchandise related to our
contracts with them. We obtain approximately 95% of this merchandise from
authorized representatives of the licensor. We cannot assure you that the logo
bearing merchandise will be available from such authorized representatives when
needed by us to satisfy our obligations to the lotteries.
We may be unable to acquire new licenses.
-----------------------------------------
Our success is dependent on our ability to obtain rights to use well
known entertainment and other similar properties for use on lottery tickets and
related merchandise. We cannot assure you that we will continue to obtain such
licenses on favorable terms or at all.
We depend on customer relationships with North American lotteries.
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Many of our licensing rights are, by design, currently limited to
United States, North American or worldwide lotteries. There are currently 38
United States lotteries and five additional Canadian lotteries. The extremely
limited potential customer base means that if any target lottery refuses to
purchase a particular promotion from us or if it only uses a promotion once,
there may be a significant negative impact on our revenue and earnings. The
three state lotteries that purchased promotions accounting for the highest
percentage of our revenues during fiscal 2000 were New Jersey, Connecticut and
Wisconsin with 19%, 15% and 14%, respectively. We cannot assure you that these
lotteries will maintain the same level of promotions or that other lotteries
will increase promotions beyond current levels, or enter into contracts with us
at all.
We have no on-going sources of revenue.
---------------------------------------
Our revenues are derived on a contract-by-contract basis from state
lotteries. There are no regular on-going sources of revenue at the present time
and we must continually create and market new promotions to our lottery
customers. Lotteries frequently move start dates for promotions thereby causing
gaps in our cash flow. Moreover, the useful life of a license is generally
relatively short as the novelty of the game or the popularity of the licensed
material wanes over time. We may depend on a particular promotion in any given
year, and a decrease in sales of the promotion or the loss of the underlying
license would seriously impact our revenues and earnings.
We may be adversely affected by government regulation of lotteries and gambling.
--------------------------------------------------------------------------------
Since most lotteries are government agencies with lottery executives
appointed by the state's governor or other high ranking official, opportunities
or projects in progress can be slowed after an election if the incumbent
governor is not reelected.
There is a growing concern in the United States about the explosion of
gaming. The creation of The National Gambling Impact Study Commission and its
released report, may negatively impact state lotteries and other gaming
activities and hence our business. We cannot assure you that there will not be
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<PAGE>
an adverse change in the lottery laws of any jurisdiction in which we do
business. In addition, we cannot predict the nature of the regulatory process in
any jurisdiction that may authorize the use of instant tickets in the future.
Any such regulatory process may be burdensome to us and our customers or their
key personnel and could include requirements that we would be unable to satisfy.
Existing stockholders are able to exercise control over us.
-----------------------------------------------------------
Our officers and directors beneficially own approximately 45% of our
outstanding common stock and Steven M. Saferin owns approximately 39%. Our
Certificate of Incorporation does not provide for cumulative voting for the
Board of Directors. As a result, Steven M. Saferin and management have
substantial influence over the election of a majority of our directors and the
outcome of issues submitted to a vote of our stockholders.
The loss of the services of Steven M. Saferin could harm our business.
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Our success depends to a significant extent on the performance and
continued service of Steven M. Saferin, an officer and director. Media Drop-In
Productions, Inc. has entered into an employment agreement with Mr. Saferin
which expires on August 8, 2002 or three years from the date we first file a
registration statement with the SEC registering all of his shares, whichever is
later. We do not carry key man insurance.
Intense competition could reduce our market share.
--------------------------------------------------
We have traditionally acquired exclusive rights to license
entertainment and other properties to the U.S. lottery industry. We have faced
only one situation in which there was substantial competition in acquiring such
rights and we were the successful bidder for these rights. However, there are
several organizations that also design and promote lottery games and promotions
based on licensed brands. One of these companies is pursuing the types of
entertainment properties we have targeted. In addition, it is possible that
potential licensors may design their own lottery games and seek to market them
directly to the lotteries, thus bypassing us. Other potential sources of
competition are the printers of instant tickets who, to improve their own
competitive standing, might attempt to acquire licensing rights for various
properties to offer exclusively to their lottery customers and enhance their
competitive bidding for lottery printing contracts.
We do not anticipate paying any dividends.
------------------------------------------
We have never paid any cash or other dividends on our common stock. At
present, we do not anticipate paying dividends on our common stock in the
foreseeable future and intend to devote any earnings to the development of our
business. Investors who anticipate the need for immediate income from their
investment should refrain from purchasing our common stock.
We indemnify our directors and officers against certain expenses and
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liabilities.
