As filed with the Securities and Exchange Commission on September 9, 1999
Registration No. 333-73213
====================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT #1 TO FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
ALPINE ENTERTAINMENT, INC.
---------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 52-2143186 7812
(State or other jurisdiction (I.R.S. Employer (Primary Standard
of incorporation or Identification Number Classification
organization) Code Number)
------------------------
6919 Valjean Avenue
Van Nuys, California 91406
818/909-5207
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Roland Carroll, 6919 Valjean Avenue, Van Nuys,
California 91406, 818/909-5207
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to
the public: As soon as practicable after the
effective date of this Registration Statement.
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,
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
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. / /
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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH
DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Title of Each Amount Proposed Proposed Amount of
Class of to be Maximum Maximum Registration
Securities to Registered Offering Aggregate Fee(3)
be Registered Price Per Offering
Share(1) Price
Units 1,250,000 $6.00 $7,500,000 $2,085
Common stock
contained in
units 1,250,000 NA NA ---
Warrants
contained in
units 1,250,000 NA NA ---
Common stock
underlying
warrants 1,250,000 NA NA ---
Convertible
Promissory Note NA NA NA ---
Common Stock
underlying
Promissory Note 7,600,000 $0.27 $2,052,000 678
TOTAL $ 9,552,000 $2,763 (4)
</TABLE>
(1) There is no current market for the securities.
(2) There is no current market for the securities and
the per share book value of the common stock is
$(.0268). Consequently the proposed per share
offering price for the common stock held by the
Selling Securityholders is estimated for purposes
of calculating the amount of registration fee.
(3) Estimated solely for the purpose of calculating
the registration fee based on Rule 457(f)(2).
(4) $2,363 previously paid by electronic transfer and
$400 paid simultaneously with the filing hereof.
PROSPECTUS Subject to Completion, Dated September _____, 1999
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement which has
been filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting
an offer to buy these securities in any state where the offer or sale is not
permitted.
ALPINE ENTERTAINMENT, INC.
Minimum Offering of 250,000 Units; Maximum Offering of 1,250,000 Units;
convertible promissory note interests up to the amount of $2,052,000 to be
distributed by the holder thereof;
and 7,600,000 shares of common stock issuable upon conversion of such
promissory note
Alpine Entertainment, Inc., a Delaware company, is offering for sale a
minimum of 250,000 units and a maximum of 1,250,000 units. Each unit
consists of one share of common stock and one warrant exercisable to
purchase one share of common stock at an exercise price of $6.00 per share
for a period of 36 months from the effective date of this prospectus. It is
currently anticipated that the initial offering price of the units will be
$6.00 per unit. The offering price of the units and the exercise price of
the warrants were determined arbitrarily by Alpine and RH Investment Corp.
and are not necessarily related to asset or book value, net worth or any
other established criteria of value.
RH Investment Corporation is the representative of the underwriters of this
offering. The offering is being made by the underwriters on a "best
efforts" basis. The underwriters must sell the minimum number of securities
offered, 125,000 units if any are sold. The underwriters are required to
use only their best efforts to sell the maximum number of securities
offering, 1,250,000. See "UNDERWRITING".
All funds received from the sale of the first 125,000 units will be
deposited in a special escrow account to be established at a federally
insured national bank. If 125,000 units are not sold within 180 days
following the effective date of this prospectus (the "Effective Date"), the
offering will automatically terminate and all funds received from the sale
of the units will be returned to the purchasers.
The Company is also registering promissory note interests for up to an
aggregate of $2,052,000 convertible into 7,600,000 shares of common stock of
Alpine. Alpine has executed a promissory note in favor of Alpine Pictures,
Inc., Upon effectiveness of this registration statement, Alpine Pictures,
Inc. (the "Selling Securityholder") will distribute the promissory note to
its shareholders without cost to such shareholders as a dividend
distribution. Alpine Pictures will not receive any proceeds from the
distribution of the promissory note. The shareholders of Alpine Pictures
may convert to shares of common stock at a conversion ratio of $0.27 per
share that portion of the promissory note distributed to them at such time
or times at their sole discretion.
Prior to this offering, there has been no public market for Alpine's common
stock. No assurances can be given that a public market will develop
following completion of this offering or that, if a market does develop, it
will be sustained.
Underwriting Proceeds to
Discounts and Company or
Price to Public Commissions(1) Other Persons (2)
Per Unit $6.00 $ 0.60 $ 5.40
Minimum Offering-
250,000 units $1,500,000 $ 150,000 $ 1,350,000
Maximum Offering-
1,250,000 units $7,500,000 $ 750,000 $ 6,750,000
Footnotes on following page
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION. SEE "RISK FACTORS" BEGINNING ON PAGE 4 AND "DILUTION" BEGINNING
ON PAGE 12.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_________________
RH Investment Corporation
1940 Century Park East, Suite 150
Century City, California 90067
_________________________
THE DATE OF THIS PROSPECTUS IS SEPTEMBER ____, 1999
Footnotes from previous page:
(1) Does not include additional compensation to be
paid to the Representative, if the offering is
consummated, in the form of: (a) a warrant to purchase
up to 10% of the number of units sold to the public at
an exercise price per unit of 120% of the public
offering price exercisable on the first anniversary of
the Effective Date and expiring on the fifth
anniversary (the "Representative's Warrants"); and (b)
a non-accountable expense allowance equal to three
percent of the aggregate initial public offering price
of the units, namely $45,000 if the minimum offering
is sold and $225,000 if the maximum offering is sold.
See "UNDERWRITING."
(2) Does not include offering costs estimated to be
$160,000 for both the minimum offering and maximum
offering.
FOLLOWING THE COMPLETION OF THIS OFFERING,
CERTAIN BROKER-DEALERS MAY BE THE PRINCIPAL MARKET
MAKERS FOR THE SECURITIES OFFERED HEREBY. UNDER THESE
CIRCUMSTANCES, THE MARKET BID AND ASKED PRICES FOR THE
SECURITIES MAY BE SIGNIFICANTLY INFLUENCED BY
DECISIONS OF THE MARKET MAKERS TO BUY OR SELL THE
SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE CAN BE
GIVEN THAT ANY MARKET MAKING ACTIVITIES OF THE MARKET
MAKERS, IF COMMENCED, WILL BE CONTINUED.
IN CONNECTION WITH THIS OFFERING, CERTAIN
UNDERWRITERS MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMPANY'S COMMON STOCK ON NASDAQ
IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE
"UNDERWRITING".
FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING
CLOSING OF THIS OFFERING, ALPINE WILL BE REQUIRED BY
THE SECURITIES EXCHANGE ACT OF 1934 TO FILE PERIODIC
REPORTS AND OTHER INFORMATION WITH THE SECURITIES AND
EXCHANGE COMMISSION. SUCH MATERIAL MAY BE INSPECTED
AT THE COMMISSION'S PRINCIPAL OFFICES AT JUDICIARY
PLAZA, 450 FIFTH STREET, N.W., WASHINGTON, DC 20459 OR
AT ITS WEB SITE AT HTTP://WWW.SEC.GOV AND COPIES MAY
BE OBTAINED ON PAYMENT OF CERTAIN FEES PRESCRIBED BY
THE COMMISSION. ALPINE WILL FURNISH TO HOLDERS OF ITS
COMMON STOCK ANNUAL REPORTS CONTAINING AUDITED
FINANCIAL STATEMENTS EXAMINED AND REPORTED UPON, AND
WITH AN OPINION EXPRESSED BY AN INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT. ALPINE MAY ISSUE OTHER UNAUDITED
INTERIM REPORTS TO ITS SHAREHOLDERS AS IT DEEMS
APPROPRIATE.
PROSPECTUS SUMMARY
The following is a summary of certain
information contained elsewhere in this Prospectus.
Reference is made to, and this summary is qualified
by, the more detailed information set forth in this
Prospectus, which should be read in its entirety.
RISK FACTORS
There are substantial risk factors involved in
investment in the Company. Investment in the Company
is speculative and no assurances can be made of any
return to investors. See "RISK FACTORS".
THE COMPANY
Alpine Entertainment, Inc. is a Delaware
corporation formed in 1998 to distribute domestically
and internationally motion pictures or other
entertainment media programming. The Company
anticipates that it may participate in other aspects
of the film industry, including the acquisition,
production and sale of entertainment media properties
or the acquisition of companies, or the assets of
companies, involved in the development, production,
distribution, acquisition or sale of entertainment
media properties either by itself or through
affiliates or joint venture or other relationships.
Alpine is in negotiations with Alpine Pictures, Inc.,
an affiliated film production company, for a
stock-for-stock exchange by which Alpine Pictures,
Inc. would become a subsidiary of Alpine. No final
agreements have been reached. There are no other
agreements or understandings to participate in or
acquire a company that participates in other aspects
of the film industry.
Alpine maintains its executive offices at 6919
Valjean Avenue, Van Nuys, California 91406. Its
telephone number is 818/909-5207 and its fax number is
818/782-4565.
TRADING MARKET
There is currently no trading market for the
Company's securities. The Company intends to apply
initially for admission to quotation of its Securities
on the NASD OTC Bulletin Board There can be no
assurance that the Company will qualify for quotation
of its securities on the NASD OTC Bulletin Board. See
"RISK FACTORS--Absence of Trading Markets" and
"DESCRIPTION OF SECURITIES--Admission to Quotation on
Nasdaq SmallCap Market or the NASD OTC Bulletin Board".
SELECTED FINANCIAL DATA
The following table sets forth the selected
consolidated financial data for the Company as of
December 31, 1997 and 1998, and March 31, 1999:
Income statement data:
Combined Year Consolidated
Year Ended Ended Three Months
December 31, December 31, ended March 31,
1998 1997 1999
Revenues
Film license fees $50,518 $74,532 $33,661
Total operating expenses $964,323 786,137 495,386
Net loss from operations $(913,805) (707,696) (461,725)
Balance sheet data:
Total Current Assets $ 80,406 $263,474 $43,687
Due from Non-Combined
Affiliate --- 91,000
Fixed and other assets 23,100 65,215 29,644
Total assets $ 114,343 $ 427,217 $ 83,602
Total Current liabilities $ 296,224 $ 54,086 $ 711,561
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN
NATURE AND INVOLVE A HIGH DEGREE OF RISK. THE
SECURITIES OFFERED HEREBY SHOULD BE PURCHASED ONLY BY
PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE
FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE OTHER
INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS AND
THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS,
INCLUDING ALL NOTES THERETO.
UNCERTAINTY AS TO THE CONTINUATION OF ALPINE AS A
GOING CONCERN
The unaudited financial statements of Alpine
of March 31, 1999, reflect a net loss of $446,358
during the three month period ended March 31, 1999,
and an accumulated deficit of $2,085,072 at March 31,
1999. These conditions raise substantial doubt about
Alpine's ability to continue as a going concern and if
substantial additional funding is not acquired or
alternative sources developed to meet Alpine's working
capital needs, management will be required to curtail
its operations.
ALPINE HAS NO OPERATING HISTORY
Alpine has recently been formed to distribute
motion pictures and other entertainment media
programming. It has no previous operating history
other than through its subsidiary, Alpine Pictures
International, Inc. which has had operations but has
reflected losses since it commenced operations in
1996.
ALPINE'S PRIOR LOSSES
Alpine's operating subsidiary has incurred
losses since its inception. There is no assurance
that Alpine's revenues will grow or be earned at
current levels, or that Alpine will be profitable.
There is no assurance that Alpine will not incur
operating deficits in the future.
EXISTING DEBT OF ALPINE
Alpine has executed a non-interest bearing
convertible promissory note in favor of Alpine
Pictures, Inc., a shareholder of Alpine, up to an
amount not greater than $2,052,000 the principal of
which is payable in full of the amount borrowed on
December 31, 2001. As of the date hereof, Alpine has
borrowed an aggregate of $1,200,000. See "RELATED
TRANSACTIONS" and "FINANCIAL STATEMENTS"
ALPINE FACES SUBSTANTIAL FUTURE CAPITAL REQUIREMENTS
If the minimum offering is sold, Alpine will
receive $1,350,000 gross proceeds and if the maximum
offering is sold, Alpine will receive $6,750,000 in
gross proceeds. The acquisition of the rights and
distribution of motion pictures requires substantial
capital. Alpine believes that the net proceeds of the
minimum offering combined with current revenues should
be adequate to permit Alpine to continue its
operations for the next 12 months. The pace of
Alpine's development of its business plan and the
number of films it is able to acquire for distribution
is directly related to the amount of capital available
to Alpine for such purposes. The greater the number
of units that are sold, the greater the amount of
proceeds available to Alpine to acquire distribution
rights or otherwise develop its business plan.
ALPINE MAY NEED FOR ADDITIONAL FINANCING
Future events, including the problems, delays,
expenses and difficulties frequently encountered by
movie production companies may lead to cost increases
that could make the net proceeds of this offering
insufficient to fund Alpine's proposed operations.
Alpine may seek additional sources of capital,
including an additional offering of its equity
securities, an offering of debt securities or
obtaining financing through a bank or other entity.
Alpine has not established a limit as to the amount of debt it may
incur nor has it adopted a ratio of its equity to a
debt allowance. If Alpine needs to obtain additional
financing, there is no assurance that financing will
be available, from any source, or that it will be
available on terms acceptable to Alpine, or that any
future offering of securities will be successful.
Alpine could suffer adverse consequences if it is
unable to obtain additional capital when needed.
UNCERTAINTY ON ABILITY OF ALPINE TO ACQUIRE DISTRIBUTION RIGHTS
Alpine's revenue is intended to come from the
distribution of motion picture rights which Alpine
acquires from others, principally a producer or owner
of a motion picture. Alpine's business is dependent
on its ability to acquire rights to those motion
pictures which will be commercially successful. The
acquisition of such rights and the distribution of
those motion pictures is highly speculative.
DIFFICULTY IN IDENTIFYING FILMS THAT WILL BE
COMMERCIALLY SUCCESSFUL
Because each motion picture is an individual
artistic work and its commercial success is primarily
determined by audience reaction, which is
unpredictable, the revenues derived from a motion
picture do not necessarily relate to the costs
incurred. Because costs involved with a film may be
greater than its economic return, even for a
audience-popular film, there can be no assurance as to
the economic success of any motion picture. It may
therefore be difficult to identify and acquire films
suitable for distribution by Alpine on acceptable terms.
SUCCESS IN THEATER'S MAY DETERMINE SUCCESS IN OTHER
MEDIA MARKETS
The entertainment business, and the film and
video industry in particular, are undergoing
significant changes such that ancillary markets,
including home video, pay-per-view, cable television
and free television, have become increasingly
important sources of revenue. Nevertheless, the
traditional mainstay of a motion picture's economic
performance, its theatrical success, may effect a
picture's ability to generate revenue in ancillary
markets. If programs are not well received in
theatrical distribution or are not exhibited in
theaters, their value in the ancillary markets may
also be diminished.
TELEVISION DISTRIBUTION IS SPECULATIVE AND RISKY
Television distribution is also highly
speculative and inherently risky. The success of
Alpine's television distribution business is affected
by some of the same factors described above and may
also be impacted by prevailing advertising rates,
which are subject to fluctuation. Thus, there is a
substantial risk that some or all of Alpine's
television projects will not be commercially
successful, resulting in costs not being recouped or
anticipated profits not being realized.
ALPINE MAY NOT BE ABLE TO ACQUIRE A VARIETY OF FILMS
Alpine may not have the ability or sufficient
capital to acquire a variety of films for
distribution. If Alpine is not able to diversify and
acquire a number of different films for distribution,
then the failure of one or two films could have a
material adverse impact on Alpine, causing
shareholders to lose all or a substantial amount of
their investment in Alpine.
DOMESTIC THEATRICAL DISTRIBUTION DOMINATED BY MAJOR
STUDIOS
Alpine will attempt to gain distribution of
its motion pictures in all media, including domestic
theatrical distribution. Many feature films do not
gain theatrical distribution. The domestic theatrical
market is dominated by several major motion picture
studios which place their own films and films they
acquire into such theaters. This domination limits
the domestic distribution market for independently
produced feature films. However, Alpine intends to
continue to develop its international distribution of
motion pictures and its domestic distribution of films
in other nontheatrical media forums.
RISKS OF INTERNATIONAL BUSINESS
Alpine distributes motion pictures in the
international and domestic market. Alpine enters into
distribution agreements with licensees in regard to
each motion picture it distributes. Management of
Alpine anticipates that a significant percentage of
Alpine's revenues and income, if any, will be from
foreign sources. Accordingly, Alpine is subject to
the risks inherent in conducting business across
national borders, including, but not limited to,
currency exchange rate fluctuations, international
incidents, military outbreaks, economic downturns,
government instability, nationalization of foreign
assets, government protectionism and changes in
governmental policy, any of which could have a
material adverse effect on the Company's business and
operations and its prospects for the future.
MANAGEMENT AND AFFILIATES OWN ENOUGH SHARES TO CONTROL
SHAREHOLDER VOTE
Upon the closing of this Offering, Alpine's
executive officers and directors, together with
entities affiliated with them, will beneficially own
approximately 84.9% of the outstanding common stock.
As a result, these stockholders will be able to
exercise controlling interest over matters requiring
stockholder approval, including the election of
directors and the approval of material corporate
matters such as change of control transactions. The
effects of such control could be to delay or prevent a
change of control of Alpine unless the terms are
approved by such stockholders.
SPECULATIVE NATURE OF INVESTMENT
The entertainment industry is extremely
competitive and the commercial success of any motion
picture or other program is often dependent on factors
beyond the control of Alpine, including but not
limited to audience preference and exhibitor
acceptance. Alpine may experience substantial cost
overruns in marketing its programs, and may not have
sufficient capital to successfully complete any of its
projects. Alpine may not be able to sell or license
its programs because of industry conditions, general
economic conditions, competition from other producers
and distributors, or lack of acceptance for its
programs by studios, distributors, exhibitors and
audiences. Alpine enters into distribution agreements
with licensees on a film-by-film basis and it has no
guarantees or understandings with any distributor or
licensee to ensure or require it to distribute any
film before that licensee enters into such agreement.
Alpine may also incur uninsured losses for liabilities
which arise in the ordinary course of business in the
entertainment industry, or which are unforeseen,
including but not limited to copyright infringement,
product liability, and employment liability. See
"BUSINESS."
INVESTORS NOT ENTITLED TO RETURN OF INVESTMENT DURING
OFFERING PERIOD
If the minimum offering (250,000 units) is not
sold by the expiration date, all funds received will
be returned to the investors thereof with interest at
the same rate as paid by the escrow bank. Investors
should be aware that investment funds will be held in
an escrow account and investors will not be entitled
to a return of their investment during such period.
POSSIBLE ADVERSE IMPACT OF DOMESTIC AND FOREIGN
GOVERNMENT REGULATION
Alpine will be subject to and affected by
significant domestic and foreign government
regulation. Restrictions on American programming in
several foreign countries have been imposed by foreign
governments. Domestic regulation governs the content
and rating of motion pictures and other programming.
Motion picture piracy, especially in foreign
countries, may significantly reduce anticipated
revenues. Government laws and regulations, whether
existing today or adopted in the future, could
adversely affect Alpine's ability to market and have
exhibited programs, and could impair Alpine's
profitability. See "BUSINESS - Regulation."
ALPINE'S OPERATIONS ARE DEPENDENT ON EXPERTISE OF ITS
TWO KEY OFFICERS
Ryan Carroll and Roland Carroll are directors
of Alpine, officers and directors of its operating
subsidiary, and serve as Alpine's Chief Executive
Officer and President, respectively. See
"MANAGEMENT." Virtually all decisions concerning the
conduct of the business of Alpine, including the
properties and rights to be acquired by Alpine and the
arrangements to be made for such distribution, are
made by or significantly influenced by Messrs.
Carroll. The loss of their services for any reason
would have a material adverse effect on Alpine's
business and operations and its prospects for the
future. Alpine does not have a "key man" life
insurance on the lives of any of its executive
officers.
CERTAIN OFFICERS OR DIRECTORS MAY PARTICIPATING IN
POSSIBLE CONFLICTING ACTIVITIES
The officers or directors of Alpine have
participated in and may continue to participate in
other entities which engage in activities similar to
those of Alpine. Conflicts of interest may arise as a
result of such officers or directors involvement with
other ventures which may compete directly or
indirectly with Alpine. See "MANAGEMENT - Possible
Conflicts of Interest."
MOTION PICTURE PRODUCTION AND DISTRIBUTION ARE HIGHLY
COMPETITIVE
Motion picture production and distribution
competition comes from both companies within the
business and companies in other entertainment media
which create alternative forms of leisure
entertainment. Alpine's competition for the
acquisition of distribution rights to entertainment
properties, includes major film studios such as The
Walt Disney Company, Paramount Pictures Corporation,
MCA, Columbia Pictures, Tri-Star Pictures, Twentieth
Century Fox, Warner Brothers Inc. and MGM/UA, which
are dominant in the motion picture industry, as well
as numerous independent motion picture and television
companies, broadcast television networks and pay
television systems. Many of these organizations with
which Alpine competes have significantly greater
financial and other resources than does Alpine. With
greater resources, these companies are able to pay
more to acquire film properties and to distribute
films to a greater market.
ALPINE HAS NEVER PAID DIVIDENDS
Alpine has never paid cash dividends on its
common stock and no cash dividends are expected to be
paid on the common stock in the foreseeable future.
Alpine anticipates that for the foreseeable future all
of its cash resources and earnings, if any, will be
retained for the operation and expansion of Alpine's
business.