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6
<PAGE>
So far as permitted by the Delaware General Corporation Law, our
Certificate of Incorporation and By-Laws provide that we will indemnify our
directors and officers against expenses and liabilities they incur to defend,
settle or satisfy any civil or criminal action brought against them on account
of their being or having been directors or officers unless, in any such action,
they are adjudged to have acted with gross negligence or to have engaged in
willful misconduct. As a result of such provisions, stockholders may be unable
to recover damages against our directors and officers for actions taken by them
which constitute negligence or a violation of their fiduciary duties, which may
reduce the likelihood of stockholders instituting derivative litigation against
directors and officers and may discourage or deter stockholders from suing our
directors, officers, employees and agents for breaches of their duty of care,
even though such action, if successful, might otherwise benefit us and our
stockholders.
Lotteries' desire to sell tickets over the Internet.
----------------------------------------------------
Currently no North American lottery sells tickets over the Internet
although all have web sites. There is legislation pending in Congress which, if
passed as currently drafted, would outlaw Internet sales of lottery tickets. Our
role as an Internet games supplier will be affected by such legislation and/or a
lottery's willingness to actually offer tickets over the internet.
Future sales of common stock by our existing stockholders could adversely affect
--------------------------------------------------------------------------------
our stock price.
----------------
The market price of our common stock could decline as a result of sales
of a substantial number of shares of our common stock in the market, or the
perception that such sales could occur. Such sales also might make it more
difficult for us to sell equity securities in the future at a time and at a
price that we deem appropriate. As of January 18, 2001, we had 10,505,872
outstanding shares of common stock. Of these shares, 5,359,472 shares of common
stock are freely tradable.
As of January 18, 2001, options to purchase a total of 674,166 shares
of our common stock are outstanding. Of such options, options to purchase
405,418 shares are currently exercisable. In addition, warrants to purchase a
total of 2,413,656 shares of our common stock are outstanding and all of such
warrants are exercisable. Shares issued upon the exercise of such options and
warrants will be eligible for resale in the public market from time to time.
We have filed a registration statement covering shares of our common
stock reserved for issuance in connection with the conversion of our Series A
Preferred Stock. All shares covered by that registration statement are freely
tradable. If a large number of such shares are sold in the public market, the
price of our common stock may fall.
There are certain anti-takeover effects associated with the issuance of "Blank
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Check" preferred stock.
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<PAGE>
Our Certificate of Incorporation authorizes our Board of Directors to
issue up to 5,000,000 shares of "blank check" preferred stock, of which 2,027
shares has been designated Series A Preferred Stock and 444 shares has been
designated Series B Preferred Stock.. All of the Series A Preferred Stock has
been converted into common stock and all of the Series B Preferred Stock is
currently outstanding. The Board of Directors, without stockholder approval, may
fix all the rights of the preferred stock. The issuance of such stock could,
among other results, negatively affect the voting power of the holders of common
stock.
Under certain circumstances, the issuance of the preferred stock would
make it more difficult for a third party to gain control of us, discourage bids
for the common stock at a premium, or otherwise adversely affect the market
price of our common stock. Such provisions may discourage attempts to acquire
us.
We have no arrangement, commitment or understanding with respect to the
issuance of our preferred stock, other than with respect to the Series A
Preferred Stock and Series B Preferred Stock. We cannot assure you, however,
that we will not, in the future, issue additional shares of preferred stock.
The Lottery Channel is claiming that we bear all costs and expenses in
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connection with the termination of our merger transaction with them.
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On November 7, 2000, we were notified that we had been named as a
defendant in a complaint filed by The Lottery Channel, Inc. on November 2, 2000
in the Hamilton County, Common Pleas Civil Division, Cincinnati, Ohio, arising
from our decision to terminate our merger agreement with Lottery Channel.
Lottery Channel is seeking to recover $1,763,343.29 in costs and expenses,
damages in excess of $25,000, attorney's fees and cost incurred in prosecuting
the action, punitive damages and any other relief to which it is entitled.
We believe that the lawsuit is without merit and will be vigorously
defend our position, as well as assert a variety of counterclaims against
Lottery Channel, including a demand that Lottery Channel pay certain expenses
under the termination provisions of our merger agreement.
Notwithstanding the merits of the action, we may incur substantial costs
defending the action and there can be no assurance as to the outcome of any
such litigation.
THE COMPANY
We are a Delaware corporation originally incorporated on December 29,
1994 under the name Puff Process, Inc. Our name was changed to MDI
Entertainment, Inc. and a one share for one hundred reverse stock split was
effected in connection with the purchase, in August 1997, of both Media Drop-In
Productions Inc., a Delaware corporation ("MDIP"), and MDI-Missouri, Inc., a
Missouri corporation, in exchange for 4,800,000 shares of our common stock, and
notes in the aggregate principal amount of $300,000. The acquisition was
effected through reverse mergers with two of our wholly-owned subsidiaries.
These transactions resulted in a change in control, with Steven Saferin holding
approximately 56% of the outstanding shares of our common stock. Pre-merger
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<PAGE>
holders of Puff Process, Inc. held approximately 32.1% of the outstanding shares
of common stock immediately after the merger.
We specialize in creating, marketing and implementing
entertainment-based promotions to North American lotteries. Our principal
business has been the scratch ticket segment of the government lottery industry,
although we have run on-line entertainment-based promotions with a lotto and
daily numbers type games featuring our licensed Harley-Davidson(R) logo. Our
lottery promotions feature well-known brand names and entertainment properties
licensed to us and designed to attract new lottery players while providing a new
experience for existing lottery players.
We developed our strategy of identifying such properties in early 1996.
Prior to that time, we had developed a series of promotions that utilized
popular videotapes, compact discs and audiocassettes as second chance lottery
prizes. Those promotions enabled us to develop an expertise in sourcing and
distributing products as second chance lottery prizes. They also enabled us to
develop a reputation with lottery personnel as a reliable organization attuned
to the special needs of lotteries and their players.
We derive over ninety-five percent (95%) of our revenues from lotteries
in two distinct ways. First, we will usually charge a lottery a license and
royalty fee to utilize a particular licensed property as a lottery game. License
fees are a fixed assessment, while royalties are a percentage of the printing
cost of the tickets. Contracts for licensed properties typically include an
up-front license fee and a royalty based on the manufacturing cost of tickets.
Manufacturing costs of tickets usually range from $10.00 per thousand to $30.00
per thousand. Actual costs depend on the size of the ticket and the quantity
printed. Ticket quantities range from about one million to as many as 60 million
with an average quantity of about five million.
Our second source of lottery revenue is the sale of logo bearing
merchandise to the lottery as second-chance prizes. In merchandise-based lottery
games, between 5% to 10% of a lottery's prize fund is typically used for the
purchase of merchandise related to the property the lottery is utilizing.
Typically, we purchase merchandise from other licensees of the property and
resell the merchandise to the lottery at a price that is designed to include
overhead costs, profit, shipping and handling and any marketing support we
provide the lottery such as brochures, posters or other advertising assistance
for which there are no separate charges.
SELLING STOCKHOLDERS
The following table sets forth information concerning shares
beneficially owned as of January 17, 2000. The table has been prepared based on
information furnished to us by or on behalf of the selling stockholders.
On August 4, 1999, International Capital Partners, LLP purchased 2,027
shares of our Series A Preferred Stock for $1,750,000. These shares were
converted into 2,027,000 shares of our common stock, in equal installments on
December 20, 1999, January 12, 2000, June 17, 2000 and September 15, 2000. These
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shares were registered pursuant to a Registration Rights Agreement, dated August
4, 1999, between MDI and International Capital Partners.
On September 21, 1999, Scientific Games Inc., a wholly-owned subsidiary
of Scientific Games Holding Corp., purchased a convertible subordinated
debenture, in the principal amount of $750,000, which is convertible into
375,000 shares of our common stock. At the same time, Scientific Games, Inc.,
purchased 333,333 shares of our common stock from Steven Saferin. In addition,
Scientific Games, Inc. entered into a Strategic Alliance with us. William G.
Malloy, who was President and Chief Executive Officer of Scientific Games
Holdings Corp. until its acquisition by Autotote Corporation on September 6,
2000, was appointed to our Board of Directors on October 1, 1999. Mr. Malloy is
currently a director and consultant to Autotote Corporation.
On January 10, 2000, Steven M. Saferin, our President and Chief
Executive Officer, sold 237,622 shares of our common stock to The Stamford Media
Group, LLC in exchange for the remaining balance of a note from us of
$316,037.90. We agreed to register these shares. Since we did not file a
registration statement covering these shares by May 10, 2000, Stamford Media is
entitled to receive 100,000 shares of common stock as a penalty. The shares sold
by Steven Saferin to Stamford Media Group were distributed to Richard Kelly, W.
Frank Dell, David Fishman and Joseph Annechino.