INVESTORS WILL SUFFER IMMEDIATE DILUTION IN VALUE OF
THEIR SHARES PURCHASED
The initial public offering price of the units
is $6.00. The price paid for the unit and the value
ascribed to the share contained therein is greater
than the net tangible book value of Alpine's common
stock. Investors will sustain immediate dilution of
between $4.95 (based on the maximum offering) and
$5.89 (based on the minimum offering) per share based
on the net tangible book value of Alpine as of March
31, 1999. Existing shareholders acquired their shares
at a price substantially lower than offering price
paid by investors and, accordingly, the new investors
will bear a disproportionate part of the financial
risk associated with Alpine's business. In addition,
Alpine has executed a convertible promissory note for
the aggregate amount of $2,052,000 at a conversion
ratio of $0.27 of promissory note principal for each
share of common stock. If all such shares are
converted, Alpine may issue 7,600,000 shares of common
stock at a value of $0.27 per share which will result
immediate and substantial dilution of the value of the
shares of common stock offered herein. See "DILUTION."
ISSUANCE OF ADDITIONAL COMMON STOCK WILL REDUCE
INVESTORS PERCENTAGE OWNERSHIP
The Certificate of Incorporation of Alpine
authorizes the issuance of a maximum of 100,000,000
shares of common stock and 20,000,000 shares of
"non-designated" preferred stock. There are 5,275,000
shares of common stock outstanding and no shares of
preferred stock outstanding. The future issuance of
all or part of the remaining authorized common stock
could result in substantial reduction in the
percentage of Alpine's common stock held by Alpine's
the then shareholders, including the investors in this
offering, and reduce the ability to control or
influence any shareholder vote. Alpine intends to
offer to purchase the remaining 2,156,441 shares of
outstanding stock Alpine Pictures International, Inc.
in a one-for-one exchange for shares of Alpine. In
addition, Alpine may issue an aggregate of 7,600,000
shares of its common stock upon conversion of the
aggregate outstanding promissory note principal if
Alpine borrows the entire amount of funds available in
the promissory note with Alpine Pictures.
ISSUANCE OF ADDITIONAL COMMON STOCK MAY DILUTE SHARE
VALUE
Alpine may issue common stock for future
acquisitions, or other items, or may sell shares of
its common stock at a price lower than the offering
price. Such issuance may have the effect of diluting
the value of shares held by investors, and might have
a material adverse effect on any trading market,
should a trading market develop for Alpine's
securities. Management is currently discussing the
acquisition of Alpine Pictures, Inc., an affiliate
operating film production company, through a
stock-for-stock exchange. Such exchange would cause
the issuance of additional shares of common stock of
Alpine and would likely have the effect of diluting
the value of the shares then outstanding.
THE POSSIBILITY OF ALPINE ISSUING PREFERRED STOCK WITH
CERTAIN PREFERENCES MAY DEPRESS MARKET PRICE OF THE
COMMON STOCK
Alpine has 20,000,000 shares of non-designated
preferred stock authorized which it may issue from
time to time by action of the Board of Directors. As
of the date hereof, Alpine has not issued any shares
of preferred stock. However, the Board of Directors
may designate voting and other preferences without
shareholder consent which designations may give the
holders of the preferred stock voting control and
other preferred rights such as to liquidation and
dividends. The authority of the Board of Directors to
issue such stock without shareholder consent may have
a depressive effect on the market price of Alpine's
common stock even prior to any such designation or
issuance of the preferred stock.
THE POSSIBILITY OF ISSUING PREFERRED STOCK FOR
ANTI-TAKEOVER EFFECT COULD PREVENT TAKEOVERS FAVORED
BY SHAREHOLDERS
The Board of Directors has the authority,
without further approval of Alpine's stockholders, to
issue preferred stock, having such rights, preferences
and privileges as the Board of Directors may
determine. Any such issuance of shares of preferred
stock, under certain circumstances, could have the
effect of delaying or preventing a change in control
of Alpine or other take-over attempt and could
adversely materially affect the rights of holders of
shares of the common stock.
OFFICERS AND DIRECTORS HAVE LIMITED LIABILITY AND HAVE
INDEMNITY RIGHTS
The Certificate of Incorporation and By-Laws
of Alpine provide that Alpine indemnify its officers
and directors against losses sustained or liabilities
incurred which arise from any transaction in such
officer's or director's respective managerial capacity
unless such officer or director violates a duty of
loyalty, did not act in good faith, engaged in
intentional misconduct or knowingly violated the law,
approved an improper dividend, or derived an improper
benefit from the transaction. Alpine's Certificate of
Incorporation and By-Laws also provide for the
indemnification by it of its officers and directors
against any losses or liabilities incurred as a result
of the manner in which such officers and directors
operate Alpine's business or conduct its internal
affairs, provided that in connection with these
activities they act in good faith and in a manner
which they reasonably believe to be in, or not opposed
to, the best interests of Alpine, and their conduct
does not constitute gross negligence, misconduct or
breach of fiduciary obligations.
ALPINE COMMON STOCK MAY BE SUBJECT TO PENNY STOCK
REGULATION
The offering price of the units has been
arbitrarily determined by Alpine. There has been no
public market for Alpine's common stock. If a market
for the common stock develops and the price of the
common stock falls below $5.00 per share, then the
common stock may be considered "penny stock". Penny
stocks generally are equity securities with a price of
less than $5.00 per share other than securities
registered on certain national securities exchanges or
quoted on the Nasdaq Stock Market, provided that
current price and volume information with respect to
transactions in such securities is provided by the
exchange or system. Alpine's securities may be
subject to "penny stock" rules that impose additional
sales practice requirements on broker-dealers who sell
such securities to persons other than established
customers and accredited investors (generally those
with assets in excess of $1,000,000 or annual income
exceeding $200,000 or $300,000 together with their
spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability
determination for the purchase of such securities and
have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for
any transaction involving a penny stock, unless
exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prescribed by
the Commission relating to the penny stock market.
The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered
representative and current quotations for the
securities. Finally, monthly statements must be sent
disclosing recent price information on the limited
market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of
broker-dealers to sell Alpine's securities.
ADDITIONAL SHARES WILL COME INTO MARKET AS SHARES
BECOME AVAILABLE FOR RESALE PURSUANT TO RULE 144
All the issued and outstanding shares of
Alpine are "restricted securities" as such term is
defined in Rule 144 ("Rule 144") promulgated under the
Securities Act of 1933 (the "1933 Act"). In general,
under Rule 144, if adequate public information is
available with respect to a company, a person who has
satisfied a one year holding period as to his
restricted securities or an affiliate who holds
unrestricted securities may sell, within any three
month period, a number of that company's shares that
does not exceed the greater of one percent of the then
outstanding shares of the class of securities being
sold or, if the security is trading on the Nasdaq
Stock Market or on an exchange, the average weekly
trading volume during the four calendar weeks prior to
such sale. Sales of restricted securities by a person
who is not an affiliate of Alpine (as defined in the
1933 Act) and who has satisfied a two year holding
period may be made without any volume limitation. The
outstanding restricted securities of Alpine may become
eligible for sale in the public market pursuant to
Rule 144 without additional capital contribution to
Alpine. Possible or actual sales of Alpine's
outstanding common stock by all or some of the present
stockholders may have a material adverse effect on the
market price of Alpine's common stock should a public
trading market develop.
NO PRIOR MARKET FOR ALPINE'S COMMON STOCK
Prior to this offering, no public trading
market existed for the common stock of Alpine.
NO ASSURANCE THAT A PUBLIC MARKET WILL DEVELOP FOR
ALPINE'S COMMON STOCK
There is no assurance that a public trading
market for the common stock will develop or that a
public trading market, if developed, will be
sustained. If a trading market does in fact develop
for the common stock offered hereby, there can be no
assurance that it will be maintained. Furthermore,
if for any reason the common stock is not listed on
the NASD OTC Bulletin Board or a public trading market
does not otherwise develop, investors in the offering
may have difficulty selling their common stock or
warrants should they desire to do so.
COMPUTER SYSTEMS FACING UNKNOWN PROBLEMS ON CHANGE TO
YEAR 2000
Many existing computer programs use only two digits
to identify a year in such program's date field.
These programs were designed and developed without
consideration of the impact of the change in the
century for which four digits will be required to
accurately report the date. If not corrected, many
computer applications could fail or create erroneous
results by or following the year 2000 ("Year 2000
Problem"). Many of the computer programs containing
such date language problems have not been corrected by
the companies or governments operating such programs.
Although Alpine's operations are not computer
dependent or reliant, Alpine could be impacted by the
failure of other domestic and international companies
and countries to timely correct their computer
systems, telephone systems, mail and package delivery
systems, transportation systems, financial systems,
and others. Alpine's operations are dependent on the
Internet, the telephone system, and delivery systems.
If any of these systems or systems of other companies
or countries by which Alpine is affected become
inoperational Alpine will be directly and
significantly affected. The extent or duration of the
problems connected with the Year 2000 Problem are
impossible to predict.
AVAILABLE INFORMATION
Alpine has filed with the Securities and
Exchange Commission (the "Commission") a registration
statement on Form SB-2 under the Securities Act with
respect to the securities offered hereby. This
prospectus does not contain all the information
contained in that registration statement. For further
information regarding Alpine and the securities
offered hereby, reference is made to the registration
statement, including all exhibits and schedules
thereto, which may be inspected without charge at the
public reference facilities of the Commission's
Washington, D.C. office, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Each statement contained in
this prospectus with respect to a document filed as an
exhibit to the registration statement is qualified by
reference to the exhibit for its complete terms and
conditions.
Alpine will be subject to the informational
requirements of the Securities Exchange Act of 1934
("Exchange Act") and in accordance therewith will file
reports and other information with the Commission.
Reports, proxy statements and other information filed
by Alpine can be inspected and copied on the
Commission's home page on the World Wide Web at
http://www.sec.gov or at the public reference
facilities of the Commission, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as
the following Regional Offices: 7 World Trade Center,
Suite 1300, New York, N.Y. 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago,
Illinois. 60661-2511. Copies can be obtained from the
Commission by mail at prescribed rates. Request
should be directed to the Commission's Public
Reference Section, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549.
Alpine intends to furnish its stockholders
with annual reports containing audited financial
statements and such other reports as may be required
by law.
THE COMPANY: ALPINE ENTERTAINMENT, INC.
ALPINE ENTERTAINMENT, INC. BACKGROUND
Alpine Entertainment, Inc. (Alpine) is a
Delaware corporation formed in 1998 to distribute
domestically and internationally motion pictures or
other entertainment media programming. Alpine
anticipates that it may participate in other aspects
of the film industry, including the acquisition,
production and sale of entertainment media properties
or the acquisition of companies, or the assets of
companies, involved in the development, production,
distribution, acquisition or sale of entertainment
media properties either by itself or through
affiliates or joint venture or other relationships.
Alpine has two subsidiaries, Alpine Pictures
International, Inc., an operating California
independent film distribution company and Alpine
Television, Inc. which is newly-formed and not yet
operational.
On February 10 ,1999, Alpine Entertainment,
Inc. acquired Alpine Pictures International, Inc., an
operating California independent film distribution
company. Alpine currently only has operations through
its subsidiary, Alpine Pictures International, Inc.
through which it has entered into oral or written
distribution agreements for over ten motion pictures.
Certain of these distribution agreements are for films
produced by affiliates of Alpine. Through its
affiliate, Alpine is engaged in the distribution of
quality films in domestic and international markets
including theatrical exhibition, home videos, network
television, cable television, pay per view cable
television, and nontheatrical exhibitors such as
airlines, schools, hospitals, libraries, hotels,
syndicated television and related markets. Alpine may
also have the right to license for distribution,
pursuant to its distribution agreements, soundtrack
music, CD-ROMs, interactive games and other
merchandising items.
ALPINE PICTURES INTERNATIONAL, INC.
Alpine Pictures International, Inc. ("APII")
is an operating California corporation formed in July,
1996 engaged in the distribution domestically and
internationally of full length motion pictures,
made-for-television movies, home videos, televisions
series, mini-series, CD-ROM programming and
interactive games based on the literary properties it
licenses through its distribution agreements. APII
served as the general partner of Alpine Releasing
Partners I, L.P., formed in July, 1996. On February
18, 1998, the Alpine Releasing Partners I, L.P. was
merged into APII with the issuance of one share of
APII common stock for each $0.85 of limited
partnership interest resulting in a total issuance of
1,344,716 shares of common stock by APII to the
limited partners.
Alpine acquired 69.9% of the outstanding
shares of APII on February 10, 1999, through the
exchange of shares of common stock of APII, at a
one-for-one ratio, for shares of Alpine Entertainment,
Inc. APII has an authorized capitalization of
20,000,000 shares of common stock, no par value, of
which 7,181,441 are outstanding to date, including
5,025,000 held by Alpine, and 10,000,000 shares of
non-designated preferred stock, no par value, of which
no shares have been designated or issued. The
directors of APII are Tom Hamilton, Rene Torres,
Roland Carroll, Ryan Carroll, and Greg Cozine. Rene
Torres serves as President and Tom Hamilton serves as
Secretary of APII. Alpine intends to offer to acquire
the remaining 2,156,441 outstanding shares of Alpine
Pictures International, Inc. from the holders thereof
in exchange for shares of Alpine on a one-for-one basis.
ALPINE TELEVISION, INC.
Alpine Television, Inc. ("ATI") was
incorporated in Delaware in February, 1999, to
distribute and develop entertainment media projects
for presentation on television, including
pay-per-view, pay, network, syndication or basic cable
television. ATI has an authorized capitalization of
100,000,000 shares of common stock of which 1,000
shares are outstanding and 20,000,000 shares of
non-designated preferred stock of which none are
outstanding. Alpine owns all 1,000 outstanding shares
of ATI. ATI has no operations to date. Ernani Di
Massa, Jr., serves as chief executive officer of ATI
and David Craddick serves as its president.
ALPINE HOME ENTERTAINMENT, INC.
Alpine Home Entertainment, Inc. is an
affiliated company of Alpine designed primarily for
video sales in the retail market. The officer and
director of Alpine Home Entertainment, Inc. is Rene
Torres. Alpine Home is not a subsidiary of Alpine and
Alpine will not share in any of the expenses or
revenues of Alpine Home Entertainment.
EMPLOYEES
Alpine has eleven full-time employees,
including its executive officers. Alpine utilizes
independent contractors and consultants from time to
time to assist in promoting, marketing, and
distributing motion pictures. The independent
contractors are generally paid on a commission, hourly
or job-related basis, depending on the service being
performed. Alpine does not have a collective
bargaining agreement with its employees and is not
aware of any labor disputes.
OFFICES/PROPERTY
Alpine is presently leasing approximately
4,000 square feet of office space at 6919 Valjean
Avenue, Van Nuys, California 91406 from Alpine
Pictures, Inc., an affiliate of Alpine. The lease
expires in January, 2001, with a right to renew for
five additional years at fair market value rental
rates. The basic rental rate for the office space
allocated to Alpine is $6,760 per month, with annual
increases at the same rate as increases in the
Consumer Price Index. The office lease is a modified
gross lease providing for the pass-through to the
tenant of a pro rata portion of property taxes,
assessments, common area charges and other property
operating costs.
USE OF PROCEEDS
If the maximum offering is sold, the proceeds
to Alpine will be $6,750,000 and if the minimum
offering is sold, the proceeds to Alpine will be
$1,350,000. Alpine anticipates that in addition to
the proceeds received from this offering, it may use
its common stock to acquire distribution rights to
motion pictures or other entertainment media
properties and to develop its business plan which may
include participation in other aspects of the film
industry, including the acquisition, production and
sale of entertainment media properties or the
acquisition of companies, or the assets of companies,
involved in the development, production, distribution,
acquisition or sale of entertainment media properties
either by itself or through affiliates or joint
venture or other relationships.
The Company currently anticipates that it will
issue shares of its common stock in order to purchase
all the outstanding stock of Alpine Pictures, Inc., an
affiliated operating California film production
company. No agreements or terms have been reached or
finalized, but any agreement would likely involve the
issuance of common stock of Alpine in exchange of the
outstanding stock of Alpine Pictures, Inc. Such
issuance of stock may dilute the value of the common
stock then outstanding.
The following table sets forth Alpine's
anticipated use of proceeds from the offering:
Minimum Offering Maximum Offering
Total Proceeds $ 1,500,000 $ 7,500,000
Commissions or underwriting fees 150,000 750,000
Offering expenses 160,000 160,000
Administrative and marketing
expenses 480,000 660,000
Acquisition of entertainment
media properties 461,500 3,854,500
Co-production 142,000 1,186,000
Development 35,500 296,500
Contingency 71,000 593,000
The foregoing represents Alpine's best
estimate of the net proceeds of the offering based on
current planning and business conditions. The exact
allocation of the proceeds for the purposes set forth
above and the timing of the expenditures may vary
significantly depending upon the exact amount of funds
raised, the time and cost involved in locating media
properties, and other factors. In regard to the
estimated use of proceeds, in the event that Alpine is
able to utilize its common stock for acquisitions of
media properties, it will allow proceeds allocated to
such acquisitions to either be utilized for other
purposes or to provide acquisitions of additional
media properties.
Alpine believes that the proceeds from the
minimum offering in addition to revenues from
operations will be sufficient to fund its operations
for the next 12 months, although such development
would be at a reduced pace than if the maximum
offering proceeds were received. If an amount less
than maximum offering is raised, Alpine may be
required to delay, scale back or eliminate parts of
its development plan or obtain funds through
additional financing, including loans or offerings of
its securities. Alpine has no agreements or
understandings with respect to any future financing or
loan agreements.
DILUTION
Purchasers of the units will experience
immediate and substantial dilution in the value of
their common stock after purchase. Management has
ascribed an offering price value of $5.00 per share
and $1.00 per warrant contained in units. Dilution
represents the difference between the initial public
offering price per share paid by the purchasers in the
offering and the net tangible book value per share
immediately after completion of the offering. Net
tangible book value per share represents the net
tangible assets of Alpine (total assets less total
liabilities), divided by the number of shares
outstanding upon closing of the offering. Alpine is a
new company without operations or revenues except
through its operating subsidiary.
At March 31, 1999 Alpine had a net tangible
book value of ($627,959) or ($.11) per share. This
represents an immediate dilution to investors in the
offering of between $4.95 per share (based on the
maximum offering ) and $5.89 per share (based on the
minimum offering) assuming a $6.00 per Unit offering
price, and an aggregate increase in net tangible book
value to present shareholders of $1.16 and $.22 per
share (based on the maximum and minimum offering
respectively). The following table illustrates such
effect:
Maximum Minimum
Offering Offering
Initial public price per unit $6.00 $6.00
Net tangible book value before offering $(.11) $(.11)
Increase per share attributable to new investors $1.16 $.22
Net tangible book value per share after offering $1.05 $.11
Dilution per share to new investors $4.95 $5.89
The following table sets forth, on a pro forma
basis, the differences between existing shareholders
and new investors in the offering with respect to the
number of shares of common stock purchased from
Alpine, the total consideration paid to Alpine and the
average price per share paid by existing shareholders
and by new investors (assuming a $5.00 per share
offering price):
Minimum Offering:
Number Percentage of Consideration Percentage Average
Outstanding Paid of Total Price
Shares Consideration Per
Paid Share
Existing
Shareholders 5,275,000 93 % 503 0.03% $.0001
New
Investors 250,000 6.7% 1,250,000 99.97% $5.00
Total 5,525,000 100% $1,250,503 100%
Maximum Offering:
Number Percentage of Consideration Percentage Average
Outstanding Paid of Total Price
Shares Consideration Per
Paid Share
Existing
Shareholders 5,275,000 80.8% $503 *% $.0001
New
Investors 1,250,000 19.2% 6,250,000 99.99% $5.00
Total 6,525,000 100% $ 6,250,503 100%
*Less than .01%
The following table sets forth, on a pro forma
basis, the differences between existing shareholders,
new investors and promissory note holders, assuming
conversion of the full amount of the available
promissory note principal, in the offering with
respect to the number of shares of common stock
purchased from Alpine, the total consideration paid to
Alpine and the average price per share paid by
existing shareholders and by new investors (assuming a
$5.00 per share offering price):
Maximum Offering:
Number Percentage Percentage Average
of Outstanding Consideration of Total Price
Shares Paid Consideration Per
Paid Share
Existing
Shareholders 5,275,000 37.3% $ 503 * % $.0001
New Investors 1,250,000 8.9 6,250,000 75.3% $ 5.00
Conversion of
Note 7,600,000 53.8 2,052,000 24.7% $0.27
Total 14,125,000 100% $8,302,503 100%
DIVIDEND POLICY
Alpine presently does not intend to pay cash
dividends on its common stock in the foreseeable
future and intends to retain future earnings, if any,
to finance the expansion and development of its
business. Any future decision of Alpine's Board of
Directors to pay dividends will be made in light
of Alpine's earnings, financial position, capital
requirements and other relevant factors then existing.
BUSINESS
Alpine's current principal business is the
acquisition of distribution and ancillary rights and
the domestic and international distribution of motion
pictures and entertainment media properties. Alpine
has operations only through its subsidiary, Alpine
Pictures International, Inc. which it acquired on
February 10, 1999.
MOTION PICTURE INDUSTRY OVERVIEW
The United States motion picture industry is
dominated by the "major" studios, including The Walt
Disney Company, Paramount Pictures Corporation, Warner
Brothers, Inc., MCA, Twentieth Century Fox, Columbia
Pictures, Tri-Star Pictures and MGM/UA. The major
studios are typically large diversified corporations
that have strong relationships with creative talent,
exhibitors and others involved in the entertainment
industry and whose libraries of motion pictures
provide a stable source of earnings which offset the
variations in the financial performance of their
motion picture releases and other aspects of their
motion picture operations. The major studios have
historically produced and distributed the vast
majority of high grossing theatrical motion pictures
released annually in the United States. These major
studios maintain generally control distribution of
pictures produced by their studio and may as well as
obtain the distribution and ancillary rights to motion
pictures and other entertainment media productions
produced by independent or other studios.
In recent years, "independent" films have been
successfully marketed and have received commercial
acclaim. Of the five pictures nominated for "best
picture" by the Academy of Motion Pictures (Oscars) in
1996, four, Fargo, The English Patient, Shine and
Secrets and Lies, were independent films. The
independent film studios earned most of the major
Oscars in 1996, including, best picture, best actor,
best actress, best supporting actress, and best
director. Management of Alpine believes that the
success of the independent studios in 1996 may be the
beginning of a greater demand for independent films in
the international and domestic market.
The motion picture industry consists of two
principal activities: production and production
financing and distribution, which involves the
promotion and exploitation of motion pictures in a
variety of media, including theatrical exhibition,
home video, television and other ancillary markets,
both domestically and internationally.
MOTION PICTURE PRODUCTION AND FINANCING
The production of a motion picture usually
involves four steps: development, pre-production,
production and post-production. During development,
the screenplay is commissioned or acquired. The
screenplay may be adapted from an existing work
acquired by the producer or developed as an original
screenplay having its genesis in a story line or
scenario conceived or acquired by the producer. In
the development phase, the producer typically seeks
production financing and tentative commitments from a
director, the principal cast members and other
creative personnel. A proposed production schedule
and budget are also prepared during this phase.
Upon completing the screenplay and arranging
financing commitments, pre-production of the motion
picture begins. In this phase, the producer
engages creative personnel to the extent not
previously committed; finalizes the filming schedule
and production budget; obtains insurance and secures
completion guaranties, if necessary; establishes
filming locations and secures any necessary
studio facilities and stages, and prepares for the
start of actual filming.
The production phase begins when principal
photography begins and continues until completion of
principal photography, generally less than a period of
three months.
Following completion of principal photography
in the post-production phase, the motion picture
is edited, opticals, dialogue, music and any special
effects are added, and voice, effects and music sound
tracks and pictures are synchronized. This
results in the production of the negative from which
release prints of the motion picture are made.
Production costs consist of acquiring or
developing the screenplay, film studio rental,
principal photography, post-production and the
compensation of creative and other production
personnel.
The major studios generally fund production
costs from cash flow generated by motion picture and
related activities or, in some cases, from unrelated
businesses or through off-balance sheet methods.
Substantial overhead costs, consisting largely of
salaries and related costs of the production staff and
physical facilities maintained by the major studios,
also must be funded. Independent production companies
generally avoid incurring overhead costs as
substantial as those incurred by the major studios by
hiring creative and other production personnel and
retaining the other elements required for
pre-production, principal photography and
post-production activities on a picture-by-picture
basis. Sources of funds for independent production
companies may include bank loans, "pre-licensing" of
distribution rights, equity offerings and joint
ventures. Independent production companies generally
attempt to obtain all or a substantial portion of
their financing of a motion picture prior to
commencement of principal photography, at which point
substantial production costs begin to be incurred and
require payment.
Distribution expenses, which consist primarily
of the costs of advertising and preparing release
prints, are not included in direct production costs.
"Pre-licensing" of film rights is often used
by independent film companies to finance all or a
portion of the direct production costs of a motion
picture. By "pre-licensing" film rights, a producer
obtains amounts from third parties in return for
granting such parties a license to exploit the
completed motion picture in various markets and media,
which rights include distribution rights. Production
companies with distribution divisions may retain the
right to distribute the completed motion picture
either domestically or in one or more international
markets. Other production companies may separately
license theatrical, home, video, television and all
other distribution rights among several licensees.
In connection with the production and
distribution of a motion picture, major studios and
independent production companies often grant
contractual rights to actors, directors, screen
writers, and other creative and financial contributors
to share in revenues or net profits (as defined in
their respective agreements) from such motion picture.
Except for the most sought-after talent, these
third-party participators are generally payable after
all distribution fees, marketing expenses, direct
production costs and financing costs are recouped in
full.
MOTION PICTURE DISTRIBUTION
Distribution of a motion picture involves
domestic and international licensing of the picture
for (a) theatrical exhibition, (b) non-theatrical
exhibition, which includes airlines, hotels and armed
forces facilities, (c) video cassettes, (d)
presentation on television, including pay-per-view,
pay, network, syndication or basic cable and (e)
marketing of the other rights in the picture and
underlying literary property, which may include books,
merchandising and soundtracks. In recent years,
revenues from the licensing of rights to distribute
motion pictures in ancillary (i.e., other than
domestic theatrical) markets, particularly
international pay and free television, have increased
significantly.
The distributor typically acquires rights from
the producer to distribute a motion picture in one or
more markets and/or media. For its distribution
rights, the distributor generally agrees to pay to the
producer a certain minimum advance or guarantee upon
the delivery of the completed motion picture, which
amount will be recouped by the distributor out of
revenues generated from the distribution of the motion
picture in the particular media or territories. After
the distributor has recouped the amount advanced (if
any) plus its distribution costs, the distributor is
then entitled to retain ongoing distribution fees
computed as a percentage of the gross revenues
generated from its distribution of the picture. The
producer is thereafter entitled to receive all
remaining revenues in excess of the ongoing
distribution fee retained by the distributor.
A substantial portion of a film's ultimate
revenues are generated in a film's initial
distribution cycle (generally the first five years
after the film's initial domestic theatrical release).
Commercially successful motion pictures, however, may
continue to generate revenues after the film's initial
distribution cycle from the relicensing of
distribution rights in certain media, including
television and home video, and from the licensing of
distribution rights with respect to new media and
technologies.
THEATRICAL DISTRIBUTION
The theatrical distribution of a motion
picture involves the licensing and booking of the
motion picture to theatrical exhibitors, the promotion
of the picture through advertising and publicity
campaigns and the manufacture of release prints from
the film negative. Expenditures on these activities,
particularly on promotion and advertising, are often
substantial and may have a significant impact on the
ultimate success of the film's theatrical release.
Moreover, as the vast majority of these costs
(primarily advertising costs) are incurred prior to
the first weekend of the film's domestic theatrical
release, there is not necessarily a correlation
between these costs and the film's ultimate box office
performance. In addition, the ability to distribute a
picture during peak exhibition seasons, including the
summer months and the Christmas holidays, may affect
the theatrical success of the picture.
While arrangements for the exhibition of a
film vary greatly, there are certain fundamental
economic relationships applicable to domestic
theatrical distribution. Theater owners (the
"exhibitors") retain a portion of the admission paid
at the box office ("gross box office receipts"). The
share of the gross box office receipts retained by an
exhibitor generally includes a fixed amount per week
(in part to cover overhead), plus a percentage of
receipts that escalates over time. The balance ("gross
film rentals") is remitted to the distributor. The
distributor then retains a distribution fee from the
gross film rentals and recoups the costs incurred in
distributing the film which consist primarily of the
cost of advertising and the cost of release prints for
exhibition. The balance of gross film rentals, after
deducting distribution fees and any additional
distribution costs recouped by the distributors ("net
film rentals"), is then remitted to the producer of
the film.
THE ANCILLARY MARKETS
The rights to ancillary markets, including
nontheatrical, video, cable, television, music and
merchandising, are generally sold for distribution
after initial theatrical distribution. The sale or
licensing of ancillary rights continues to be a
growing source of revenue for motion pictures. These
rights can be sold as a package or individually as
follows:
HOME VIDEOS. A motion picture typically
becomes available for videocassette distribution
within four to six months after its initial domestic
theatrical release. Home video distribution consists
of the promotion and sale of video cassettes to local,
regional and national video retailers which rent or
sell video cassettes to consumers primarily for home
viewing. Certain films may never be released to
theaters but be immediately released to the home video
market. Alpine anticipates that its films may be
released directly to the home video market.
TELEVISION. Television rights can include the
following:
Pay Television - The right to broadcast the
motion picture over cable systems nationwide as part
of a paid subscription to the cable channels or via
other media such as direct broadcast satellite.
Pay-Per-View Cable - The right to broadcast
the motion picture over cable systems for a fee on a
per-viewing basis.
Network Television - The right to license to
one of the major television networks for one or more
broadcasts of the motion picture.
Syndicated Television - The right to market
television rights on a market-by-market basis to
individual television stations around the country for
a specific number of broadcasts or for an unlimited
number of broadcasts over a period of time.
Television rights are generally licensed first
to pay-per-view for an exhibition period within six to
nine months following initial domestic theatrical
release, then to pay television approximately twelve
to fifteen months after initial domestic theatrical
release, thereafter in certain cases to free
television for an exhibition period, and then to pay
television again. These films are then syndicated to
either independent stations or basic cable outlets.
Pay-per-view allows subscribers to pay for individual
programs. Pay television allows cable television
subscribers to view such services as HBO, Cinemax,
Showtime, The Movie Channel or Encore Media Services
offered by their cable system operators for a monthly
subscription fee. Since groups of motion pictures are
typically packaged and licensed as a group for
exhibition on television over a period of time,
revenues from these television licensing "packages"
may be received over a period that extends beyond five
years from the initial domestic theatrical release of
a particular film. Motion pictures are also "packaged"
and licensed for television broadcast in international
markets.
NON-THEATRICAL. The rights to distribute the
film to the armed services, airlines, schools,
hospitals, cruise ships, correctional facilities,
community groups, libraries, hotels and motels in
other than 35mm gauge release prints or in video format.
OTHER RIGHTS. Music contained in a film may
be licensed for sound recording, public performance
and sheet music publication. Rights in motion pictures
may be licensed to merchandisers for the manufacture
of products such as video games, toys, T-shirts,
posters and other merchandise. Rights may also be
licensed to create novelizations of the screenplay and
other related book publications.
FOREIGN MEDIA. The right to market all of
the above rights, including theatrical exhibition, on
a territory-by-territory basis in foreign countries.
INTERNATIONAL MARKETS
In addition to their domestic distribution
activities, motion picture producers and distributors
generate substantial revenues from distribution of
motion pictures in international markets (in the same
media in which films are distributed in the domestic
market). Through its subsidiary, Alpine has primarily
concentrated its distribution operations in the
international market and anticipates that it will
continue to do so. Based upon its distribution of
films in the past two years, Alpine distributes
approximately 52% of its films in the European market,
17% in Mexico and Latin America, 8.5% in Hong Kong and
Taiwan and less than 8% in Turkey, India, Malaysia,
India and the Philippines.
CURRENT OPERATIONS OF ALPINE OVERVIEW
As of the date hereof, Alpine's operations
have consisted of the distribution of motion pictures.
Alpine primarily concentrates on the distribution of
films ranging between $1,000,000 to $5,000,000 in
production costs. Alpine generally enters into an
agreement with an owner or producer of a motion
picture which agreement provides for Alpine to serve
as the exclusive distributor agent for the
owner/producer in designated territories for a
specified term (the "Sales Agency Agreement", also
referred to "Distribution Agreement"). The Sales
Agency Agreement may also grant Alpine certain other
rights to distribute the motion picture in all media,
including but not limited to, theatrical exhibition,
non-theatrical exhibition, all forms of television,
and home video. Alpine also attempts to acquire the
merchandizing, publication and sound track rights to
the motion picture.
In consideration for these rights, Alpine
usually pays the owner/producer of the firm a cash
advance which cash advance is reimbursable from the
gross receipts derived from the film in such
designated territory. Alpine usually agrees to pay
for distribution costs, including reworking the film
to meet foreign country standards, technical materials
and other items stipulated in the Sales Agency
Agreement, which are also reimbursed from gross
receipts to a certain agreed upon maximum level.
After reimbursement of the cash advance and
distribution costs, Alpine then receives a percentage
of the gross receipts derived from the film as
negotiated in the Sales Agency Agreement ("Sales Agent
Fee"). The remaining gross receipts are paid to the
owner/producer. Under certain Sales Agency Agreement,
the owner/producer receives a certain percentage from
gross receipts prior to the reimbursement of the cash
advance or distribution costs or payment of Alpine's
percentage.
Generally, for each picture which Alpine has
agreed to distribute, it will enter into agreements
with subdistributors allowing the subdistributor to
license certain rights to the film in certain
specified territories for a designated period of time
(the "License Agreement"). The License Agreement
stipulates exactly which rights are licensed
including, for example, cinematic rights (theatrical,
non-theatrical, public video), video rights (home
video, commercial video), ancillary rights (hotels,
airlines, ships) and/or television rights (cable TV,
free TV, pay-for-view TV). For such licensing rights,
the subdistributor will pay Alpine a certain
guaranteed amount. After payment of such guaranteed
amount and recoupment of certain costs by the
subdistributor, Alpine will receive a percentage of
the gross receipts received by the subdistributor in
the exploitation of the film. Although Alpine may use
certain subdistributors for several of its films
projects, each transaction is separately entered into
and Alpine has no continuing agreements or
arrangements with any subdistributors to give them
exclusive or first rights to the distribution of any
particular film nor does Alpine have any preliminary
arrangement or agreements with any subdistributors to
assist it in marketing its films.
CURRENT OPERATIONS SPECIFIC PROJECTS
Alpine has entered into Sales Agency
Agreements for the following motion pictures.
SALES AGENT FEE AS EXPENSE
PERCENT OF GROSS REVENUES REIMBURSEMENT
TITLES FROM THE MOTION PICTURE(1) CEILING (2)
Lord Protector(3)(4) 20% $50,000
Destiny of Marty Fine(4) 25% (of 60% of gross) $50,000
The Maze(4) 25% $70,000
Killers(4) 30% $70,000
Paper Dragon (4) 20% $50,000
Resolution (4) 20% (Domestic) $50,000
25% (Foreign)
Tear It Down (4) 20% $50,000
Salmon Run (4) 25% $75,000
Good Bye Paradise (4) 25% $75,000
Lancelot-Guardian of Time 20% $50,000
An Angel's Gift(3)(5) 20% $50,000
Final Game(3)(5)(6) 20% $50,000
Shalakan (3)(5)(6) 20% $50,000
An Angel on Abbey Street(3)(5)(6) 20% $50,000
Dead Homiez 30% NA
Rebel(3)(5)(6) 20% $50,000
(1) Pursuant to the typical Sales Agency
Agreement, APII is entitled to receive a
percentage of the gross receipts from the
licensing of the motion picture before the
payment of any other expenses or any
distributions to the producer.
(2) The Sales Agency Agreements typically provide
a ceiling for reimbursable costs. These
expense ceilings do not include cash advances
which may be made by Alpine to the
owner/producer which are generally repayable
to Alpine from the gross revenues earned by
the motion picture.
(3) This motion pictures was or is being produced
or co-produced by an affiliate of Alpine.
(4) This motion pictures is completed.
(5) This motion picture is in pre-production or
production phase.
(6) The capital or financing for the production of
this motion picture has not yet been raised or
is only partially raised as of the date hereof.
LICENSE AGREEMENTS
Alpine has entered into the following License
Agreements providing for the international
distribution of its films as follows:
On or about May 14, 1998, APII licensed the
following rights in Poland to Nuvola Corporation
A.V.V. for seven years with respect to "Lancelot:
Guardian of Time" for a licensing fee of U.S. $6,500:
(a) cinematic rights, theatrical, non-theatrical, and
public video; (b) video rights, home video cassette,
commercial video, and home sell-thru; (c) ancillary
rights, hotels, airlines, and ships flying the Polish
flag and without bookings in the United States; (d)
television rights, pay TV (terrestrial, cable, and
satellite), and free TV (terrestrial, cable, and
satellite); and (e) pay per-view rights, residential,
non-residential, and demand view.
On or about May 13, 1998, APII licensed the
following rights in Yugoslavia to TUCK for seven years
with respect to "Tear it Down" and "Killers" for an
aggregate licensing fee of U.S. $6,000: (a) cinematic
rights, theatrical, non-theatrical, and public video;
(b) video rights, home video cassette, commercial
video, and home sell-thru; (c) ancillary rights,
hotels, airlines, and ships flying the Yugoslavian
flag and without bookings in the United States; (d)
television rights, pay TV (terrestrial, cable, and
satellite), and free TV (terrestrial, cable, and
satellite); and (e) pay-per-view rights, residential,
non-residential, and demand view.
On or about May 18, 1998, APII licensed the
following rights in Spain to Telesis, S.L. for seven
years with respect to "Killers" for a licensing fee of
U.S. $15,000: (a) cinematic rights, theatrical,
non-theatrical, and public video; (b) video rights,
home video cassette, commercial video, and home
sell-thru; (c) ancillary rights, hotels, airlines, and
ships flying the Spanish flag and without bookings in
the United States; (d) television rights, pay TV
(terrestrial, cable, and satellite), and free TV
(terrestrial, cable, and satellite); and (e)
pay-per-view rights, residential, non-residential, and
demand view.
On or about May 19, 1998, APII licensed the
following rights in the United Kingdom, Republic of
Ireland, Malta, and Gibraltar to Third Millennium for
seven years with respect to "Killers" for a licensing
fee of U.S. $15,000: video rights, home video
cassette, commercial video, and home sell-thru.
On or about November 3, 1998, APII licensed
the following rights in Spain to V.F. Multimedia, S.L.
for ten years with respect to "Tear It Down,"
"Resolution," "Paper Dragons," "Lord Protector,"
"Lancelot," and "Tiger Street" for a licensing fee of
U.S. $70,000: (a) pay-per-view rights, residential,
non-residential, and demand view; (b) pay TV rights,
terrestrial, cable, and satellite; and (c) free TV
rights, terrestrial, cable, and satellite.
On or about November 3,1998, APII licensed the
following rights in the Philippines to Conrad Luzon
for eight years with respect to "Paper Dragons" and
"Lancelot" for a licensing fee of U.S. $2,000: (a)
video rights, home video cassette, commercial video,
and home sell-thru; (b) pay-per-view rights,
residential, non-residential, and demand view; (c) pay
TV rights, terrestrial, cable, and satellite; and (d)
free TV rights, terrestrial, cable, and satellite.
On or about November 3, 1998, APII licensed
the following rights in Turkey to Inter Medea Teacart,
Ltd. for seven years with respect to "Tear It Down"
for a licensing fee of U.S. $5,000: (a) video rights,
home video cassette, commercial video, and home
sell-thru; (b) ancillary rights, hotels, airlines, and
ships flying with the Turkish flag and without
bookings in the United States; (c) pay-per-view
rights, residential, non-residential, demand view; (d)
pay TV rights, terrestrial, cable, and satellite; and
(e) free TV rights, terrestrial, cable, and satellite.
On or about November 3, 1998, APII licensed
the following rights in Turkey to SAR-An International
Co., Ltd. for five years with respect to "Tiger
Street," "Paper Dragons," and a third film to be named
for a licensing fee of U.S. $10,000: (a) video rights,
home video cassette, commercial video, and home
sell-thru; (b) pay-per-view rights, residential,
non-residential, and demand view; (c) pay TV rights,
terrestrial, cable, and satellite; and (d) free TV
rights, terrestrial, cable, and satellite.
On or about November 3,1998, APII licensed the
following rights in the United Kingdom, Erie, Malta,
and Gibraltar to Marquee Pictures for nine years with
respect to "Dead Homes" for a licensing fee of U.S.
$10,000: (a) video rights, home video cassette,
commercial video, home sell-thru, and DID; (b)
ancillary rights, hotels and ships flying the
territory flag and without bookings in the United
States; and (c) television rights, if Distributor
secures an agreement for all television rights,
Licensor will split minimum guarantee 50/50 with
Distributor.
On or about October 5, 1998, APII licensed the
following rights in the United Kingdom, Republic of
Ireland, Malta, and Gibraltar to Third Millennium
Distribution Ltd. for five years with respect to "Tear
It Down" for a licensing fee of U.S. $15,000: video
rights, home video cassette, commercial video, and
home sell-thru.
On or about March 2, 1998, APII licensed the
following rights in Turkey to Yen Taal Film for seven
years with respect to "Paper Dragons" for a licensing
fee of U.S. $3,000: television rights, pay TV
(terrestrial, cable, and satellite), free TV
(terrestrial, cable, and satellite), pay-per-view
(residential, non-residential, and demand view).
On or about February 27,1998, APII licensed
the following rights in Latin America to Global
Communications for seven years with respect to "Paper
Dragons" for a licensing fee of U.S. $35,000: (a)
video rights, home video cassette, commercial video,
and home sell-thru; (b) pay TV rights, terrestrial,
cable, and satellite; and (c) free TV rights,
terrestrial, cable, and satellite.
On or about March 2, 1998, APII licensed the
following rights in the Philippines with Conrad Luzon
for eight years with respect to "Lord Protector" for a
licensing fee of U.S. $1,500: (a) video rights, home
video cassette, commercial video, and home sell-thru;
(b) pay-per-view rights, residential, non-residential,
and demand view; (c) pay TV rights, terrestrial,
cable, and satellite; and (d) free TV rights,
terrestrial, cable, and satellite.