On September 8, 2000, we entered into a loan agreement with Robert
Sparacino in which he loaned Media Drop-In, Inc., our wholly owned subsidiary,
$260,000. He received a note, due January 31, 2001, bearing interest at a fixed
rate of 15% per annum. The note is secured by a security interest in all of
Media Drop-In's assets and the note is guaranteed by us. In connection with the
loan transaction, Mr. Sparacino and his designees received warrants to purchase
an aggregate of 13,205 shares of our common stock at an exercise price of $3.938
per share. An additional 50,000 shares were issued to Mr. Sparacino and his
designees as consideration for extending the maturity date of his note to May
15, 2001.
On December 1, 2000, Media Drop-In entered into loan agreements with
David Jacobs, Jay Leonard, Scott Williams, Marc Sadinsky, and Steve and Linda
Kilponen (collectively "the Lenders") in an aggregate amount of $200,000. These
loans will mature on May 15, 2001. These notes bear interest at a fixed rate of
12% per annum, are secured by a security interest in all of Media Drop-In's
assets and guaranteed by us. In connection with the loan transaction, the
Lenders received warrants to purchase an aggregate of 45,000 shares of our
common stock at an exercise price of $2.25 per share.
Squadron, Ellenoff, Plesent & Sheinfeld, LLP. Served as our counsel
until July 2000. We issued 37,500 shares of common stock to Squadron Ellenoff
for the legal fees and expenses we owed to Squadron, Ellenoff. In addition, we
agreed to use our best efforts to file a registration statement with the SEC
registering these shares and to have the registration statement declared
effective by the SEC. Upon effectiveness of the registration statement,
Squadron, ellenoff has agreed not to sell more than 5,000 shares (as adjusted
for stock splits, stock dividends or similar events) during any seven-day
period.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC serves as our
counsel. We issued 175,000 shares of common stock to Mintz, Levin for nominal
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consideration. We agreed to register these shares. Mintz, Levin has agreed not
to sell more than 5,000 shares in any week and at a price less than $1.00 per
share. The net proceeds from the sale of the first 135,000 shares will be used
to satisfy our outstanding payables to Mintz, Levin and the net proceeds in
excess of such payables wil be held by Mintz, Levin as a non refundable retainer
to be applied against fees and disbursements generated from additional activity.
Net proceeds from the sale of the remaining 40,000 shares will not be applied
to any such obligation. All references to share numbers above will be adjusted
to reflect any stock splits, stock dividends or similar events.
Any or all of the shares listed below may be offered for sale by the
selling stockholders from time to time and, therefore, no estimate can be given
as to the number of shares that will be held by the selling stockholders upon
termination of this offering. Except as otherwise indicated, the selling
stockholders listed in the table have sole voting and investment powers with
respect to the shares indicated.
11
<PAGE>
<TABLE>
BENEFICIAL OWNERSHIP
STOCKHOLDER OFFERED PRIOR TO SALE AFTER SALE(1)
<S> <C> <C> <C>
International Capital Partners, LLP 1,340,294 (2) 1,340,294 0
Scientific Games, Inc. 375,000 (3) 708,333 333,333
Robert R. Sparacino 15,802 (4) 15,802 0
Jack R. Sparacino 15,801 (4) 15,801 0
Michael P. Sparacino 15,801 (4) 15,801 0
Paul A. Sparacino 15,801 (4) 15,801 0
Richard Kelly 223,568 223,568 0
W. Frank Dell 52,231 52,231 0
David Fishman 34,656 38,656 4,000
Joseph Annechino 27,167 27,167 0
Squadron, Ellenoff, Plesent & Sheinfeld, LLP 37,500 37,500 0
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC 175,000 175,000 0
Scott Williams 10,000 (4) 42,000 32,000
Marc Sadinsky 5,000 (4) 8,100 3,100
David Jacobs 10,000 (4) 42,400 32,400
Jay Leonard 10,000 (4) 32,200 22,200
Steve and Linda Kilponen 10,000 (4) 11,400 1,400
----------- ----------- ----------
2,373,621 2,802,054 428,433
=========== =========== ==========
</TABLE>
(1) Assumes all of the shares offered for sale on behalf of the selling
stockholders are sold.
(2) Includes 1,297,144 shares of common stock that were issued upon
conversion of the Series A Preferred Stock.
(3) Represents shares of common stock issuable upon conversion of the
outstanding principal amount of a convertible subordinated
debenture.
(4) Represents shares of common stock issuable upon exercise of warrants.
USE OF PROCEEDS
We will not receive any proceeds from any sale by the selling
stockholders of their shares. We will, however, receive the exercise price from
the exercise of any warrants held by the selling stockholders. We have no way of
determining when the selling stockholders will exercise any of these warrants.