On or about March 2, 1998, APII licensed the
following rights in Malaysia to Suraya Filem
Production for seven years with respect to "The Gift"
(U.S. $2,000), "Lord Protector" (U.S. $2,000),
"Lancelot" (U.S. $2,000)"Salmon Run" (U.S. $1,000),
and "Goodbye Paradise" (U.S. $1,000) for a licensing
fee of U.S. $8,000: (a) video rights, home video
cassette, commercial video, and home sell-thru; (b)
ancillary rights, hotels, airlines, and ships flying
the Malaysian flag and without booking in the United
States; (c) pay-per-view rights, residential, non
residential, and demand view; (d) pay TV rights,
terrestrial, cable, and satellite; and (e) free TV
rights, terrestrial, cable, and satellite.
On or about February 27, 1998, APII licensed
the following rights in Mexico to Duplitek S.A. De
C.V. for seven years with respect to "Paper Dragons"
for a licensing fee of U.S. $2,500: video rights, home
video cassette, commercial video, and home sell-thru.
On or about February 27, 1998, APII licensed
the following rights in Mexico to Duplitek S.A. De
C.V. for seven years with respect to "Killers" for a
licensing fee of U.S. $7,500: (a) video rights, home
video cassette, commercial video, and home sell-thru;
(b) pay TV rights, cable; and (c) free TV rights,
terrestrial, cable, and satellite.
On or about March 2,1998, APII licensed the
following rights in Hong Kong and Macau to Mel Ah (HK)
Co. Ltd. for seven years with respect to "Killers" and
"Resolution" for a licensing fee of U.S. $7,000: (a)
video rights, home video cassette, commercial video,
home sell-thru, VCD, DID, and LO; (b) ancillary
rights, hotels, airlines, and ships flying the
territory flag and without bookings in the United
States; (c) pay-per-view rights, residential,
non-residential, and demand view; (d) pay TV rights,
terrestrial, cable, and satellite; and (e) free TV
rights, terrestrial, cable, and satellite.
On or about March 1, 1998, APII licensed the
following rights in India to Global Film Distributors,
Inc. for seven years with respect to "Killers" for a
licensing fee of U.S. $6,100: (a) cinematic rights,
theatrical, non-theatrical, and public video; (b)
video rights, home video cassette, commercial video,
and home sell-thru; (c) ancillary rights, hotels,
airlines, and ships flying the Indian flag and without
bookings in the Units States; (d) pay-per-view rights,
residential, non-residential, and demand view; and (e)
pay TV rights, terrestrial, cable, and satellite; and
(0 free TV rights, terrestrial, cable, and satellite.
On or about February 27,1998, APII licensed
the following rights in Russia, CIS, and the Baltic
States in Worldvision Communications for seven years
with respect to "Goodbye Paradise" (U.S. $5,000),
"Paper Dragons" (U.S. $5,000), "Resolution" (U.S.
$5,000), and "Pink As The Day She Was Born" (U.S.
$5,000) for a licensing fee of U.S. $20,000: (a)
cinematic rights, theatrical, non-theatrical, and
public video; (b) video rights, home video cassette
and commercial video; (c) ancillary rights, hotels,
airlines, and ships flying the territory flag and
without bookings in the United States; (d) pay TV
rights, terrestrial, cable, and satellite; and free TV
rights, terrestrial, cable, and satellite.
On or about November 3,1998, APII licensed the
following rights in Malaysia to Suraya Filem
Production for five years with respect to "Tear It
Down" and "Resolution" for a licensing fee of U.S.
$2,500: (a) video rights, home video cassette,
commercial video, and home sell-thru; (b) pay-per-view
rights, residential, non-residential, and demand view;
(c) pay TV rights, terrestrial, cable, and satellite;
and (d) free TV rights, terrestrial, cable, and
satellite.
On or about March 25, 1998, APII licensed the
following rights in Taiwan to Ta Lai Hwa Jaan Films
Co., Ltd. for seven years with respect to "Killers"
for licensing fee of U.S. $7,000: (a) cinematic
rights, theatrical, non-theatrical, and public video;
(b) video rights, home video cassette, commercial
video, home sell-thru, and video gram; (c) ancillary
rights, hotels airlines, and ships flying the
Taiwanese flag and without bookings in the United
States; (d) pay-per-view rights, residential,
non-residential, and demand view; (e) pay TV rights,
terrestrial, cable, and satellite; and (f) free TV
rights, terrestrial, cable, and satellite.
On or about May 20, 1998, APII licensed the
following rights in Taiwan to Hwa Jaan Films Co. for
seven years with respect to "Paper Dragon" for a
licensing fee of U.S. $5,000: (a) video rights, home
video cassette, commercial video, home sell-thru,
video gram, and public video; (b) ancillary rights,
hotels, airlines, and ships flying the Taiwanese flag
and without bookings in the United States; (c)
pay-per-view rights, residential, non-residential and
demand view; (d) pay TV rights, terrestrial, cable,
and satellite; and (e) free TV rights, terrestrial,
cable, and satellite.
The following table categorizes the above information
by motion picture, licensed country, licensee and date:
Lord Protect Italy La Italiana Produzioni 10/30/96
Poland Novola Corp. A.V.V. 10/30/96
Russia Dream Co., Ltd. 10/30/96
Taiwan USR Entertainment Inc. 10/30/96
Latin America Global Communications 11/18/97
Turkey Yen Guven Filmcilik 11/10/97
Indonesia Indo-American Entertain, Inc. 3/18/97
Thailand Right Pictures Co., Ltd. 3/17/97
Hungary Power Video 3/5/97
Malaysia Suraya Film Production 3/2/98
Philippines Conrad Puzonn 3/2/98
The Maze Latin America Global Communications 11/18/97
Russia Worldvision Communications 11/6/97
Italy Glickson Investments Ltd. 6/2/97
Lancelot Latin America Global Communications 11/18/97
Indonesia Pt. Parkit Films 11/10/97
Turkey Yen Guven Filmcilik 11/10/97
Russia Worldvision Communications 11/6/97
Poland Nuvola Corporation AVV 5/14/98
Malaysia Suraya Film Production 3/2/98
Dead Homes Latin America Global Communications 11/18/97
Thailand Right Pictures Public Company 11/4/97
Destiny of
Marty Fine Latin America Global Communications 11/18/97
Killers Uruguay Mark Findley
International Corp 11/11/97
France Metropolitan Film Export 6/24/97
Brazil Park Pictures &
Entertainment Corp. 6/24/97
Germany Splendid Film Gkein BmbH 6/5/97
Benelux Exclusive Film and Video 5/28/97
Malaysia Sunny Film Corporation Sdn Bhd 5/28/97
Peru, Ecuador
Columbia Aiwastar Ltd. 5/28/97
Korea Oz Cinema 3/17/97
Thailand Right Pictures Co., Ltd. 3/17/97
Japan Pueblo Film Distribution 3/1/97
Hungary Kft.
United Kingdom Third Millenium 5/19/98
Spain Higher Dreams 9/1/98
Former
Yugoslavia Zvammir Djordavic 6/15/98
Hong Kong Mei Ah International 3/2/98
Taiwan Ta Lai Hwa Jaaan Films 3/25/98
India Global Film Dispural 3/1/98
Final Game Indonesia Pt. Parkit Films 11/10/97
Hollywood
Blvd. Russia Worldvision Communications 11/6/97
Paper Dragon Taiwan HWA Jaan Films Co. 5/20/98
Turkey Yen Taal Film 3/2/98
Mexico Duplitek 3/3/98
Russia Worldvision Communications 2/27/98
Latin America Global Communications 2/27/98
The Gift Malaysia Suraya Film Production 3/2/98
Salmon Run Malaysia Suraya Film Production 3/2/98
Goodbye
Paradise Malaysia Suraya Film Production 3/2/98
Russia Worldvision Communications 2/27/98
Resolution Russia Worldvision Communications 2/27/98
MARKETING AND SALES PLANS FOR DOMESTIC AND
INTERNATIONAL DISTRIBUTION
Alpine intends to distribute programming in
the domestic United States market and throughout the
international market, either directly or through other
distribution companies. The distribution of films and
programs is accomplished by marketing them to
exhibitors in trade shows and by other direct
marketing methods. Distribution agreements typically
provide that the distributor will pay the print and
advertising costs incurred in marketing the films, and
will in return receive reimbursement of its costs from
the first gross revenues earned by the film, as well
as a gross revenue or net profits interest in the
film. Film distributors may give minimum guarantees
for sales volumes and commit to pay a minimum amount
regardless of actual sales. Foreign distributors often
pay a fixed price up front and collect all gross
revenues from the exhibition of the film in their
territory for their own account.
Television programs are generally sold
directly to television stations and networks for
licensing fees, whereby the producer can retain the
right to sell the program in other markets and in
syndication after its initial showing. Once full
length motion pictures have had a theatrical release,
they often can subsequently be distributed to
television stations, cable television operators and
home video sales and rental companies. In this regard,
to the extent feasible, Alpine intends to acquire the
licensing rights to all of the ancillary rights to the
programming distributed by it, including the right to
distribute home videos, CD-ROM programs, interactive
games, soundtracks, sequels and other applications
based on the programming. Alpine may distribute
projects produced by its affiliates, or by
unaffiliated producers. The terms and conditions of
the Sales Agency Agreement (distribution agreements)
are negotiated by management in arms length
transactions with unaffiliated producers, or
determined in its discretion when entered into with
its affiliates.
A "sales campaign", together with marketing
costs, will comprise the bulk of the distribution
costs for each film or program. The relative cost of
the sales campaign will vary based on the market
potential of the program. The core of the sales
campaign is the cost of copies of the program
including release prints and the cost of advertising
the program in all media. Other elements of the sales
campaign may include a "one" sheet (or posters), the
press sheet (small size poster) and the press kit, the
theatrical trailer, the video promotion reel,
television and radio spots, trade paper, trade
magazine, newspaper and magazine advertising layouts,
and pre and post-release public relations including an
electronic press kit.
An artist is commissioned to create the basic
art for the one-sheet. Specialized editors are
commissioned to create the theatrical trailer, video
promotional reel, and the radio and television spots.
The one-sheet and other sales materials feature the
basic art with the movie title and the
paid-advertising credits. The press sheet is usually a
single page. On the front side it features the same
front cover as the one sheet, while the back contains
a synopsis and a list of credits for both cast and
crew. The theatrical trailer is usually from 90
seconds to three-and-one-half minutes long. An editor
who specializes in trailer cutting is hired with the
goal of creating a trailer which captivates the
viewers and entices them to see the program in its
entirety when released theatrically. The video
promotional reel may be longer than the theatrical
trailer, as it will be used in smaller presentations
(typically on a private basis). Television and radio
advertisements are cut to specific lengths: 15, 30 or
60 seconds. The trade paper and trade magazine
advertisements are designed specifically for full-page
insertion announcing availability of the program. The
press kit contains a complete biographical breakdown
of all key cast and crew members, an extensive
synopsis, a complete list of all credits, six black
and white stills depicting scenes from the picture,
and a copy of the press sheet. All of these elements
are enclosed in a corporate folder for distribution.
TRADE SHOW MARKETING
Alpine intends, either by itself or with an
affiliate, to maintain an office at each of the major
film markets (AFM in Los Angeles, during late February
early March; MIP, in Cannes, France during April;
Cannes Film Festival and Market in Cannes, France
during May; MIPCOM in Cannes, France during early
October; and MIFED in Milan, Italy during late October
and early November). Alpine anticipates that it will
attempt to establish a presence at the numerous film
festivals and minor markets held throughout the world
each year such as the USA Film Festival in Park City,
Utah and the IFP in New York City.
COMPETITION
The entertainment industry is intensely
competitive. The competition comes from companies
within the same business and companies in other
entertainment media which create alternative forms of
leisure entertainment. Alpine competes with several
"major" film studios (the Walt Disney Company,
Paramount Pictures Corporation, Universal Pictures,
Columbia Pictures, Tri-Star Pictures, Twentieth
Century Fox, Warner Brothers, Inc. and MGM/UA) which
are dominant in the motion picture industry, as well
as numerous independent motion picture and television
production and distribution companies, television
networks and pay television systems. These companies
compete for the acquisition of literary properties,
the services of performing artists, directors,
producers and other creative and technical personnel,
and production financing. Many of the organizations
with which Alpine competes have significantly greater
financial and other resources than does Alpine.
There can be no assurance of the economic
success of any entertainment project since the
revenues derived from the production and distribution
of motion pictures and programs (which do not
necessarily bear a direct correlation to the
production or distribution costs incurred) depend
primarily upon their acceptance by the public, which
cannot be predicted. Alpine's films compete for
audience acceptance and exhibition outlets with motion
pictures produced and distributed by other companies.
As a result, the success of any of Alpine's films is
dependent not only on the quality and acceptance of
that particular film, but also on the acceptance of
other competing films released into the marketplace at
or near the same time.
The entertainment industry in general, and the
motion picture industry in particular, are continuing
to undergo significant changes, primarily due to
technological developments. These developments have
resulted in the availability of alternative and
competing forms of leisure time entertainment,
including pay/cable television services and home
entertainment equipment such as videocassette, video
games and computers. Such technological developments
have also resulted in the creation of additional
revenue sources through the licensing of rights with
respect to such new media, and potentially could lead
to future reductions in the costs of producing and
distributing motion pictures. In addition, the
theatrical success of a motion picture remains a
crucial factor in generating revenues in other media
such as videocassette and television. Due to the rapid
growth of technology, shifting consumer tastes, and
the popularity and availability of other forms of
entertainment, it is impossible to predict the overall
effect these factors will have on the potential
revenue from and profitability of feature-length
motion pictures.
There are many companies engaged in the
acquisition, production and the distribution of
feature length motion pictures. Many of these are
seasoned companies with substantially greater
resources, financial and otherwise, and more diverse
or well known motion picture projects than Alpine. The
financial resources, established distribution
arrangements, and more diverse or better known motion
picture projects may provide such other companies with
competitive advantages over Alpine. There can be no
assurance that Alpine will be able to compete
effectively.
The distribution of theatrical motion pictures
is also a highly competitive and speculative business
involving a high degree of risk relative to the
marketing, releasing, distribution, and other
exploitation of films. Furthermore, each market and
territory for the distribution of films is generally
independent of all other markets, so that obtaining an
agreement for the exploitation of films in one market
or territory does not necessarily mean that a similar
agreement will be obtained in other markets and
territories. It is impossible to accurately predict
the effects that any of these competitive factors may
have on the success of films distributed by Alpine.
See "RISK FACTORS - Competition."
SEASONALITY
Alpine expects to experience seasonality in
its business, especially with respect to the
performance of its motion pictures. Audiences for
motion pictures tend to be larger during holiday
periods and to be smaller during other months.
Domestic theatrical motion picture distributors
compete with on another for access to desirable motion
picture screens, especially during Thanksgiving and
Christmas holidays and the summer season. Foreign
sales of motion pictures and other entertainment
products tend to peak when the major international
film markets are held. These film markets are
generally held in February, May and October with the
exact dates fluctuating from year to year. Video sales
generally decline during the summer months. First run
television programming is generally purchased in the
spring for exhibition in the autumn months.
INTELLECTUAL PROPERTY
Alpine may apply for a registered tradename on
the Principal Register of the United States Patent and
Trademark Office for its subsidiary "Alpine Pictures
International, Inc." Alpine intends to pursue
registration of its trademarks wherever possible and
to oppose vigorously any infringement of its marks.
Alpine is not aware of any infringing uses that could
materially affect its business or any prior claim to
trademarks that would prevent Alpine from using
trademarks in its business.
Copyrights to the motion pictures and programs
will, in almost all cases, remain with the producer of
the film or program. Alpine expects that only the
distribution rights relating to the films will be
acquired by it. Alpine intends to take all steps
necessary to protect its interest in any copyrights,
including filing a public notice of such interest in
the copyright, if appropriate.
GOVERNMENT REGULATION
In 1994, the United States was unable to reach
agreement with its major international trading
partners to include audiovisual works, such as
television programs and motion pictures, under the
terms of the General Agreement on Trade and Tariffs
Treaty ("GATT"). The failure to include audiovisual
works under GATT allows many countries (including
members of the European Union, which consists of
Belgium, Denmark, Germany, Greece, Spain, France,
Ireland, Italy, Luxembourg, the Netherlands, Portugal
and the United Kingdom) to continue enforcing quotas
that restrict the amount of American programming which
may be aired on television in such countries. The
Council of Europe has adopted a directive requiring
all member states of the European Union to enact laws
specifying that broadcasters must reserve a majority
of their transmission time (exclusive of news, sports,
game shows and advertising) for European works. The
directive does not itself constitute law, but must be
implemented by appropriate legislation in each member
country. In addition, France requires that original
French programming constitute a required portion of
all programming aired on French television. These
quotas generally apply only to television programming
and not to theatrical exhibition of motion pictures,
but quotas on the theatrical exhibition of motion
pictures could also be enacted in the future. There
can be no assurance that additional or more
restrictive theatrical or television quotas will not
be enacted or that countries with existing quotas will
not more strictly enforce such quotas. Additional or
more restrictive quotas or more stringent enforcement
of existing quotas could materially and adversely
affect the business of Alpine by limiting its ability
to fully exploit the programs internationally.
Distribution rights to motion pictures are
granted legal protection under the copyright laws of
the United States and most foreign countries. These
laws provide substantial civil and criminal sanctions
for unauthorized duplication and exhibition of motion
pictures. Motion pictures, musical works, sound
recordings, art work, still photography and motion
picture properties are separate works, subject to
copyright under most copyright laws, including the
United States Copyright Act of 1976, as amended.
Alpine plans to take appropriate and reasonable
measures to secure, protect and maintain or obtain
agreements to secure, protect and maintain copyright
protection for the programs under the laws of
applicable jurisdictions. Management is aware of
reports of extensive unauthorized misappropriation of
videocassette rights to motion pictures. Motion
picture piracy is an industry-wide problem. The Motion
Picture Association of America, an industry trade
association (the "MPAA"), operates a piracy hotline
and investigates all reports of such piracy. Depending
upon the results of such investigations, appropriate
legal action may be brought by the owner of the
rights. Depending upon the extent of the piracy, the
Federal Bureau of Investigation may assist in these
investigations and related criminal prosecutions.
Motion picture piracy is an international as
well as a domestic problem. Motion picture piracy is
extensive in many parts of the world, including South
America, Asia (including Korea, China and Taiwan), the
countries of the former Soviet Union and the former
Eastern bloc countries. In addition to the MPAA, the
Motion Picture Export Association, the American Film
Marketing Association and the American Film Export
Association monitor the progress and efforts made by
various countries to limit or prevent piracy. In the
past, these various trade associations have enacted
voluntary embargoes of motion picture exports to
certain countries in order to pressure the governments
of those countries to become more aggressive in
preventing motion picture piracy. In addition, the
United States government has publicly considered trade
sanctions against specific countries which do not
prevent copyright infringement of United States
produced motion pictures. There can be no assurance
that voluntary industry embargoes or United States
government trade sanctions will be enacted. If
enacted, such actions could impact the amount of
revenue that Alpine realizes from the international
distribution of the programs depending upon the
countries subject to such action and the duration of
such action. If not enacted or if other measures are
not taken, the motion picture industry (including
Alpine) may continue to lose an indeterminate amount
of revenues as a result of motion picture piracy.
The Code and Ratings Administration of the
MPAA assigns ratings indicating age-group suitability
for theatrical distribution of motion pictures. Alpine
expects that the program producers will follow the
practice of submitting the programs for such ratings.
United States television stations and
networks, as well as foreign governments, impose
additional restrictions on the content of motion
pictures which may restrict in whole or in part
theatrical or television exhibition in particular
territories. Management's current policy is to
distribute motion pictures for which there will be no
material restrictions on exhibition in any major
territories or media. This policy often requires
production of "cover" shots or different photography
and recording of certain scenes for insertion in
versions of a motion picture exhibited on television
or theatrically in certain territories. There can be
no assurance that current and future restrictions on
the content of the programs may not limit or affect
Alpine's ability to exhibit it in certain territories
and media.
MERGER WITH ALPINE RELEASING PARTNERSHIPS L.P.
Alpine Pictures International, Inc. served as
the general partner Alpine Releasing Partners L.P., a
California limited partnership. On February 15, 1998,
Alpine Releasing Partners L.P. ("ARPLP") merged into
Alpine Pictures International Inc. ("APII"). Under
the terms of the merger agreement, APII issued one
share of its common stock for each $0.85 of limited
partnership interests in ARPLP. At the time of the
merger, ARPLP had issued an aggregate of $1,138,000
limited partnership interests. As a result of the
conversion of ARPLP interests into APII's common
stock, APII issued an aggregate of 1,338,824 shares of
Alpine to the limited partners of ARPLP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Alpine was formed to acquire the rights to and
to distribute in the domestic or international markets
motion pictures or other entertainment media
programming. Alpine is engaged in the production and
distribution of quality films in domestic and
international markets including theatrical exhibition,
home videos, network television, cable television, pay
per view cable television, and non-theatrical
exhibitors such as airlines, schools, cruise ships,
correctional facilities, etc. Alpine anticipates that
it may participate in other aspects of the film
industry, including the acquisition, production and
sale of entertainment media properties or the
acquisition of companies, or the assets of companies,
involved in the development, production, distribution,
acquisition or sale of entertainment media properties
either by itself or through affiliates or joint
venture or other relationships.
Alpine enters into Sales Agency Agreements
with the owners or producers of a motion picture for
the exclusive rights to distribute and market such
film. Alpine pays an agreed production fee to the
owner/producer for such rights. Alpine receives
reimbursement of this production fee and reimbursement
of its distribution costs (up to a negotiated ceiling
amount) as well as an agreed percentage of the
revenues derived from the exploitation of the film.