Accordingly, the proceeds from the exercise of these warrants have not been
allocated for any particular purpose.
12
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereby may be offered and sold from time to time by
the selling stockholders, or by pledgees, donees, transferees or other
successors in interest. Such offers and sales may be made from time to time on
the Nasdaq SmallCap Market, or otherwise, at prices and on terms then prevailing
or at prices related to the then-current market price, or in negotiated
transactions. The methods by which the shares may be sold may include, but not
be limited to, the following: a block trade in which the 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; purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account; an exchange distribution in accordance with the rules of such exchange;
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; privately negotiated transactions; short sales; and a combination of
any such methods of sale. In effecting sales, brokers and dealers engaged by the
selling stockholders may arrange for other brokers or dealers to participate.
Brokers or Dealers will receive commissions or discounts from selling
stockholders in amounts to be negotiated (and, if such broker-dealer acts as
agent for the purchaser of such shares, from such purchaser). Broker-dealers may
agree with the selling stockholders to sell a specified number of shares at a
stipulated price per share and, to the extent such broker-dealer is unable to do
so acting as agent for a selling stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
such selling stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market or otherwise at prices and on terms then prevailing at
the time of the sale, at prices then related to the then-current market price or
in negotiated transactions and, in connection with such resales, may pay to or
receive from the purchasers of such shares commissions as described above.
The selling stockholders may also sell such shares in accordance with
Rule 144 under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to such shares for a period of one or five
business days prior to the commencement of such distribution. In addition to,
and without limiting, the foregoing, each of the selling stockholders and any
other person participating in a distribution will be subject to the applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of any of the shares by the selling stockholders
or any such other person. All of the foregoing may affect the marketability of
the shares.
We have entered into a registration rights agreement with the holders
of the Series A Preferred Stock. Under such agreement, we have agreed to
maintain the effectiveness of the registration of the shares underlying the
13
<PAGE>
preferred stock until the earliest of (i) the date that is one year after the
closing date when the preferred stock was issued, (ii) the date when such
holders may sell shares of common stock issuable upon conversion of, or in
connection with, the Series A Preferred Stock under Rule 144 or (iii) the date
that the holders no longer own shares of common stock issuable upon conversion
of, or in connection with, the Series A Preferred Stock. We have also agreed to
bear all reasonable expenses relating to the registration of the shares,
including the fees and expenses of one counsel to the holders of the Series A
Preferred Stock.
The registration rights agreement also provides that we will indemnify
and hold harmless the holders of the Series A Preferred Stock, any directors or
officers of such holders or any person who controls such holders against any
losses, claims, damages, liabilities or expenses (joint or several) that arise
out of or are based upon certain statements, omissions or violations of this
registration statement, unless any of the foregoing arise out of information
furnished in writing to MDI by such persons. In such case, such persons shall
indemnify MDI, its officers, directors and agents against any claims arising out
of or based upon such furnished information To the extent any indemnification is
prohibited or limited by law, the indemnifying party has agreed to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable, subject to certain exceptions.
We have also granted piggy-back registration rights to the holders of
certain warrants, the underlying shares of which are being offered hereby. The
warrants provide that we will indemnify and hold harmless the holders of such
warrants, any directors, officers, stockholders or partners of such holders, any
person who controls such holders and each underwriter against all claims,
losses, damages or liabilities (including reasonable legal fees and expenses)
that arise out of or are based upon certain statements, omissions or violations
of this registration statement, unless any of the foregoing arise out of
information furnished to MDI by such persons. In such case, such persons shall
indemnify MDI, its officers, directors, legal counsel and independent accountant
against all claims, losses, damages and liabilities (including legal fees and
expenses) arising out of or based upon such furnished information. We have
agreed to indemnify the holders of our subordinated convertible debenture on
similar terms.
The selling stockholders and any brokers participating in such sales
may be deemed to be underwriters within the meaning of the Securities Act. We
cannot assure you that the selling stockholders will sell any or all of the
shares offered hereby.
Any commissions paid or any discounts or concessions allowed to any
broker, dealer, underwriter, agent or market maker and, if any such broker,
dealer, underwriter, agent or market maker purchases any of the shares as
principal, any profits received on the resale of such shares, may be deemed to
be underwriting commissions or discounts under the Securities Act.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our Certificate of Incorporation includes provisions which eliminate
the personal liability of directors for monetary damages resulting from breaches
of their fiduciary duty, except for (i) liability for breaches of the duty of
loyalty, (ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) liability for unlawful payment
of dividends or unlawful stock purchases or redemption by us, or (iv) for any
transaction from which the director derived an improper personal benefit. We
believe that these provisions are necessary to attract and retain qualified
persons as directors and officers.
14
<PAGE>
Section 145 of the Delaware General Corporation Law ("DGCL") permits
indemnification by a corporation of certain officers, directors, employees and
agents. Consistent with this section, our Certificate of Incorporation provides
that we will indemnify any person to the fullest extent permitted by law with
respect to certain liabilities and expenses incurred by such person in any
action, suit or proceeding in which such person was or is made or threatened to
be made a party or is otherwise involved by reason of the fact that such person
is or was a director, officer, employee or agent of us.
We are also obligated to pay the expenses of the directors and officers
incurred in defending such proceedings, subject to reimbursement if it is
subsequently determined that such person is not entitled to indemnification. We
have a liability insurance policy in effect for our officers and directors. Such
insurance, in certain instances, insures our directors and officers against
liabilities arising under the Securities Act of 1933. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
In addition, MDI generally has agreed to indemnify the selling
stockholders, and any of their respective affiliates, directors, officers and
controlling persons, against certain liabilities in connection with the offering
of shares pursuant to this prospectus, including liabilities arising under the
Securities Act.
LEGAL MATTERS
The validity of the shares under applicable state law has been passed
upon for us by Mintz Levin Cohn Ferris Glovsky and Popeo, P.C., New York, New
York 10017. Mintz Levin beneficially owns 175,000 shares of our common stock,
which are being offered under the prospectus. See "Selling Stockholders" on
page 9.
EXPERTS
The financial statements incorporated by reference in this Prospectus,
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in auditing and accounting
in giving said report.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any materials we file with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the SEC's regional offices in New York City and
Chicago. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically (http://www.sec.gov). You
also may inspect reports and other information concerning us at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
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 you to those documents. We incorporate by reference and make a part of
this prospectus the following:
(1) Annual Report on Form 10-KSB for the fiscal year ended May 31, 2000;
(2) Current Report on Form 8-K filed September 12, 2000;
(3) Quarterly Report on Form 10-QSB for the period ended August 31, 2000;
(4) Current Report filed on Form 8-K filed October 19, 2000;
(5) Current Report filed on Form 8-K filed November 9, 2000;
(6) Current Report filed on Form 8-K filed November 17, 2000; and
(7) the description of our common stock contained in our Registration
Statement on Form 10-SB (File No. 0-24919) filed with the SEC on
September 28, 1998, as amended on February 1, 1999.
Each document we filed with the SEC pursuant to Section 13(a), 13(c),
14, or 15(d) of the Exchange Act after the date of this prospectus and before
the end of the offering made hereby is also incorporated by reference into this
prospectus from the filing date of filing of such document.
If any statement in any document incorporated by reference is
inconsistent with this prospectus, the statement in the latest document
supersedes the earlier statement. You should not rely on any statement that has
been superseded.
We will provide upon request a free copy of the documents that are
incorporated by reference in the prospectus. Requests for such information
should be directed to: MDI Entertainment, Inc., 201 Ann Street, Hartford,
Connecticut 06103, Attention: Kenneth M. Przysiecki. Our telephone number is
(860) 527-5359.
16
<PAGE>
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements included or incorporated by reference into this
prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, and include statements made in
press releases and oral statements made by our officers, directors or employees
acting on our behalf. All such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements, or industry results, to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
market demand for our products, successful implementation of our products,
competitive factors, the ability to manage our growth, the ability to recruit
additional personnel and other factors referenced in this prospectus and in our
filings with the Securities and Exchange Commission. In addition to statements
which explicitly describe such risks and uncertainties, you are urged to
consider statements labeled with the terms "believes," "belief," "expects,"
"plans," "anticipates" or "intends," to be uncertain and forward-looking.
17
<PAGE>
No dealer, salesman, or any other
person has been authorized to give
any information or to make any 2,373,621 SHARES
representation not contained in
this prospectus in connection with
the offering made hereby, and, if
given or made, such information or
representation must not be relied MDI ENTERTAINMENT, INC.
upon as having been authorized by
us. This prospectus does not
constitute an offer to sell, or a
solicitation of an offer to buy, COMMON STOCK
any of the securities offered
hereby in any jurisdiction to any
person to whom it is unlawful to
make such an offer or solicitation
in such jurisdiction. Neither the
delivery of this prospectus nor any
sale made hereunder shall under any
circumstances create any
implication that there has been no
change in our affairs since the
date hereof or that the information
contained herein is correct as of
any time subsequent to the dates as
of which such information is
furnished.