For each motion picture that Alpine intends to
distribute, it enters into licensing agreements with
one or more "subdistributors" for licensing rights in
specified geographical locations to certain specified
rights such as theatrical rights, non-theatrical
rights, home video rights, television rights, or other
media rights (sound recording, public performance,
sheet music publication, merchandising). Alpine
receives a fee from each "subdistributor" as well as a
percentage of the revenues derived from the use of the
licensed rights.
RESULTS AND PLAN OF OPERATIONS
Alpine has two subsidiaries only one of which
has operations, Alpine Pictures International, Inc.
which has suffered losses from operations since
inception. Alpine Pictures International, Inc. has
entered into distribution agreements for over 10
movies and has entered into over 30 "subdistributor"
agreements.
Alpine intends to develop operations of its
newly-created subsidiary, Alpine Television, Inc.
Alpine anticipates that it may, through its
own development or acquisition of existing entities,
enter into other areas of the entertainment industry,
including motion picture and television development
and production.
LIQUIDITY AND CAPITAL RESOURCES
Alpine has executed a non-interest bearing
convertible promissory note in favor of one of its
shareholders, Alpine Pictures, Inc., for an aggregate
of $2,052,000 against which it has borrowed, as of the
date hereof, an aggregate of $1,200,000. Alpine
anticipates that it will borrow the entire amount
available to it. The promissory note is convertible
into shares of Alpine common stock at a conversion
ratio of $.27 of outstanding loan amount per share
converted. Alpine Pictures will distribute the
promissory note among its shareholders upon
effectiveness of this registration statement and such
shareholders will have the right to convert all or any
of such portion of the promissory note as distributed
to them.
Alpine believes that the proceeds of this
offering in addition to the revenues from its current
operations and loan from its shareholder will be
sufficient to fund Alpine's operations for the next 12
months. If Alpine receives revenues greater than the
minimum offering amount, then Alpine will be able to
implement its business plan more fully and more
expeditiously.
Alpine anticipates revenues to increase as a
result of acquisitions of higher quality films and
television products made from the proceeds of this
offering. Alpine's marketing plan anticipates that
proceeds from this offering will also permit Alpine to
increase its national exposure through attendance at
additional trade shows and film festivals.
Alpine anticipates that it may make a stock
exchange offer to Alpine Pictures, Inc., an affiliated
operating film production company. Certain of the
directors and officers of Alpine are also directors
and officers of Alpine Pictures, Inc. Management
believes that the integration of Alpine Pictures, Inc.
into the operations of Alpine would provide the
company with the opportunity to distribute and produce
films eliminating some of the necessity of obtaining
distribution rights from third-parties. No agreement
or terms have been reached or finalized, but any
agreement would likely involve the issuance of stock
of Alpine in exchange of the outstanding stock of
Alpine Pictures, Inc. Such issuance of stock may
dilute the value of the common stock then outstanding.
FISCAL YEAR ENDED DECEMBER 31, 1998 COMPARED TO FISCAL
YEAR ENDED DECEMBER 31, 1997
APII had an decrease in revenues for the year
ended December 31, 1998 compared to the year ended
December 31, 1997 resulting from an increase in the
number of film license sales.
Operating expenses increased from $786,137 for
the year ended December 31, 1997 to $964,323 for the
year ended December 31, 1998 primarily due to
increased administrative expenses and increased film
marketing and distribution expenses.
Because of the increase in operating expenses,
APII had an increase in net loss from $707,696 for the
year ended December 31, 1997 to $913,805 for the year
ended December 31, 1998.
THREE MONTH PERIOD ENDED MARCH 31, 1999
The unaudited consolidated financial
statements for Alpine Entertainment, Inc. and
subsidiaries are combined statements of its subsidiary
Alpine Pictures International, Inc. The comparative
balance sheet as of December 31, 1998, combines Alpine
Entertainment, Inc. and Alpine Pictures International,
Inc. Comparable consolidated figures for the period
ended March 31, 1998 are not available.
Consolidated total operating expenses were
$495,386 for the three month period ended March 31,
1999 and
the consolidated net loss was $446,358 for the three
month period ended March 31, 1999.
MANAGEMENT
OFFICERS AND DIRECTORS
The following table sets forth certain
information with respect to Alpine's directors,
executive officers and key consultants
NAME POSITION
Ryan Carroll Chief Executive Office,
Chairman of Board
Roland Carroll President, Director
Greg Cozine Vice President of Finance and Sales
Director
Paul Miller Vice President of Operations
Rene Tor Vice President of
Foreign/Domestic Sales
Tom Hamilton Vice President of Marketing and
Production
Ernani V. Di Massa Director of Television Operations
Scott Towle Executive Programming Consultant
All directors hold office until the next
annual meeting of stockholders and until their
successors are elected. Officers are elected to serve,
subject to the discretion of the Board of Directors,
until their successors are appointed.
RYAN J. CARROLL, 40, serves as a Chief
Executive Officer and director of Alpine. Mr. Carroll
has been a director and principal shareholder of
Alpine Pictures International, Inc. since its
inception in July 1996. Since its inception in
September, 1995, Mr. Carroll has been the secretary, a
director and a principal shareholder of Alpine
Pictures, Inc., an affiliated motion picture
production company. Mr. Carroll is a 50% shareholder
and serves as a director and secretary of Carroll
Media, Inc., an affiliated California corporation
engaged in the entertainment business, since its
inception in January 1994. From February 1996 to the
present, Mr. Carroll has served as chairman of the
board and a principal shareholder of Teleshare, Inc.,
a California telecommunications corporation. In 1981,
Mr. Carroll was appointed Artistic Director of
Chicago's Mantisis Theater Company. From 1985 to
1986, Mr. Carroll served as Artistic Director with
Paragon Arts International, Inc., Los Angeles,
California, an independent finance, production and
distribution company whose credits include Witchboard
and Night Angel. From 1986 to 1988, Mr. Carroll
served as president of G.C.O. Pictures, Incorporated,
an independent film production company he co-founded
with Roland Carroll. Mr. Carroll was an executive
producer of Season of Fear starring Ray Wise, Michael
J. Polard and Clancy Brown, distributed by MGM/UA.
Mr. Carroll received his C.F.A. degree in 1982 from
the Goodman School of Drama at DePaul University in
Chicago, Illinois.
On November 17, 1997, the Department of
Corporations for the State of California issued a
desist and refrain order against Alpine Pictures,
Inc., Roland Carroll, Ryan Carroll and Carroll Media,
Inc., which requires them to desist and refrain from
the offer or sale in California of any unqualified or
non-exempt security. The order does not address any
specific offering. On July 9, 1999, the State of
California filed a complaint against Teleshare, Inc.,
Alpine Pictures, Lord Protector, Cavalier Partners,
Roland Carroll and Ryan Carroll alleging violations of
the California Corporation Code and seeking (i) a
permanent injunction against the defendants against
further violations of the California Corporation Code
(ii) recission offers to certain purchasers of the
Lord Protector and Cavalier Partners partnership
interests and (iii) payment of fees to offset the
court administrative and investigative costs. The
defendants have filed a stipulation with the court for
entry of a permanent injunction and the other
requested relief.
ROLAND CARROLL, 44, serves as President and a
director of Alpine. Mr. Roland has been a principal
shareholder and director of Alpine Pictures
International, Inc. since its inception in July 1996.
Since its inception in September 1995, Mr. Carroll has
served as the president, chairman of the board and a
principal shareholder of Alpine Pictures, Inc., an
affiliated motion picture production company. Mr.
Carroll is also a 50% shareholder, chairman of the
board and president of Carroll Media, Inc., an
affiliated California corporation engaged in the
entertainment business, since its inception in January
1994. From February 1996 to the present, Mr. Carroll
has served as a director and a principal shareholder
of Teleshare, Inc., a California telecommunications
corporation. In 1985, Mr. Carroll co-founded and
served as president of Paragon Arts International, Los
Angeles, California, an independent finance,
production and distribution company whose credits
include Witchboard and Night Angel. From 1986 to
1988, Mr. Carroll served as an executive producer at
G.C.O. Pictures, located in Los Angeles, California,
overseeing the production of the feature length film
Season of Fear. His responsibilities included
financing, selection of key production personnel,
monitoring of production progress and negotiating
distribution of Season of Fear with MGM/UA Studios.
Mr. Carroll has served from time to time as an
independent consultant for the production of
television programming. Mr. Carroll attended the
University Southern California School of
Cinema/Television from 1979 to 1981.
On November 17, 1997, the Department of
Corporations for the State of California issued a
desist and refrain order against Alpine Pictures,
Inc., Roland Carroll, Ryan Carroll and Carroll Media,
Inc., which requires them to desist and refrain from
the offer or sale in California of any unqualified or
non-exempt security. The order does not address any
specific offering. On July 9, 1999, the State of
California filed a complaint against Teleshare, Inc.,
Alpine Pictures, Lord Protector, Cavalier Partners,
Roland Carroll and Ryan Carroll alleging violations of
the California Corporation Code and seeking
a permanent injunction against the defendants
against further violations of the California
Corporation Code;
recission offers to certain purchasers of the
Lord Protector and Cavalier Partners partnership
interests; and
payment of fees to offset the court
administrative and investigative costs.
The defendants have filed a stipulation with
the court for entry of a permanent injunction and the
other requested relief.
GREG COZINE, 40, serves as a director of
Alpine. Mr. Cozine has served as a director of Alpine
Pictures International, Inc. since March, 1997. Since
January 1996, Mr. Cozine has served as a vice
president and a shareholder of Alpine Pictures, Inc.,
an affiliated motion picture production company.
From 1990 to 1992, Mr. Cozine was manager of
operations and senior marketing consultant for Gold
Shore Land Corporation, Los Angeles, California where
he managed all sales for a real estate development
project located north of Los Angeles, California.
From 1987 to 1990, Mr. Cozine was founder and chief
executive officer of NCN Financial Group, Inc. where
he handled various financial products including energy
related joint ventures and feature film venture
capital projects.
PAUL MILLER, 31, serves as a Vice President of
Alpine. From April, 1996 to 1998, Mr. Miller was
general partner of Cavalier Partners L.P. and founder,
sole shareholder and director of Desert Star, Inc., an
entertainment production company established in 1996.
In January, 1998, Cavalier Partners L.P. consented to
an order from the State of Michigan to cease and
desist from any violation of the Michigan securities
laws and paid administrative costs in the amount of
$750. From 1995 to 1996, Mr. Miller was the associate
producer of the full length motion picture Lord
Protector for which Alpine has distribution rights.
See "BUSINESS Current Operations". From 1992 to 1994,
Mr. Miller was the owner of PM Productions, a Los
Angeles, California, entertainment company engaged in
writing, producing and directing commercials, training
videos and infomercials. From 1989 to 1992, Mr.
Miller was a partner in Concept Product Designers
which produced commercials and infomercials for
private label hair care clients primarily directed
toward the Hispanic market. Mr. Miller attended the
University of Southern California from 1985 to 1988
with a major in Communications Arts and Sciences,
including film making.
RENE TORRES , 43, serves as a Vice President
of Alpine. Since its inception in July 1996, Mr.
Torres has served as president of Alpine Pictures
International, Inc. From 1996 to 1999, Mr. Torres
served as President of Meridian Pictures, Inc., an
independent film company located in Irvine,
California, which produced the nationally released
feature film Night of the Demons. While at Meridian,
Mr. Torres was responsible for the implementation and
supervision of limited partnership offerings that
funded film production. In 1985, Mr. Torres was a
founding member of Paragon Arts International, Los
Angeles, California, an independent finance,
production and distribution company whose credits
include Witchboard and Night Angel. In 1990, Mr.
Torres served as the president of Box Office Partners,
located in Los Angeles, California, which company
participated in the acquisition of The Kid, starring
C. Thomas Howell, Metamorphosis, The Alien Factor, a
high-tech science fiction film, and The Treasure, a
family adventure. Mr. Torres received his Bachelor of
Arts degree in Marketing from Milwaukee Area Technical
College in 1976.
TOM HAMILTON, 55, serves as a Vice President
of Alpine. Mr. Hamilton has served as secretary and
executive vice president of Alpine Pictures
International, Inc. From 1985 to 1990, Mr. Hamilton
has worked at Paragon Arts International, Los Angeles,
California, an independent finance, production and
distribution company whose credits include Witchboard
and Night Angel. as an associate producer of motion
pictures. From 1990 to 1992, Mr. Hamilton was the
executive vice president-director of European
operations for Euro-Films, Inc., a Franco American
international film finance and distribution company.
Mr. Hamilton was based in Paris, France where he was
responsible for all European markets. Mr. Hamilton
attended the University of Grenoble in Grenoble,
France in 1969.
ERNANI V. DI MASSA, 52, has served as the
Director of Television Operations for Alpine
Television, Inc. since September, 1998. From 1996 to
1998, Mr. Di Massa was an independent producer and
formed Di Massa Productions, Inc. Mr. Di Massa is
currently working on several television projects
including a new talk show, a variety show, a medical
series, and a game show. From 1989 to 1996, Mr. De
Massa was vice president of programming development
subsequently senior vice president of programming and
development for KingWorld. From 1982 until 1989, Mr.
Di Massa produced and wrote for several television
executives including Fred Silverman and Brandon
Tartikoff, and television talent including Alan
Thicke, Tony Orlando, Bob Costas, David Copperfield,
Billy Crystal and others. Prior to 1982, Mr. Di Massa
worked for the NBC Television Network where he
produced The Regis Philbin Show and helped create the
network daytime hour Fantasy. Mr. Di Massa obtained
his Bachelors of Science in Psychology from LaSalle
University in 1969. He obtained a Masters Degree in
clinical psychology from Temple University in 1971.
SCOTT TOWLE, 52, has been the Executive
Programming Consultant to the Company since March,
1999. Prior to joining the Company, Mr. Towle was the
President of Domestic Distribution for KingWorld, a
domestic supplier of first run programming for
television. From 1986 to 1990, Mr. Towle was the
president of Domestic Distribution for Orion
Television.
CERTAIN RELATIONSHIPS AND POSSIBLE CONFLICT OF INTEREST
Roland Carroll serves as president and a
director, and Ryan Carroll serves as chief financial
officer and a director of Alpine Pictures, Inc., an
operating California motion picture production company
formed in 1995. Messrs. Carroll are controlling
shareholders of Alpine Pictures, Inc. Messrs. Cozine,
Torres and Hamilton are also directors of Alpine
Pictures, Inc. Alpine Pictures, Inc. was a
shareholder of Alpine Pictures International, Inc.,
representing 25% of the then issued and outstanding
shares of Alpine Pictures International, Inc., prior
to acquisition by Alpine of such shares.
Alpine Pictures, Inc. has produced or is in
the process of producing the following full length
motion pictures An Angel's Gift, An Angel On Abbey
Street, Shalakan, Rebel, Lancelot - Guardian of Time,
and Lord Protector. Through its subsidiary, Alpine
has entered into distribution agreements with Alpine
Pictures, Inc. for the distribution rights of certain
of these films. See "BUSINESS Current Operations".
Alpine anticipates that it will continue to distribute
films produced by Alpine Pictures, Inc. or affiliates
thereof. The distribution agreements entered into
will not be negotiated on an arms'-length basis, but
Alpine anticipates that terms of such agreements will
be favorable to Alpine.
The officers and directors of Alpine may face
a conflict of interest in regard to their management
of the operations of Alpine Pictures, Inc. and in
participation in any other entities which engage in
activities similar to those of Alpine. Alpine
anticipates that Alpine Pictures, Inc. will produce
motion pictures and other theatrical projects and
Alpine will distribute such projects. However, there
is no assurance that certain opportunities may be
presented to Alpine Pictures, Inc. which because not
then available to Alpine would be detrimental to
Alpine. Such officers and directors may be subject to
various conflicts of interest, including among others,
the negotiation of agreements between Alpine and
Alpine Pictures, Inc. for the distribution rights of
films produced by it. In addition, each of the
officers and directors of Alpine has other duties and
responsibilities with Alpine Pictures, Inc. that may
conflict with the time which might otherwise be
devoted to the duties with Alpine. The officers and
directors of Alpine will endeavor in good faith to
satisfy its fiduciary duties to Alpine.
EXECUTIVE COMPENSATION
Alpine is a newly formed corporation and has
not paid salaries. Alpine has agreed to compensate
Ryan Carroll as Chief Executive Officer an annual
salary of $91,000 and Roland Carroll, as President ,
an annual salary of $91,000. In addition, Alpine
provides health insurance coverage and a 401(k) plan
for its employees and a car allowance. No written
employment agreements have been entered into as of the
date hereof and the Board of Directors may at its
option determine additional compensation or benefits
to be granted to one or all of Alpine's employees.
Directors do not receive cash compensation for
their services to Alpine as directors, but are
reimbursed for expenses actually incurred in
connection with attending meetings of the Board of
Directors.
EMPLOYMENT AGREEMENTS AND STOCK OPTION PLAN
Alpine has not entered into any employment
agreements with its executive officers or other
employees to date. Alpine may enter into employment
agreements with them in the future.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
The Certificate of Incorporation and Bylaws of
Alpine provide that Alpine shall, to the fullest
extent permitted by applicable law, as amended from
time to time, indemnify all directors of Alpine, as
well as any officers or employees of Alpine to whom
Alpine has agreed to grant indemnification.
Section 145 of the Delaware General
Corporation Law ("DGCL") empowers a corporation to
indemnify its directors and officers and to purchase
insurance with respect to liability arising out of
their capacity or status as directors and officers
provided that this provision shall not eliminate or
limit the liability of a director
For any breach of the director's duty of
loyalty to the corporation or its stockholders;
For acts or omissions not in good faith or
which involve intentional misconduct or a knowing
violation of law;
Under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or
dividends on,
capital stock) of the General Corporation
Law of the State of Delaware; or
For any transaction from which the director
derived an improper personal benefit.
The Delaware General Corporation Law provides
further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to
which the directors and officers may be entitled under
the corporation's by-laws, any agreement, vote of
shareholders or otherwise.
The effect of the foregoing is to require
Alpine to indemnify the officers and directors of
Alpine for any claim arising against such persons in
their official capacities if such person acted in good
faith and in a manner that 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.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING Alpine PURSUANT TO THE FOREGOING
PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS
THEREFORE UNENFORCEABLE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain
information as of the Effective Date of this
Prospectus regarding the beneficial ownership of
Alpine's Common Stock by each officer and director of
Alpine and by each person who owns in excess of five
percent of Alpine's Common Stock.
Name, Position and Shares of Common Percentage of Shares
Address Stock Beneficially of Class Owned
Owned Prior to After
Offering Offering(2)
Ryan Carroll (3) 775,000 14.7% 11.9%
Chief Executive Officer
Chairman of Board
21111 Celtic Street
Chatsworth, California 91311
Roland Carroll 775,000 14.7% 11.9%
President, Director
11319 Dona Teresa
Studio City, California 916104
Greg Cozine 350,000 6.6% 5.4%
Vice President, Director
1810 Bentley Avenue
Los Angeles, California 90034
Tom Hamilton 350,000 6.6% 5.4%
Vice President
10082 Stony Brook Drive
Huntington Beach, California 92646
Rene Torres 350,000 6.6% 5.4%
Vice President
6656 Columbus Avenue
Van Nuys, California 91405
Paul Miller 350,000 6.6% 5.4%
Vice President
1727 Glendon Avenue
Los Angeles, California 90024
Erni DiMasa 0 0% 0%
15233 Ventura Boulevard
Sherman Oaks, California 91403
All officers and directos
as a group (7 persons) 2,950,000 55.9% 45.2%
Alpine Pictures, Inc. 1,800,000 34.12% 27.6%
6919 Valjean Avenue
Van Nuys, California 91406
______________
(1) Based upon 5,275,000 shares of Common Stock
outstanding prior to the offering.
(2) Assuming Maximum Offering sold (1,250,000)
resulting in 6,525,000 shares of Common Stock
outstanding.
(3) Mr. Carroll is a controlling shareholder of
Alpine Pictures, Inc. which owns 1,800,000
shares of Alpine's outstanding common stock.
(4) Mr. Carroll is a controlling shareholder of
Alpine Pictures, Inc. which owns 1,800,000
shares of Alpine's outstanding common stock.
RELATED TRANSACTIONS
Alpine has executed a convertible promissory
note, without interest, in favor of Alpine Pictures,
Inc., a shareholder of Alpine, up to an amount not
greater than $2,052,000 the principal of which is
payable in full of the amount borrowed on December 31,
2001. As of the date hereof, Alpine has borrowed an
aggregate of $1,200,000. Alpine anticipates that it
will borrow the full amount provided by the promissory
note. Upon effectiveness of this registration
statement, Alpine Pictures intends to distribute
promissory note interests for the full amount of the
promissory note to its shareholders. Messrs. Roland
and Ryan Carroll are directors, officers and
controlling shareholders of Alpine Pictures, Inc. and
will receive proportionate promissory note interest.
The holders of the promissory note may convert their
interest into shares of common stock of Alpine at a
conversion ratio of $0.27 of promissory note principal
for each share of common stock.
SELLING SECURITYHOLDER
Alpine Pictures, Inc., the Selling
Securityholder and an affiliate of Alpine, intends to
distribute the promissory note interests to its
shareholders upon effectiveness hereof as a dividend
distribution without cost to such shareholders.
Alpine Pictures will not receive any remuneration or
other consideration for such dividend distribution.
As of the date hereof, the Board of Directors of
Alpine Pictures has not set a date for the dividend
distribution and the number of shareholders to receive
the promissory note interests is not yet determined
but Alpine Pictures intends to distribute the
promissory note interests upon effectiveness of this
registration statement. The promissory note interests
will be distributed amongst all the shareholders at
the time such dividend distribution is declared by the
Board of Alpine Pictures.
CONCURRENT DISTRIBUTION BY SELLING SECURITYHOLDER
This registration statement also relates to
the distribution of promissory note interests held by
Alpine Pictures, Inc. aggregating $2,052,000 from
Alpine. The promissory note interests held by each
shareholder of Alpine Pictures may be converted by
such shareholder at a conversion ratio of $.27 of
promissory note principal for each share of Alpine
common stock.
The distribution of the securities by Alpine
Pictures and the possible conversion thereof by the
shareholder receiving such distribution into shares of
common stock of Alpine will likely have an adverse
effect on the market price of the common stock being
offered for sale by the Company. The freely tradeable
shares of the common stock (the "public float") upon
effectiveness of this registration statement (other
than exercise of the Warrants), assuming all Units are
sold and the full amount of the outstanding promissory
note is converted, will be 8,850,000 shares of common
stock, of which 7,600,000 are to be distributed by
Alpine Pictures to its shareholders without
remuneration.
UNDERWRITING
Subject to the terms and conditions set forth in
the Underwriting Agreement by and among Alpine, RH
Investment Corporation (as the representative of the
underwriters) and the underwriters (the "Underwriting
Agreement"), the underwriters, as set forth below,
have agreed to make a best efforts offering of the
Alpine units, each unit consisting of one share of
common stock and one warrant for the purchase of one
share of common stock at an exercise price of $6.00
per share for a exercise period of 36 months
commencing on the Effective Date of this prospectus.
UNDERWRITER NUMBER OF UNITS
RH Investment Corporation 1,250,000
TOTAL: 1,250,000
The following summaries of certain terms and
conditions of the Underwriting Agreement and the
Representative's Warrants do not purport to be
complete statements of the terms and/or contents of
such agreements. Copies of the Underwriting Agreement
and Representative's Warrants have been filed with the
Commission as exhibits to the registration statement
and are also on file at the offices of the
Representative and Alpine. Reference is hereby made
to each such exhibit for a detailed description of the
provisions thereof which have been summarized above.
See "AVAILABLE INFORMATION."
MINIMUM OFFERING AND ESCROW ACCOUNT
In order to effect the offering, the
underwriters must sell at least the minimum number of
units within 180 days of the effectiveness of this
registration statement. If the minimum number of
units is not sold by that date, then the offering will
terminate and all funds received from sales of the
units will be returned to the purchasers. Funds
received from the sale of the first 125,000 units will
be deposited in a special escrow account to be
established at a federally insured national bank.
After the minimum offering has been sold, funds
received from additional sales will be sent directly
to Alpine.
At the time that the 250,000 units have been
sold (the minimum offering) prior to termination date,
Alpine will release the funds from the escrow account
for deposit into the working account of Alpine.
Although the Underwriters will continue to sell the
offering to attempt to reach the maximum offering
(1,500,000 units), such released funds will be used at
that time by Alpine as described herein.
MAXIMUM OFFERING
No more than 1,250,000 units will be sold.
The offering will automatically terminate when
purchases for such number of units have been made.
UNDERWRITERS COMPENSATION
Alpine has agreed to give to the underwriters,
as a commission for the sale of the units, 10% of the
sales price for each unit sold.
Alpine has agreed to pay the Representative a
Non-Accountable Expense Allowance equal to 3% of the
aggregate offering price of the units of which $5,000
per month, commencing May, 1999, of which $20,000 has
been advanced to the Representative. Pursuant to the
provisions of the Underwriting Agreement, in the event
that the public offering is terminated for any reason,
the Representative shall be reimbursed for all
accountable expenses incurred by it not to exceed an
aggregate of $85,000. Any amounts previously paid
shall be credited against any amounts due.
As part of the consideration to the
Representative for its services in connection with the
public offering described herein, Alpine has agreed to
issue to the Representative for the benefit of the
Underwriters, for nominal consideration, the
Representative's Warrants to purchase an aggregate of
up to 10% of the number of units sold in this
offering. The Representative's Warrants will be
non-redeemable and will be exercisable at an exercise
price of $6.00 (120% of the public offering price of
the shares). The Representative's Warrants will be
restricted from exercise, sale, transfer, assignment
or hypothecation, except to officers of the
Representative and members of the selling group and/or
their officers or partners, for a period of one year
from the Effective Date and will, thereafter, be
exercisable for a period of four years. The exercise
price of the Representative's Warrants was arbitrarily
determined by Alpine and the Representative and should
not be deemed to reflect any estimate of the intrinsic
value of either the Representative's Warrants, the
units or the common stock. The Representative's
Warrants will contain anti-dilution and adjustment
provisions in the event of any merger, acquisition,
recapitalization, split-up of shares, stock dividend,
sales or issuance by Alpine of stock or securities
convertible into stock by the company at a price or
conversion price less than the exercise price of the
Representative's Warrants or less than the market
price of the common stock at the time of such sale or
indebtedness or similar event, except for dilution
which would result from issuances under any stock
incentive or option plan, reasonably acceptable to the
Representative.
In connection with the underwriting of the
Company's public offering, the Company has granted to
the Representative certain "piggy back" and "demand"
registration rights. Pursuant to the terms of the
Underwriting Agreement, Alpine has granted to the
Representative, for a period of five years from the
Effective Date, the right to include for registration,
the Representative's Warrants (including the
underlying common stock) in the event that Alpine
files a registration statement under the Securities
Act of 1933 relating to the public sale of any of its
securities. Consequently, the "piggy back"
registration rights are only operative if Alpine
otherwise files a registration statement. In
addition, Alpine has agreed to register under the
Securities Act, at its expense, the Representative's
Warrants (including the underlying common stock),
upon the request of the holders of 50% or more of the
Representative's Warrants. Consequently, the "demand"
registration rights may be exercised only if the
requisite percentage of holders of the
Representative's Warrants request registration
thereof. Such request may be made at any time during
the exercise period of the Representative's Warrants.
During the period in which the Representative's
Warrants are exercisable, the holders thereof are
given the opportunity to profit from a rise in the
market price of the units, the common stock and the
warrants which may result in a dilution of the
interest of the stockholders. Alpine may find it more
difficult to raise additional equity capital if it
should be needed for its business while the
Representative's Warrants are outstanding. At any
time when the holders thereof might be expected to
exercise such warrants, the company would probably be
able to obtain additional equity capital on terms more
favorable than those provided by the Representative's
Warrants. Any profit realized on the sale of
securities issuable upon the exercise of the
Representative's Warrants may be deemed additional
underwriting compensation.
DETERMINATION OF OFFERING PRICE
There has been no previous established trading
market for the units or the warrants. The major
factors considered by Alpine and the Representative in
determining the public offering price of the units and
the exercise price of the warrants, in addition to
prevailing market conditions, were historical
performance and growth rates of Alpine's operating
subsidiary; an assessment of Alpine's management,
business potential and earning prospects; the present
state of the company's development and the above
factors in relation to market valuations of other
similar companies. The public offering price may not
bear any relationship to the assets or book value, net
worth or other criteria of value of or applicable to
Alpine.
LOCK UP AGREEMENT
The Company has agreed that it will and will
cause its officers, directors and holders of more than
5% of its common stock, to enter into an agreement not
to sell or otherwise dispose of, without the consent
of the Representative, any equity security of Alpine
for a period of one year following the Effective Date.
For a period of five years from the Effective Date,
the Company, its officers, directors and holders of
more than 5% of its common stock will provide the
Representative with prior notice of any sales of
Alpine's equity securities to be made pursuant to Rule
144.
THE UNDERWRITERS
The units being offered to the public by Alpine
are being offered at a price of $6.00 per unit as set
forth on the cover page of this prospectus. The units
are offered by the Underwriters subject to receipt and
acceptance by them, to the Underwriters' right to
reject any order in whole or in part, to approval of
certain legal matters by counsel and to certain other
conditions.
The Representative has advised the Company that
sales to certain dealers may be made at the public
offering price less a concession not in excess of 10%
or $.60 per unit. After the public offering of the
units by Alpine, the public offering price and other
selling terms may be changed by the Representative.
The Representative does not intend to confirm sales of
more than one percent of the units offered hereby to
any accounts over which it exercises discretionary
authority.
Alpine has agreed to indemnify the
Representative and others against certain liabilities,
including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising
under the Securities Act may be provided to officers,
directors or persons controlling Alpine, Alpine has
been informed that, in the opinion of the Commission,
such indemnification is against public policy and is
therefore unenforceable. The Representative has
agreed to indemnify Alpine, its directors, and each
person who controls it within the meaning of Section
15 of the Securities Act with respect to any statement
in or omission from the registration statement or the
prospectus or any amendment or supplement thereto if
such statement or omission was made in reliance upon
information furnished in writing to Alpine, or any of
its agents, by the Representative specifically for or
in connection with the preparation of the registration
statement, the prospectus, or any such amendment or
supplement thereto.
On October 29, 1998, a principal of the
Representative was given a 10 day suspension from
association with any NASD member firm, a censure and a
$10,000 fine for failure to maintain sufficient net
capital in the brokerage firm's account.
MARKET MAKING
If, at some time, Alpine meets the
requirements of the Nasdaq SmallCap Market it will
apply for listing thereon. If is should be accepted
for listing thereon, then certain underwriters may
engage in passive market making transactions in
Alpine's Common Stock in accordance with Rule 103 of
Regulation M.
Following the completion of this offering,
certain broker-dealers may be the principal market
makers for the securities offered hereby. Under these
circumstances, the market bid and asked prices for the
securities may be significantly influenced by
decisions of the market makers to buy or sell the
securities for their own account. No assurance can be
given that any market making activities, if commenced,
will be continued.
ARBITRARY DETERMINATION OF OFFERING PRICE
The offering price of the Shares has been
determined arbitrarily by Alpine. Among the factors
considered were Alpine's potential operations, current
financial conditions and financial requirements of
Alpine, estimates of the business potential and
prospects of Alpine, the domestic and international
market demand for motion pictures and other
entertainment media projects, the general condition of
the equities market, and other factors.
LIMITED STATE REGISTRATION
Alpine anticipates that it will primarily sell
the Shares in a limited number of states, depending on
the location and registration of any selling broker or
dealer that it locates. Alpine will initially qualify
or register the sales of the units in the states of
New York, California, Florida, Illinois, and Nevada.
Alpine will not accept subscriptions from investors
resident in other states unless Alpine effects a
registration therein or determines that no such
registration is required.
In order to comply with the applicable
securities laws, if any, of certain states, the
securities will be offered or sold in such states
through registered or licensed brokers or dealers in
those states. In addition, in certain states, the
securities may not be offered or sold unless they have
been registered or qualified for sale in such states
or an exemption from such registration or
qualification requirement is available and with which
Alpine has complied.
DESCRIPTION OF SECURITIES
AUTHORIZED CAPITAL
The total number of authorized shares of stock
of Alpine is one hundred million (100,000,000) shares
of Common Stock with a par value of $.0001 per share
and twenty million (20,000,000) shares of
non-designated preferred shares with a par value of
$.0001 per share.
INCORPORATION
Alpine Entertainment, Inc. (the "Company") was
incorporated under the laws of Delaware in 1998.
Alpine's Certificate of Incorporation, by-laws and
corporate governance, including matters involving the
issuance, redemption and conversion of securities, are
subject to the provisions of the Delaware General
Corporation Law, as amended and interpreted from time
to time.
COMMON STOCK
Alpine's Certificate of Incorporation
authorizes the issuance of 100,000,000 shares of
Common Stock, $.0001 value per share, of which
5,275,000 shares were outstanding as of the date hereof.
Holders of shares of Common Stock are entitled
to one vote for each share on all matters to be voted
on by the stockholders. Holders of Common Stock do not
have cumulative voting rights. Holders of Common Stock
are entitled to share ratably in dividends, if any, as
may be declared from time to time by the Board of
Directors in its discretion from funds legally
available therefor. In the event of a liquidation,
dissolution or winding up of Alpine, the holders of
Common Stock are entitled to share pro rata all assets
remaining after payment in full of all liabilities.
All of the outstanding shares of Common Stock are, and
the shares of Common Stock offered by Alpine pursuant
to this Offering will be, when issued and delivered,
fully paid and non-assessable.
Holders of Common Stock have no preemptive
rights to purchase Alpine's Common Stock. There are no
conversion or redemption rights or sinking fund
provisions with respect to the Common Stock.
All outstanding shares of Common Stock are
validly issued, fully paid and nonassessable, and all
Shares to be sold and issued as contemplated hereby
will be fully paid and nonassessable when sold in
accordance with the terms hereof and pursuant to a
valid and current prospectus. The Board of Directors
is authorized to issue additional shares, on such
terms and conditions and for such consideration as the
Board may deem appropriate without further stockholder
action.
NONCUMULATIVE VOTING
Each holder of Common Stock is entitled to one
vote per share on all matters on which such
stockholders are entitled to vote. Shares of Common
Stock do not have cumulative voting rights. The
holders of more than 50 percent of the shares voting
for the election of directors can elect all the
directors if they choose to do so and, in such event,
the holders of the remaining shares will not be able
to elect any person to the Board of Directors.
PROMISSORY NOTE
The Company is also registering for
distribution by the holder thereof to its shareholders
a promissory note in the amount of $2,052,000 and the
7,600,000 shares of common stock issuable upon
conversion of the full amount of the promissory note.
Upon effectiveness of this registration statement, the
holder of the promissory note, Alpine Pictures, Inc.,
an affiliate of Alpine, will distribute the promissory
note to its shareholders as a dividend distribution
without cost to the shareholders. Alpine Pictures
will not receive any proceeds from the distribution of
the promissory note. The shareholders of the Alpine
Pictures may convert to shares of common stock at a
conversion ratio of $0.27 per share that portion of
the promissory note distributed to them at such time
or times at their sole discretion. The promissory
note is payable to the holders thereof on December 31,
2001 in an amount equal to the principal held by that
shareholder less deduction for any shares converted.
PENNY STOCK REGULATION
The offering price of the units has been
arbitrarily determined by Alpine. If the market price
of the Alpine common stock, if a market for its common
stock develops and is maintained, falls below $5.00
per share, then the common stock of Alpine may be
considered "penny stock". Penny stocks generally are
equity securities with a price of less than $5.00 per
share other than securities registered on certain
national securities exchanges or quoted on the Nasdaq
Stock Market, provided that current price and volume
information with respect to transactions in such
securities is provided by the exchange or system.
Alpine's securities may be subject to "penny stock"
rules that impose additional sales practice
requirements on broker-dealers who sell such
securities to persons other than established customers
and accredited investors (generally those with assets
in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For
transactions covered by these rules, the broker-dealer
must make a special suitability determination for the
purchase of such securities and have received the
purchaser's written consent to the transaction prior
to the purchase. Additionally, for any transaction
involving a penny stock, unless exempt, the rules
require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission
relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the
broker-dealer and the registered representative and
current quotations for the securities. Finally,
monthly statements must be sent disclosing recent
price information on the limited market in penny
stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell
Alpine's securities.
PREFERRED STOCK
Alpine's Certificate of Incorporation
authorizes the issuance of 20,000,000 shares of
preferred stock, $.0001 par value per share. As of
the date hereof, no preferred stock has been
designated or issued. The designation of such issued
preferred stock provides that each such share of
preferred stock will have one vote on all matters on
which shareholders are entitled to vote. Preferred
stock provides for liquidation and dividend
preference, if any dividends were to be declared by
the Board of Directors.
In the case of voluntary or involuntary
liquidation, dissolution or winding up of Alpine,
holders of shares of preferred stock are entitled to
receive the liquidation preference before any payment
or distribution is made to the holders of Common Stock
or any other series or class of Alpine's stock
hereafter issued that ranks junior as to liquidation
rights to the preferred stock, but holders of the
shares of the preferred stock will not be entitled to
receive the liquidation preference of such shares
until the liquidation preference of any other series
or class of Alpine's stock hereafter issued that ranks
senior as to liquidation rights to the preferred stock
("senior liquidation stock") has been paid in full.
The holders of preferred stock and all series or
classes of Alpine's stock hereafter issued that rank
on a parity as to liquidation rights with the
preferred stock are entitled to share ratable, in
accordance with the respective preferential amounts
payable on such stock, in any distribution (after
payment of the liquidation preference of the senior
liquidation stock) which is not sufficient to pay in
full the aggregate of the amounts payable thereon.
After payment in full of the liquidation preference of
the shares of the preferred stock, the holders of such
shares will not be entitled to any further
participation in any distribution of assets by Alpine.
Neither a consolidation or merger of Alpine with
another corporation, nor a sale or transfer of all or
part of Alpine's assets for cash, securities or other
property will be considered a liquidation, dissolution
or winding up of Alpine.
The Board of Directors is authorized to
provide for the issuance of additional shares of
preferred stock in series and, by filing a certificate
pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of
shares to be included in each such series, and to fix
the designation, powers, preferences and rights of the
shares of each such series and the qualifications,
limitations or restrictions thereof without any
further vote or action by the shareholders. Any shares
of preferred stock so issued would have priority over
the Common Stock with respect to dividend or
liquidation rights. Any future issuance of preferred
stock may have the effect of delaying, deferring or
preventing a change in control of Alpine without
further action by the shareholders and may adversely
affect the voting and other rights of the holders of
Common Stock. At present, Alpine has no plans to issue
any preferred stock nor adopt any series, preferences
or other classification of preferred stock.
ADDITIONAL INFORMATION DESCRIBING STOCK
The above descriptions concerning the stock of
Alpine do not purport to be complete. Reference is
made to Alpine's Certificate of Incorporation and
by-laws which are included in the Registration
Statement of which this Prospectus is a part and which
are available for inspection at Alpine's offices.
Reference is also made to the applicable statutes of
the State of Delaware for a more complete description
concerning rights and liabilities of shareholders.
ADMISSION TO QUOTATION ON NASDAQ SMALLCAP MARKET OR
NASD OTC BULLETIN BOARD
If Alpine meets the qualifications, Alpine
intends to apply for quotation of its Securities on
the NASD OTC Bulletin Board. Until Alpine meets such
qualifications, its Securities will be quoted in the
daily quotation sheets of the National Quotation
Bureau, Inc., commonly known as the "pink sheets". If
Alpine's Securities are not quoted on the NASD OTC
Bulletin Board, a securityholder may find it more
difficult to dispose of, or to obtain accurate
quotations as to the market value of, Alpine's
Securities. The over-the-counter market ("OTC")
differs from national and regional stock exchanges in
that it (1) is not cited in a single location but
operates through communication of bids, offers and
confirmations between broker-dealers and (2)
securities admitted to quotation are offered by one or
more broker-dealers rather than the "specialist"
common to stock exchanges. To qualify for quotation
on the NASD OTC Bulletin Board, an equity security
must have one registered broker-dealer, known as the
market maker, willing to list bid or sale quotations
and to sponsor such a Company listing. If it meets
the qualifications for trading securities on the NASD
OTC Bulletin Board Alpine's Securities will trade on
the NASD OTC Bulletin Board until such future time, if
at all, that Alpine applies and qualifies for
admission for listing on the Nasdaq SmallCap Market.
There can be no assurance that Alpine will qualify or
if qualified that it will be accepted for listing of
its securities on the NASD SmallCap Market.
To qualify for admission for listing on the
Nasdaq SmallCap Market, an equity security must, in
relevant summary, (1) be registered under the
Securities Exchange Act of 1934; (2) have at least
three registered and active market makers, one of
which may be a market maker entering a stabilizing
bid; (3) for initial inclusion, be issued by a company
with $4,000,000 in net tangible assets, or
$50,000,0000 in market capitalization, or $750,000 in
net income in two of the last three years (if
operating history is less than one year then market
capitalization must be at least $50,000,000); (4) have
at a public float of at least 1,000,000 shares with a
value of at least $5,000,000; (5) have a minimum bid
price of $4.00 per share; and (6) have at least 300
beneficial shareholders.
TRADING OF SHARES
There are no outstanding options, options to
purchase, or securities convertible into, the shares
of Alpine which are not being registered hereby.
Alpine has not agreed with any shareholders, to
register their shares for sale, other than for this
registration. Alpine does not have any other public
offerings in process or proposed.
TRANSFER AGENT AND REGISTRAR
Alpine currently serves as its own transfer
agent.
REPORTS TO SHAREHOLDERS
Alpine will furnish to holders of the Shares
annual reports containing audited financial statements
examined and reported upon, and with an opinion
expressed by, an independent certified public
accountant. Alpine may issue other unaudited interim
reports to its shareholders as it deems appropriate.
LEGAL MATTERS
LEGAL PROCEEDINGS
Alpine is not a party to any litigation and
management has no knowledge of any threatened or
pending litigation against Alpine.
SECURITIES AND EXCHANGE COMMISSION AND STATE
INVESTIGATIONS OF AFFILIATE
Alpine Pictures, Inc., an affiliated company,
is the focus of a formal investigation conducted by
the United States Securities and Exchange Commission
to determine whether any federal securities laws were
violated in connection with the offering of securities
by Alpine Pictures, Inc. and several partnerships in
which it was involved. In March, 1998, Alpine
Pictures, Inc. and several of its officers, including
Roland Carroll and Ryan Carroll, were subpoenaed and
provided documents and oral testimony to the
Securities and Exchange Commission. No further action
has been taken since that date.
In January, 1998, Cavalier Partners L.P.
consented to an order from the State of Michigan to
cease and desist from any violation of the Michigan
securities laws and paid administrative costs in the
amount of $750. Paul Miller, an officer of Alpine,
served as general partner of Cavalier Partners L.P.