-------------------
TABLE OF CONTENTS
--------------
PROSPECTUS
Page --------------
Prospectus Summary................2
Risk Factors..................... 4
The Company...................... 8
Selling Stockholders............ 9
Use of Proceeds................. 12 , 2000
Plan of Distribution............ 13
Limitation of Liability and
Indemnification...............14
Legal Matters................... 15
Experts......................... 15
Where You Can Find More
Information.................. 16
Special Note Regarding Forward
Looking Statements............17
<PAGE>
II-7
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by us in connection with the
issuance and distribution of the securities being offered hereby (items marked
with an asterisk (*) represent estimated expenses):
SEC Registration Fee.......................................$ 1,603*
Legal Fees and Expenses ..................................$ 10,000*
Accounting Fees and Expenses...............................$ 5,000*
Miscellaneous..............................................$ 0*
-------------
Total......................................................$ 16,603*
* Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware General Corporation Law, Section 102(b)(7), enables a
corporation in its original certificate of incorporation, or an amendment
thereto validly approved by stockholders, to eliminate or limit personal
liability of members of its Board of Directors for violations of a director's
fiduciary duty of care. However, the elimination or limitation shall not apply
where there has been a breach of the duty of loyalty, failure to act in good
faith, intentional misconduct or a knowing violation of a law, the payment of a
dividend or approval of a stock repurchase which is deemed illegal or an
improper personal benefit is obtained. Delaware General Corporation Law, Section
145, permits a corporation organized under Delaware law to indemnify directors
and officers with respect to any matter in which a director or officer acted in
good faith and in a manner reasonably believed to be not opposed to the best
interests of the corporation, and, with respect to any criminal action, had
reasonable cause to believe the conduct was lawful.
Our Certificate of Incorporation includes the following language:
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of
fiduciary duties unless the breach involves: (1) a director's duty of
loyalty to the corporation or its stockholders; (2) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law; (3) liability for unlawful payment of dividends or
unlawful stock purchases or redemption by the corporation; or (4) a
transaction from which the director derived an improper personal
benefit.
<PAGE>
EIGHTH:
1. To the extent permitted by Delaware law from time to time
in effect and subject to the provisions of paragraph (2) of
this Article, the Corporation shall indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to
any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
2. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation and
except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to
the extent that the court in which such action or suit was
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to
<PAGE>
indemnity for such expenses which such court shall deem
proper.
3. To the extent that a present and former director or officer of
the Corporation has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in
paragraphs (1) and (2) of this Article, or in defense of any
claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
4. Any indemnification under paragraphs (1) and (2) of this
Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a
determination that indemnification of the present or former
director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of
conduct set forth in said paragraphs (1) and (2). Such
determination shall be made, with respect to a person who is a
director or officer at the time of such determination, (i) by
a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(ii) by a committee of such directors designated by majority
vote of such directors, even though less than a quorum, or
(iii) if there are no such directors, or if such directors so
direct, by independent legal counsel in a written opinion, or
(iv) by the stockholders.
5. Expenses (including attorneys' fees) incurred by an officer
or director in defending a civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount
if it shall ultimately be determined that he is not entitled
to be indemnified by the Corporation as authorized in this
Article. Such expenses (including attorneys' fees) incurred by
former directors and officers or other employees and agents
shall be so paid upon such terms and conditions, if any, as
the Corporation deems appropriate.
6. The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Article
shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses shall
be entitled under any by-law, agreement, vote of the
stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another
capacity while holding such office.
<PAGE>
7. The Corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the
provisions of the Delaware General Corporation Law.
8. The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article shall, unless otherwise
provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
9. Each person who serves as a director, officer, employee or
agent of the Corporation or was serving at the request of the
Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise while this Article EIGHTH is in effect shall
be deemed to be doing so in reliance on the provisions of this
Article EIGHTH, and neither the amendment or repeal of this
Article EIGHTH, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article
EIGHTH, shall apply to or have any effect on the
indemnification of such director, officer, employee or agent
occurring prior to such amendment, repeal, or adoption of an
inconsistent provision.
MDI has a liability insurance policy in effect for officers and
directors. Such insurance, in certain instances, insures our directors and
officers against liabilities arising under the Securities Act, including
liabilities arising out of the offering made by this registration statement.