On November 17, 1997, the Department of
Corporations for the State of California issued a
desist and refrain order against Alpine Pictures,
Inc., Roland Carroll, Ryan Carroll and Carroll Media,
Inc., which requires them to desist and refrain from
the offer or sale in California of any unqualified or
non-exempt security. The order does not address any
specific offering.
On July 9, 1999, the State of California filed
a complaint against Teleshare, Inc., a California
telecommunications company for which Messrs. Roland
and Ryan Carroll served as directors, Alpine Pictures,
Lord Protector, Cavalier Partners, Roland Carroll,
Ryan Carroll and Stewart Whipple (the president of
Teleshare) alleging violations of the California
Corporation Code and seeking
a permanent injunction against the defendants
against further violations of the California
Corporation Code;
recission offers to certain purchasers of the
Lord Protector and Cavalier Partners partnership
interests; and
payment of fees to offset the court
administrative and investigative costs.
The defendants have filed a consent with the
court for entry of a permanent injunction and the
other requested relief without admitting or denying
the allegations of the complaint. The permanent
injunction, if issued, would restrain Alpine Pictures,
Inc., Lord Protector Partners, Cavalier Partners,
Stewart Whipple, Roland Carroll and Ryan Carroll from
offering to sell, selling, or engaging in the business
of selling any securities of any kind in violation of
the qualification or exemption requirements of the
California Corporations Code Section 251110.
In June, 1999, Alpine Pictures entered into a
settlement agreement with the State of Illinois
agreeing to make a recission offer to three investors
in regard to such investors' purchase of securities of
Alpine Pictures aggregating less then $10,000 which
sales were made in reliance on certain exemptions from
registration in Illinois prior to completion of the
required filings thereto.
LEGAL OPINION
Cassidy & Associates, Washington, D.C. has
given its opinion as attorneys-at-law that the Units,
and the securities comprising the Units, when issued
pursuant to the terms hereof will be fully paid and
non-assessable. Cassidy & Associates has passed on
the validity of the securities being issued but
purchasers of the securities offered by this
prospectus should not rely on Cassidy & Associates
with respect to any other matters.
James M. Cassidy, a principal of Cassidy &
Associates, is an officer and director and controlling
shareholder of TPG Capital Corporation, which owns
125,000 shares of the common stock of Alpine.
EXPERTS
The financial statements in this Prospectus
have been included in reliance upon the report of
Weinberg & Company, P.A., Certified Public
Accountants, and upon the authority of such firm as
expert in accounting
FINANCIAL STATEMENTS
The combined audited financial statements for
the fiscal years ended December 31, 1997 and December
31, 1996 for Alpine Pictures International, Inc. and
affiliate and the audited financial statements for the
fiscal year ended December 31, 1998 for Alpine
Entertainment, Inc. (Delaware), and the unaudited
financial statements for the period ended March 31,
1999 follow herewith.
ALPINE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENT
AS OF DECEMBER 31, 1998
ALPINE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - BALANCE SHEET AS OF DECEMBER 31, 1998
PAGE 3 - 5 - NOTES TO BALANCE SHEET AS OF DECEMBER 31, 1998
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Alpine Entertainment, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of
Alpine Entertainment, Inc.(a development stage
company) as of December 31, 1998. This financial
statement is the responsibility of Alpine's
management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall balance
sheet presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above
presents fairly in all material respects, the
financial position of Alpine Entertainment, Inc. (a
development stage company) as of December 31, 1998, in
conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
February 4, 1999 (except for Notes 4A and 4B
as to which the date is February 10, 1999)
ALPINE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1998
ASSETS
ASSETS
Cash $ 100
TOTAL CURRENT ASSETS $ 100
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ -
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value, 20 million
shares authorized, zero issued and outstanding -
Common Stock, $.0001 par value, 100 million
shares authorized, 250,000 shares issued and
outstanding 25
Additional paid-in capital 75
Total Stockholders' Equity -
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 100
See accompanying notes to balance sheet.
2
ALPINE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Alpine Entertainment, Inc.(a development
stage company) ("Alpine") was incorporated
in Delaware on November 5, 1998 to serve as
a vehicle to effect a merger, exchange of
capital stock, asset acquisition or other
business combination with a domestic or
foreign private business. At December 31,
1998, Alpine had not yet commenced any
formal business operations. Alpine's fiscal
year end is December 31.
Alpine's ability to commence operations is
contingent upon its ability to identify a
prospective target business and raise the
capital it will require through the issuance
of equity securities, debt securities, bank
borrowings or a combination thereof. (See
Note 4)
B. Use of Estimates
The preparation of the financial statements
in conformity with generally accepted
accounting principles requires management to
make estimates and assumptions that affect
the reported amounts of assets and
liabilities and disclosure of contingent
assets and liabilities at the date of the
financial statements and the reported
amounts of revenues and expenses during the
reporting period. Actual results could
differ from those estimates.
NOTE 2 - STOCKHOLDERS' EQUITY
A. Preferred Stock
Alpine is authorized to issue 20,000,000
shares of preferred stock at $.0001 par
value, with such designations, voting and
other rights and preferences as may be
determined from time to time by the Board of
Directors.
B. Common Stock
Alpine is authorized to issue 100,000,000
shares of common stock at $.0001 par value.
Alpine issued for cash 125,000 shares to
TPG Capital Corporation and Brokerlink
Capital Research and Communications,
respectively.
3
ALPINE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF DECEMBER 31, 1998
NOTE 3 - RELATED PARTIES
Legal counsel to Alpine is a firm owned by a
director of Alpine who also is a beneficial
owner of over 50% of the outstanding stock
of TPG Capital Corporation.
NOTE 4 - SUBSEQUENT EVENTS
A. Acquisition
Under an agreement dated February 9, 1999
effective February 10, 1999 Alpine acquired
all of the issued and outstanding shares of
capital stock of Alpine Pictures
International, Inc. in exchange for common
stock of Alpine. Under the terms of the
agreement, the outstanding shares were
exchanged at a ratio of one share of Alpine
for every share of Alpine Pictures
International, Inc. As a result of the
exchange, Alpine Pictures International,
Inc. (A.P.I., Inc.) became a wholly owned
subsidiary of Alpine, and the shareholders
of A.P.I., Inc. became shareholders of
approximately 69.9% of Alpine. Generally
accepted accounting principles require that
Alpine whose shareholders retain a majority
interest in a combined business be treated
as an acquirer for accounting purposes. As a
result, the merger will be treated as an
acquisition of Alpine by A.P.I., Inc. and a
recapitalization of A.P.I.,Inc. using the
purchase method of accounting for financial
reporting purposes. Accordingly, Alpine's
financial statements immediately following
the merger will be as follows: (1) The
balance sheet will consist of A.P.I., Inc.'s
net assets at historical cost and (2) the
statement of operations will include the
A.P.I.,Inc's operations for the period
presented and the operations of Alpine from
the date of acquisition.
B. Formation of New Subsidiary
In February 1999, a wholly-owned subsidiary,
Alpine Television, Inc. was incorporated
Inc. in Delaware. Alpine Television, Inc.
("ATI") was formed to distribute and develop
entertainment media projects for
presentation on television, including
pay-per-view, pay network, syndication or
basic cable television.
4
ALPINE ENTERTAINMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO BALANCE SHEET
AS OF DECEMBER 31, 1998
NOTE 4 - SUBSEQUENT EVENTS - (CONT'D)
ATI has authorized capitalization of
100,000,000 shares of common stock of which
1,000 shares are outstanding and 20,000,000
shares of non-designated preferred stock, of
which none are outstanding. ATI has no
operations to date.
C. Registration Statement Filing
Alpine is in process of preparing and filing
a Form SB-2 Registration Statement under the
Securities Act of 1933 to offer up to
1,500,000 shares of common stock at $5.00
per share. The offering also registers
250,000 shares of common stock held by
selling security holders. (See Note 2B).
5
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES
INTERNATIONAL, INC. AND AFFILIATE
(A LIMITED PARTNERSHIP))
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - BALANCE SHEETS AS OF DECEMBER 31, 1998 AND 1997
PAGE 3 - STATEMENTS OF OPERATIONS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
PAGE 4 - STATEMENT OF CHANGES IN EQUITY FOR THE YEARS
ENDED DECEMBER 31, 1998 AND 1997
PAGE 5 - 6 - STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997
PAGE 7 - 18 - NOTES TO FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1998 AND 1997
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Alpine Pictures International, Inc.
We have audited the accompanying balance sheet of
Alpine Pictures International, Inc. as of December 31,
1998 and the combined balance sheet of Alpine Pictures
International, Inc. and affiliate (a limited
partnership) as of December 31, 1997 and the related
statement of operations, changes in equity (deficit),
and cash flows for the year ended December 31, 1998
and the related combined statement of operations,
changes in equity (deficit), and cash flows for the
year ended December 31, 1997. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an
opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatements. An
audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the
financial statements. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Alpine Pictures International,
Inc. as of December 31, 1998 and the financial
position of Alpine Pictures International, Inc. and
affiliate (a limited partnership) as of December 31,
1997 and the results of their operations and their
cash flows for the two years then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements have been
prepared assuming that the Company will continue as a
going concern. As discussed in Note 11 to the
financial statements, the Company has suffered
recurring losses from operations and has a large
accumulated deficit that raises substantial doubt
about its ability to continue as a going concern.
Management's plans in regard to these matters are also
described in Note 11. The financial statements do not
include any adjustments that might result from the
outcome of this uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
June 6, 1999
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
ASSETS
1997
1998 Combined
CURRENT ASSETS
Cash and cash equivalents $ 2,087 $ -
Due from non-combined affiliates 76,000 260,715
Employee advances 1,519 1,959
Prepaid taxes 800 800
Total Current Assets 80,406 263,474
DUE FROM NON-COMBINED AFFILIATE - 91,000
PROPERTY AND EQUIPMENT, NET 10,837 7,528
OTHER ASSETS
Deferred offering costs 23,100 65,215
Total Other Assets 23,100 65,215
TOTAL ASSETS $ 114,343 $ 427,217
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES
Bank overdraft $ - $ 6,518
Accounts payable and accrued
expenses 35,986 36,971
Due to affiliate 243,556 -
Other current liabilities - 8,591
Distributor deposits 16,682 2,006
Total Current Liabilities 296,224 54,086
TOTAL LIABILITIES 296,224 54,086
COMMITMENTS AND CONTINGENCIES
EQUITY (DEFICIT) (181,881) 373,131
TOTAL LIABILITIES AND EQUITY
(DEFICIT) $ 114,343 $ 427,217
See accompanying notes to financial statements.
2
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1997
1998 Combined
REVENUES
Film license sales $ 50,518 $ 74,532
Total Revenues 50,518 74,532
OPERATING EXPENSES
Salaries and wages 370,377 229,527
Commissions - 20,628
Professional fees 98,420 101,787
General and administrative 75,414 138,146
General marketing 11,615 10,953
Direct film marketing,
advertising, distribution
and rework expenses 360,800 270,554
Rental expenses 45,433 12,744
Depreciation 2,264 1,798
Total Operating Expenses 964,323 786,137
NET LOSS FROM OPERATIONS (913,805) (711,605)
OTHER INCOME
Other income - 3,909
NET LOSS $ (913,805) $ (707,696)
Weighted average number of
shares outstanding during
the period (as restated) 5,025,000 3,225,000
Net loss per common share
and equivalents $ (0.1819) $ (0.2194)
See accompanying notes to financial statements.
3
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
FOR THE PERIOD FROM DECEMBER 31, 1996 TO DECEMBER 31, 1998
<TABLE>
LIMTIED SUBSCRIP-
PARTNER- CORPORATION PARTNERSHIP TION RE-
COMMON STOCK SHIP INTEREST ACCUMULATED ACCUMULATED CEIV-
SHARES AMOUNT UNITS AMOUNT DEFICIT DEFICIT ABLE TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE,
DECEMBER 31,
1996 350,000 $ 35 48.93 $ 225,972 $(53,289) $ (24,188) $ (35) $148,495
Issuance of
common stock
pursuant to
private
placement 222,700 222,700 - - - - - 222,700
Issuance of
limited partner-
ship units - - 179.67 898,341 - - - 898,341
Issuance of
common stock
to employees 2,875,000 288 - - - - (288) -
Write-off of
deferred offering
costs - (89,138) - (99,571) - - - (188,709)
Net loss 1997 - - - - (671,620) 36,076) - (707,696)
BALANCE,
DECEMBER 31,
1997 3,447,700 $133,885 228.60 $1,024,742 $(724,909) $ (60,264) $(323) $373,131
Issuance of
common stock
pursuant to
private
placement 588,937 588,937 - - - - - 588,937
Issuance of
common stock
in exchange
for partnership
units 1,344,804 964,478 - - - - - 964,478
Cancellation
of partnership
units - - (228.60) (1,024,742) - 60,264 - (964,478)
Issuance of
common stock
to affiliate 1,800,000 180 - - - - (180) -
Subscriptions
received - - - - - - 323 323
Write-off of
deferred offering
costs - (230,467) - - - - - (230,467)
Net loss 1998 - - - (913,805) - - (913,805)
BALANCE,
DECEMBER 31,
1998 7,181,441 $1,457,013 - $ - $(1,638,714) $ - $(180)$(181,881)
</TABLE>
See accompanying notes to financial statements.
4
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
STATEMENTS OF CASH FLOWS
AS OF DECEMBER 31, 1998 AND 1997
1998 1997 Combined
Cash flows from operating
activities:
Net loss $ (913,805) $ (707,696)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation 2,264 1,798
Changes in operating assets and
liabilities:
(Increase) decrease in:
Prepaid taxes - (800)
Increase (decrease)in:
Bank overdraft (6,518) 6,518
Accounts payable and accrued
expenses (985) 33,371
Other liabilities (8,591) 8,591
Distributor deposits 14,676 2,006
Total adjustments 846 51,484
Net cash used in operating
activities (912,959) (656,212)
Cash flows from investing
activities:
Employee advances 440 (1,959)
Due from non-combined
affiliates 275,715 (253,348)
Purchase of property and
equipment (5,573) (9,326)
Net cash provided by (used in)
investing activities 270,582 (264,633)
Cash flows from financing activities:
Proceeds from the issuance
of common stock 424,008 133,562
Proceeds from the issuance
of limited partnership units - 798,770
Due to affiliate 243,556 -
Deferred offering costs (23,100) (60,798)
Net cash provided by financing
activities 644,464 871,534
Net increase (decrease) in cash 2,087 (49,311)
Cash and cash equivalents-beginning - 49,311
CASH AND CASH EQUIVALENTS-ENDING $ 2,087 $ -
See accompanying notes to financial statements.
5
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
STATEMENTS OF CASH FLOWS (CONT'D)
AS OF DECEMBER 31, 1998 AND 1997
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
During 1997 and 1998 2,875,000 and 1,800,000 shares,
respectively of common stock were issued to certain directors,
officers, and affiliates of the Company, which in turn were
recorded as subscriptions receivable at December 31, 1997 and
1998, and paid in the following year.
During 1998, the Corporation issued 1,344,804 shares of common
stock in exchange for the partnership units pursuant to the
merger (See Note 5).
See accompanying notes to financial statements.
6
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Description of Business
Alpine Pictures International, Inc. (the "Corporation") is a
California corporation formed in August 1996 and engaged in the
business of distributing, marketing, licensing, and selling
motion pictures in all markets, including domestic and
international theatrical exhibition, home video, network
television, cable television, pay per view cable television,
nontheatrical exhibitors such as airlines, schools, hospitals,
libraries, hotels, syndicated television and related markets.
The Corporation may also have the right to license the
ancillary rights for motion pictures for which it enters into
distribution agreements, including soundtrack music and
merchandising items. The Corporation enters into distribution
agreements with affiliated and unaffiliated motion picture
producers. The distribution agreements generally provide for
the Corporation to be allocated a percentage of gross revenues
from the motion pictures which it licenses and distributes, as
well as to be repaid advances, if any, which it makes to
producers and to be reimbursed its distribution and film rework
expenses. (See Note 8). Alpine Releasing Partners I, L.P., the
Corporation's controlled affiliate, was a California Limited
Partnership (the "Partnership") formed in July 1996 to finance
the acquisition and distribution of certain feature length
motion pictures principally in conjunction with the Corporation
who was the general partner. The partnership was merged into
the Corporation in February 1998. (See Note 5).
The combined entities are hereafter referred to as the "Company."
In February 1999, the Company was acquired by Alpine
Entertainment, Inc. ("AEInc.") in a transaction accounted for
as a recapitalization of the Company. (See Note 12)
7
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(B) Principles of Combination
The combined financial statements as of December 31, 1997
included the accounts of the Corporation and its controlled
affiliate, Alpine Releasing Partners I, L.P. All significant
intercompany balances and transactions were eliminated in
combination.
(C) Use of Estimates
In preparing financial statements in conformity with generally
accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and
revenues and expenses during the reported period. Actual
results could differ from those estimates.
(D) Cash and Cash Equivalents
For purpose of the cash flow statements, the Company considers
all highly liquid investments with original maturities of three
months or less at time of purchase to be cash equivalents.
(E) Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Expenditures from maintenance and repairs are
charged to expense as incurred. Depreciation is provided using
the straight-line method over the estimated useful life's of
the assets as follows:
Equipment 5 years
Furniture and fixtures 7 years
8
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(F) Income taxes
The Company accounts for income taxes under the Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 109. "Accounting for Income Taxes" ("Statement
No.109"). Under Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those measured using enacted tax
rates expected to be recovered or settled. Under Statement 109,
the effect on deferred tax assets and liabilities of a change
in tax rates in recognized is income in the period that
includes the enactment date.
(G) Revenue Recognition
The Company recognizes revenue in accordance with Statement of
Financial Standards No. 53, "Financial Reporting by Producers
and Distributors of Motion Picture Films" ("SFAS 53"). Under
SFAS 53, a producer or distributor recognizes revenue when the
license fee is known, the film costs have been reasonably
determined, the film has been shipped and accepted by the
sub-licensee distributor and is available for showing, and
collectibility of the full license fee is assured. Based on
Company experience, collectibility of the full license fee is
assured only upon cash receipt from the sub-licensee
distributor. Therefore, under the Company's flat fee type
contracts, revenue is recognized upon receipt of final payment
from and the shipment to and acceptance by the sub-licensee
distributor. Under revenue sharing type contracts, revenue is
recognized as payments are received from the sub-licensee
distributor. Initial deposits on sub-licensee distributor
contracts are recorded as distributor deposits and recognized
when the final payment is received and the film is shipped to
and accepted by the sub-licensee distributor.
9
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(H) Direct Film Marketing, Advertising, Distribution and Rework
Expense
The Company incurs certain film pre-release and post-release
marketing and advertising expenses, distribution expense, and
film rework expenses such as adding subtitles or dubbing, or
other editing required to prepare the films for distribution in
foreign geographic markets. The Company considers such
expenses to be period costs and accordingly expenses them in
the period incurred. Contractual terms with each film producer
allow the Company to recoup its marketing, advertising,
distribution and rework costs, subject to limitations as
defined in each contract, from future revenues generated from
the film. Such recoupment amounts, when received, are recorded
as an offset against the current film marketing, advertising
and rework expense.
(I) Concentrations
There were no financial instruments which potentially subject
the Company to significant concentration of credit risk at
December 31, 1998 and 1997.
The following is an approximate summary of the percentage of
film sales by geographic region.
1998 1997
Italy 25% 45%
Latin America 20% -
Germany 12% 19%
Philippines 10% -
England 8% -
Argentina 7% -
France 6% -
Indonesia - 8%
Poland - 7%
Thailand 5% 2%
Taiwan 4% -
Peru - 1%
Russia 3% 18%
100% 100%
10
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -(CONT'D)
(J) Per Share Data
Net loss per common share for the year ended December 31, 1998
and 1997 is required to be computed by dividing net loss by the
weighted average common shares outstanding during the year as
defined by Financial Accounting Standards, No. 128, "Earnings
per Share". However, the weighted average shares have been
retroactively restated to reflect the quantity of shares of
AEInc. issued on the date of reorganization to the Company's
consenting stockholders existing at each balance sheet
date.(See Note 12)
(K) Reclassifications
Certain amounts in 1997 financial statements have been
reclassified to conform to the 1998 presentation.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1998 and 1997 consists
of the following:
1998 1997
Equipment $ 10,522 $ 8,142
Furniture and fixtures 4,377 1,184
14,899 9,326
Less accumulated depreciation (4,062) (1,798)
$ 10,837 $ 7,528
NOTE 3 - EQUITY
In July 1997 the Corporation amended its articles of
incorporation to increase the authorized no par value common
stock to 20,000,000 from 10,000,000 and to authorize 2,000,000
shares of no par value preferred stock.
The Board of Directors of the Corporation may designate
different series of preferred stock and may fix the authorized
number of shares for each series. The holders of each series
of preferred stock shall have such rights, preferences and
privileges as may be determined by the Board of Directors prior
to the issuance of such shares.
11
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 3 - EQUITY - (CONT'D)
As of December 31, 1998 and 1997, there were no preferred
shares issued or outstanding.
NOTE 4 - PARTNERSHIP AGREEMENT
In 1996, a limited partnership was formed known as Alpine
Releasing Partners I, L.P. (see Note 6). Alpine Pictures
International, Inc. was named as general partner. Under the
terms of the partnership agreement, (a) the partnership shall
continue for ten (10) years unless terminated sooner by the
partners, (b) in general, income and loss shall be allocated
annually to the general partner 1% and limited partners 99%. In
February 1998 Alpine Releasing Partners I, L.P. was merged into
Alpine Pictures International, Inc. (See Note 5)
NOTE 5 - MERGER OF ALPINE PICTURES INTERNATIONAL, INC.
AND ALPINE RELEASING PARTNERS I, L.P.
On December 17, 1997, the Corporation entered into an Agreement
of Merger (the "Agreement") to merge the Partnership into the
Corporation with the Corporation as the surviving entity.
Under the terms of the Agreement, the effective date of the
merger was February 15, 1998, and the Corporation issued one
share of its common stock for each $0.85 of limited partnership
interest resulting in a total issuance by the Company of
1,344,804 shares of its common stock to the limited partners.
NOTE 6 - PRIVATE PLACEMENTS
In July 1997 the Corporation issued a Private Placement
Memorandum (the "Placement") pursuant to the Securities and
Exchange Commission Regulation CE Section 3(b), Rule 1001, of
the Securities Act of 1933, as amended, and under Section
25102(n) of the California corporations code to offer 980,000
shares of its common stock, no par value, with an option to
increase the offering by up to an additional 120,000 shares for
a maximum offering of 1,100,000 shares. Under terms of the
Placement, the shares were offered on a "best efforts" basis at
$1.00 per share in minimum units of 20,000 shares with no
minimum capitalization required by the Corporation.
12
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 6 - PRIVATE PLACEMENTS - (CONT'D)
Under the Placement, which terminated in 1998, the Corporation
issued 811,637 shares of common stock during 1998 and 1997 with
gross proceeds to the Corporation of $811,637 and offering
expenses of $319,605 of which $230,467 and $89,138 were charged
against equity in 1998 and 1997, respectively.
In July 1996, the Partnership issued a Private Placement
Memorandum (the "Placement") under Rule 506 of Regulation D
under Section 4(2) of the Securities Act of 1933, as amended,
and under Section 25102(n) of the California Corporations Code
to offer, on a "best efforts" basis, 200 limited partnership
units at a subscription price of $5,000 per unit. Under terms
of the Placement, the minimum investment was 5 units or $25,000
and no minimum capitalization was required. Additionally, the
general partner was required to make a capital contribution
equal to 1% of aggregate partnership capital at the termination
of the offering. Under the Placement, the Partnership raised
approximately $898,341 in 1997, and the placement was
terminated in June 1997. Offering costs of the placement
aggregated $118,267 of which $99,571 were charged against
equity in 1997.
NOTE 7 - INCOME TAXES
There was no current income tax expense or benefit in 1998 and
1997 due to the Company's net losses.
At December 31, 1998, the Company had net operating loss carry
forwards of approximately $1,508,000, which expire from 2011
through 2013, subject to certain prescribed annual rate
limitations. The deferred tax asset resulting from these net
operating losses approximates $513,000 at December 31, 1998,
and has been fully offset by a valuation allowance at that date.
The valuation allowance for deferred tax assets as of January
1, 1998 was approximately $ 202,000. The net change in the
total valuation allowance for the year ended December 31, 1998
was an increase of approximately $311,000.
13
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 8 - OPERATING AGREEMENTS
(A) Agreements with Producers/Owners
As part of its primary operations, the Company enters into
agreements with various producers/owners (the "owner") of
feature films (the "film") to act as distributor agent of the
owner for the sales, collections and servicing of the film in
specified media and geographic territories, for a stipulated
term. Under the agreements, various provisions exist for
extension and/or cancellation of the contracts, limited
reworking of the film to meet local country requirements, and
sublicensing of distribution by the Company. The Company
generally retains a percentage fee based on gross receipts from
film sales, as defined in the agreements, and is allowed
reimbursement of out-of-pocket sales, marketing, distribution,
servicing, rework, technical materials, and other customary
expenses incurred up to a stipulated cap from the remaining
gross receipts. The balance after the Company's fee and
out-of-pocket expenses is payable to the owner. Under certain
agreements the owner is paid a stipulated percentage out of
gross receipts prior to any fee and/or expense distributions to
the Company.
(B) Licensing Agreements with Distributors
The Company enters into licensing agreements with
sub-distributors for distribution of films for which the
Company is the agent of producers/owners, as discussed above.
The agreements generally stipulate a fixed fee and less
commonly, royalty fees or a combination thereof allowing the
sub-distributor to distribute certain films within a specified
territory. The Company generally obtains a non-refundable
deposit from distributors which is recorded as a deposit
liability until the film is delivered to and balance received
from the distributor, or the agreement is canceled.
(C) Consulting Agreement
In August 1998 the Company entered into an agreement (the
"Agreement") with a firm whereby the firm will provide certain
stipulated services relating to positioning the Company to
enter the public capital markets. (See Note 12(B))
14
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 8 - OPERATING AGREEMENTS (CONT'D)
(C) Consulting Agreement (CONT'D)
The firm is to provide a holding company to which the firm will
retain 250,000 common shares and warrants to purchase an
additional 250,000 common shares at a price of $1.00 per share.
In addition, the Company will pay the firm $100,000 for its
services and the services of its affiliates. As of December
31, 1998, the Company paid $60,000 which is included in the
statement of operations as professional fees.
(See Note 12(A))
NOTE 9 - COMMITMENTS AND CONTINGENCIES
The Company is aware of the issues associated with the
programming code in existing computer systems as the millennium
(Year 2000) approaches. The "Year 2000" problem is pervasive
and complex as virtually every computer operation will be
affected in some way by the rollover of the two-digit year to
00. The issue is whether computer systems will properly
recognize date-sensitive information when the year changes to
2000. Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail.
The Company uses a standard off the shelf accounting software
package for all of its accounting requirements. Management has
contacted the software vendor and confirmed that the accounting
software is Year 2000 compliant. Management has also verified
that critical vendors' systems will be Year 2000 compliant.
Costs of investigating Year 2000 compliance issues have not
been material to date. As a result, management believes that
the effect of investigating and resolving Year 2000 compliance
issues will not have a material effect on the Company's future
financial position or results of operations.
NOTE 10 - RELATED PARTY TRANSACTIONS
During 1998 and 1997 investor lead lists were purchased from a
non-combined affiliate, First National Information Network,
Inc. (FNIN) for an aggregate amount of $163,457.
15
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 10 - RELATED PARTY TRANSACTIONS -(CONT'D)
Such investor lists were used in marketing campaigns to sell
shares of common stock under the private placements (See Note
6). Accordingly, $118,604 and $44,853 was charged against
equity in 1998 and 1997, respectively. The Company also
periodically advances funds to FNIN. The net effect of amounts
due to FNIN for investors lead list purchases and advances due
from FNIN totaled $76,000 and $91,000 at December 31, 1998 and
1997, respectively, and are reflected as due from non-combined
affiliates in current assets and due from non-combined
affiliate-long term at those dates, respectively. The amount
of $76,000 was repaid in January 1999.
During 1998 the Company issued 1,800,000 shares of common stock
to its affiliate, Alpine Pictures, Inc. During 1997, 2,875,000
shares of common stock were issued to key officers and employees.
The Company's affiliate, Alpine Pictures, Inc. borrows funds
from, or lends funds to, and pays certain shared office
expenses of the Company. The net effect of these transactions
resulted in a due to affiliate of $243,556 at December 31, 1998
and a due from non-combined affiliates of $260,715 at December
31, 1997.
The Company periodically enters into distribution agreements
with its non-combined affiliate, Alpine Pictures, Inc. to
distribute films produced by such affiliate.
NOTE 11 - GOING CONCERN
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company incurred a net loss of $913,805 during the year ended
December 31, 1998, had a negative cash flow from operating
activities of $912,959 and has an accumulated deficit of
$1,638,714 at December 31, 1998. These conditions raise
substantial doubt about the Company's ability to continue as a
going concern and if substantial additional funding is not
acquired or alternative sources developed to meet the Company's
working capital needs, management will be
required to curtail its operations.
16
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 11 - GOING CONCERN - (CONT'D)
The Company's current parent, AEInc., intends to raise between
$1.5 million (minimum) and $7.5 million (maximum) in an initial
public offering during 1999. (See Note 12(B)) Management
believes that actions presently being taken to obtain
additional funding provide the opportunity for the Company to
continue as a going concern.
NOTE 12 - SUBSEQUENT EVENTS
(A) Agreement and Plan of Reorganization
Under an agreement dated February 9, 1999, effective February
10, 1999, Alpine Entertainment, Inc., ("AEInc.") a new
corporation formed on November 5, 1998 under the laws of
Delaware, acquired all of the issued and outstanding shares of
common stock of the Company in exchange for common stock of
AEInc.
Under the terms of the agreement, the Company's shares were
exchanged at a ratio of one share of AEInc. for every share of
the Company. As a result of the exchange, the Company became a
wholly owned subsidiary of AEInc., and the shareholders of the
Company became shareholders of approximately 96% of AEInc.
Generally Accepted Accounting Principles require that the
Company whose shareholders retain a majority interest in a
combined business be treated as the acquirer for accounting
purposes. As a result, the acquisition will be treated as an
acquisition of AEInc. by the Company, and a recapitalization of
the Company.
The Company's financial statements immediately following the
acquisition will be as follows: (1) The Balance Sheet will
consist of the Company's net assets at historical cost and
AEInc.'s net assets at historical cost and (2) the Statement of
Operations will include the Company's operations for the period
presented and AEInc.'s operations from the date of acquisition.
17
ALPINE PICTURES INTERNATIONAL, INC.
(FORMERLY ALPINE PICTURES INTERNATIONAL, INC.
AND AFFILIATE (A LIMITED PARTNERSHIP))
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1998 AND 1997
NOTE 12 - SUBSEQUENT EVENTS - (CONT'D)
(B) Letter of Intent For Public Offering
In May 1999, the Company's parent at that time, AEInc. executed
a letter of intent (the"Letter") with an investment banking
firm whereby the investment banking firm will make a best
efforts underwritten public offering (the "offering") of units
of common stock and warrants of AEInc. aggregating between $1.5
million (minimum) and $7.5 million (maximum). Under the
Letter, AEInc. is committed to pay the investment banking firm
$5000 per month, and certain offering expenses incurred by the
investment banking firm, up to $85,000, are reimbursable by the
Company whether or not the offering is consumated.
18
ALPINE ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED INTERIM BALANCE SHEET
ASSETS
March 31, 1999 December 31, 1998
(Unaudited)
Current Assets
Cash and cash equivalents $ 40,668 $ 2,187
Accounts Receivable - -
Employee Advances 2,219 1,519
Prepaid Taxes 800 800
Due from combined Affiliates - -
Due from non-combined Affiliates - -
- 76,000
Total Current Assets 43,687 80,506
Property Plant and Equipment, Net 10,271 10,837
Other Assets
Deferred Offering Costs 29,644 23,100
Total Assets $ 83,602 $ 114,443
LIABILITIES AND EQUITY
Current Liabilities
Accounts Payable & Accrued
Expenses $ 274,613 $ 35,986
Due to affiliates 430,266 243,556
Distributor Deposits 6,682 16,682
Total Current Liabilities 711,561 296,224
Total Liabilities $ 711,561 296,224
Equity (627,959) (181,781)
Total Liabilities and Equity $ 83,602 114,443
See accompanying notes to consolidated financial statements
ALPINE ENTERTAINMENT, INC. AND SUBSIDIARIES
AND AFFILIATE (A LIMITED PARTNERSHIP)
CONSOLIDATED INTERIM STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
Revenues
Film license fees 33,661
Total Revenue 33,661
Operating Expenses
Salaries and Wages 162,902
Professional Fees 102,458
General and Administrative 7,815
General Marketing 3,118
Direct Film Marketing,
Advertising, Distribution and
Rework Expenses 209,791
Rental Expenses 8,736
Depreciation Expense 566
Total Operating Expenses 495,386
Net Loss From Operations (461,725)
Other Income 15,367
Net Loss $ (446,358)
Number of Shares Outstanding 5,161,111
Net loss per common share (0.09)
See accompanying notes to consolidated financial statements
ALPINE ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THREE MONTHS ENDING MARCH 31, 1999 (UNAUDITED)
Cash flows from operating activities:
Net loss (446,358)
Depreciation Expense 566
Changes in operating assets and
liabilities:
Increase (decrease) in:
Accounts payable and accrued
expenses 236,627
Distributor deposits (10,000)
Total adjustments 229,193
Net cash used in operating
activities (217,165)
Cash flows from investing activities:
Employee advances (700)
Due from non-combined affiliates 76,000
Due to non-combined affiliates 186,710
Net cash provided by investing
activities 262,010
Cash flows from financing activities:
Proceeds from the issuance
of common stock 180
Deferred offering costs
(6,544)
Net cash used in financing activities (6,364)
Net increase (decrease) in cash 38,481
Cash and Cash equivalents-beginning 2,187
Cash and Cash equivalents-Ending $ 40,668
See accompanying notes to consolidated financial statements
ALPINE ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
<TABLE>
COMMON STOCK Additional Corporation
Number Paid-In Accumulated Subscription
of Shares Amount Capital Deficit Receivable Total
<S> <C> <C> <C> <C> <C> <C>
Balance
12/31/1998 7,181,441 $1,457,013 $ -- $(1,638,714) $(180) $(181,881)
Recapitaliza-
tion Effect (1,906,441) (1,456,485) 1,456,585 -- -- 100
Subscription
Received -- -- -- -- 180 100
Net Loss
1/1/1999 to
3/31/1999 -- -- -- (446,358) -- (446,358)
Balance
3/31/1999 5,275,000 $ 528 $1,456,585 $(2,085,072) $-- $(627,959)
See accompanying notes to consolidated financial statements
ALPINE ENTERTAINMENT, INC AND SUBSIDIARIES
AS OF MARCH 31, 1999
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited
consolidated financial
statements have been prepared
in accordance with generally
accepted accounting
principles and the rules and
regulations of the Securities
and Exchange Commission for
interim financial
information. Accordingly,
they do not include all the
information and footnotes
necessary for a comprehensive
presentation of financial
position and results of
operations.
It is management's opinion,
however, that all material
adjustments (consisting of
normal recurring adjustments)
have been made which are
necessary for a fair
financial statements
presentation. The results
for the interim period are
not necessarily indicative of
the results to be expected
for the year.
For further information,
refer to the audited
financial statements and
footnotes included in the
company's Form SB-2 for the
years ended December 31, 1998
and 1997.
NOTE 2 PRINCIPLES OF CONSOLIDATION
The consolidated financial
statements include the
accounts of Alpine
Entertainment, Inc. (the
"Company") and its
wholly-owned and
majority-owned subsidiaries
Alpine Television, Inc. and
Alpine Pictures
International, Inc.,
respectively. All
significant intercompany
balances and transactions
have been eliminated in
consolidation.
NOTE 3 CHANGES IN CAPITALIZATION
During 1999, Alpine Pictures
International, Inc. received
funds from an affiliate for
shares previously purchased
in 1998.
NOTE 4 AGREEMENT AND PLAN OF
REORGANIZATION
Under an agreement dated
February 9, 1999, effective
February 10, 1999 the Company
acquired 69.9% of the issued
and outstanding shares of
capital stock of Alpine
Pictures International, Inc.
in exchange for shares of the
Company. Under the terms of
the agreement, Alpine
Pictures International, Inc.
shares were exchanged at a
ratio of one share of the
Company for every share of
Alpine Pictures
International, Inc. As a
result of the exchange,
Alpine Pictures
International, Inc. became a
majority-owned subsidiary of
the Company, and the
consenting stockholders of
Alpine Pictures
International, Inc. became
stockholders of approximately
96% of the Company.
Generally Accepted Accounting
Principles require that the
company whose shareholders
retain a majority interest in
a combined business be
treated as the aquirer for
accounting purposes. As a
result, the reorganization
will be treated as an
acquisition of the Company by
Alpine Pictures
International, Inc., and a
recapitalization of Alpine
Pictures International, Inc.
The Company's financial
statements immediately
following the acquisition
were as follows: (1) The
balance sheet consists of the
Company's net assets at
historical cost and Alpine
Pictures International,
Inc.'s net assets at
historical cost and (2) the
statement of operations
includes Alpine Pictures
International, Inc.
operations for the period
presented and the Company's
operations from the date of
acquisition.
On February 8, 1999 Alpine
Television, Inc. (ATVInc.), a
new corporation formed under
the laws of Delaware, was
created, as a wholly owned
subsidiary of the Company for
the purpose of television
programming and syndication.
Alpine Pictures
International, Inc. funded
ATVInc.'s initial
development, in the amount of
$131,446, which is included
in operating expenses for the
three months ended March 31,
1999
NOTE 5 GOING CONCERN
The accompanying financial
statements have been prepared
assuming that the company
will continue as a going
concern. The company
incurred a net loss of
$446,358 during the three
month period ended March 31,
1999, and has an accumulated
deficit of $2,085,072 at
March 31, 1999. These
conditions raise substantial
doubt about the Company's
ability to continue as a
going concern and if
substantial additional
funding is not acquired or
alternative sources developed
to meet the Company's working
capital needs, management
will be required to curtail
its operations.
The Company intends to raise
between $1.5 million
(minimum) and $7.5 million
(maximum) in an initial
public offering during 1999.
Management believes that
actions presently being taken
to obtain additional funding
provide the opportunity for
the company to continue as a
going concern.
No dealer, salesman or any other person has been
authorized to give any information or to make any representations
other than those contained in this prospectus, and, if given or
made, such information or representations may not be relied on
as having been authorized by Alpine or by any of the
underwriters.
Neither the delivery of this prospectus nor any sale made
hereunder shall under any circumstances create an
implication that there has been no change in the affairs of the Company
sinc the date hereof. This prospectus does not constitute an
offer to sell, or solicitation of any offer to buy, by any person in
any jurisdiction in which it is unlawful for any such person
to make such offer or solicitation. Neither the delivery of this
prospectus nor any offer, solicitation or sale made
hereunder, shall under any circumstances create any implication that
the information herein is correct as of any time subsequent to
the date of the prospectus
250,000 Units Minimum Offering date of the Prospectus.
1,250,000 Units Maximum Offering
convertible promissory note interests up to the
amount of $2,052,000 to be distributed
by the holder thereof; and
7,600,000 shares of common stock issuable
upon conversion of such promissory note
TABLE OF CONTENTS
Page
Prospectus Summary
Risk Factors
Available Information
The Company
Use of Proceeds
Dilution
Dividend Policy
Business
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Management
Security Ownership of Certain Beneficial
Owners and Management
Related Transactions
Selling Securityholder
PROSPECTUS
Concurrent Distribution by Selling Securityholder
Underwriting
Description of Securities
Legal Proceedings
Legal Matters September ___, 1999
Experts
Financial Statements
Until ________ all dealers that effect transactions in
these securities, whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to
the dealers' obligations to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Alpine is incorporated in Delaware. Under Section 145 of
the General Corporation Law of the State of Delaware, a Delaware corporation
has the power, under specified circumstances, to indemnify its directors,
officers, employees and agents in connection with actions, suits or
proceedings brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such directors,
officers, employees or agents, against expenses incurred in any action,
suit or proceeding. The Certificate of Incorporation and the By-laws of
Alpine provide for indemnification of directors and officers to the fullest
extent permitted by the General Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision
eliminating the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director provided that such provision shall not eliminate or limit the
liability of a director
For any breach of the director's duty of loyalty to
the corporation or its stockholders;
For acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation
of law; Under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or
dividends on, capital stock) of the General Corporation
Law of the State of Delaware; or
For any transaction from which the director derived an
improper personal benefit.
Alpine's Certificate of Incorporation contains such a
provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS,
OFFICERS OR PERSONS CONTROLLING ALPINE PURSUANT TO THE FOREGOING PROVISIONS,
IT IS THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH
INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS
THEREFORE UNENFORCEABLE.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in
connection with this Registration Statement. All of such expenses are
estimates, other than the filing fees payable to the Securities and
Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 2,800
Fees and Expenses of Accountants 40,000
Fees and Expenses of legal counsel 100,000
Printing and Engraving Expenses 10,000
Miscellaneous Expenses 3,700
Total $160,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
As listed below, Alpine issued shares of its Common
Stock par value $.0001 per share to the following
individuals or entities for the consideration as listed in
cash or services. All sales made within the United States
or to United States citizens or residents, were made in
reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933.
Date Shareholder Number of Consideration
Shares
12/1/98 TPG Capital Corporation 125,000 $ 50.00
12/1/98 Brokerlink Capital, Research
and Communication 125,000 50.00
2/10/99 Rene Torres 350,000 35.00*
2/10/99 Ryan Carroll 775,000 77.50*
2/10/99 Roland Carroll 775,000 77.50*
2/10/99 Tom Hamilton 350,000 35.00*
2/10/99 Greg Cozine 350,000 35.00*
2/10/99 Paul Miller 350,000 35.00*
2/10/99 Linda McArthur 150,000 15.00*
2/10/99 Phil Hammond 25,000 2.50*
2/10/99 Neil Kaufman 25,000 2.50*
2/10/99 Barnard Natalino 25,000 2.50*
2/10/99 Jack Larson 25,000 2.50*
2/10/99 Jack Phelan 25,000 2.50*
2/10/99 Alpine Pictures, Inc. 1,800,000 180.00*
* These shares were originally purchased from Alpine
Pictures International, Inc. and exchanged for shares of
Alpine Entertainment, Inc. on February 10, 1999 at a share
exchange ratio of one-for-one.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
1.1* Underwriting Agreement
1.2* Agreement among Underwriters
3.1** Certificate of Incorporation
3.2** By-