<PAGE>
ITEM 16. EXHIBITS
(a) The following exhibits are filed herewith:
Exhibit No. Description
4.1 Registration Statement dated August 4, 1999 between MDI Entertainment,
Inc. and International Capital Partners, LLC.(1)
4.2 Stock Purchase Agreement dated August 4, 1999 between MDI
Entertainment, Inc. and International Capital Partners, LLC.(1)
4.3 Convertible Subordinated Debenture Agreement, dated September 21,1999
between MDI Entertainment, Inc. and Scientific Games, Inc.(2)
4.4 Convertible Subordinated Debenture dated September 21, 1999, between
MDI Entertainment, Inc. and Scientific Games, Inc.(2)
4.5 Form of warrant, dated September 8, 2000 (3)
4.6 Form of warrant, dated December 2000 (5)
5 Opinion of Mintz, Levin, Cohn, Ferris Glovsky and Popeo, P.C.(5)
23.1 Consent of Arthur Andersen, LLP(5)
23.2 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained in
the opinion filed as Exhibit 5)(5)
24 Power of Attorney (included on the signature pages hereto)(previously
filed)
27 Financial Data Schedule.(4)
--------------------------------
(1) Incorporated by reference from the Company's Form 8-K filed August 12,
1999.
(2) Incorporated by reference from the Company's Form 8-K field October 4,
1999.
(3) Incorporated by reference from the Company's 8-K filed September 12,
2000.
(4) Incorporated by reference from the Company's Form 10-KSB filed
September 11, 2000.
(5) Filed herewith.
ITEM 17. UNDERTAKINGS
(a) 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
<PAGE>
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective 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;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement
is on Form S-3, and the information required to be
included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934, that
are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise,
we have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by of expenses incurred or paid by a director,
officer or controlling person 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,
we will, unless in the opinion of 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 Securities Act and will be governed by the
final adjudication of such issue.
<PAGE>
(c) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or 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.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this Post Effective Amendment No. 2 to
Registration Statement on Form SB-2 and Amendment No. 1 to Registration
Statement on Form S-3 ("Registration Statement") and authorized this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hartford, State of Connecticut, January 18,2001.
2000.
MDI ENTERTAINMENT, INC.
By: /s/ Steven M. Saferin
-----------------------------
Steven M. Saferin
President and Chief Executive Officer
<PAGE>
In accordance with to the requirements of the Securities Act, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
NAME TITLE DATE
<S> <C> <C>
/s/ Steven M. Saferin President, Chief Executive Officer and January 18, 2001
---------------------------------- Director
Steven M. Saferin (Principal Executive Officer)
/s/ Kenneth M. Przysiecki Chief Financial Officer, Secretary and January 18, 2001
----------------------------- Director
Kenneth M. Przysiecki
/s/ Steven M. Saferin* Director January 18, 2001
-------------------------
Robert J. Wussler
/s/ Steven M. Saferin* Director January 18, 2001
----------------------------
Todd P. Leavitt
/s/ Steven M. Saferin* Director January 18, 2001
-------------------------
S. David Fineman
/s/ Steven M. Saferin* Director January 18, 2001
-------------------------
William G. Malloy
* Attorney-in-fact
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
4.1 Registration Statement dated August 4, 1999 between MDI Entertainment,
Inc. and International Capital Partners, LLC.(1)
4.2 Stock Purchase Agreement dated August 4, 1999 between MDI
Entertainment, Inc. and International Capital Partners, LLC.(1)
4.3 Convertible Subordinated Debenture Agreement, dated September 21,1999
between MDI Entertainment, Inc. and Scientific Games, Inc.(2)
4.4 Convertible Subordinated Debenture dated September 21, 1999, between
MDI Entertainment, Inc. and Scientific Games, Inc.(2)
4.5 Form of warrant, dated September 8, 2000 (3)
4.6 Form of warrant, dated December 2000 (5)
5 Opinion of Mintz, Levin, Cohn, Ferris Glovsky and Popeo, P.C.(5)
23.1 Consent of Arthur Andersen, LLP(5)
23.2 Consent of Squadron, Ellenoff, Plesent & Sheinfeld, LLP (contained in
the opinion filed as Exhibit 5)(5)
24 Power of Attorney (included on the signature pages hereto)(previously
filed)
27 Financial Data Schedule.(4)
--------------------------------
(1) Incorporated by reference from the Company's Form 8-K filed August 12,
1999.
(2) Incorporated by reference from the Company's Form 8-K field October 4,
1999.
(3) Incorporated by reference from the Company's 8-K filed September 12,
2000.
(4) Incorporated by reference from the Company's Form 10-KSB filed
September 11, 2000.
(5) Filed herewith.
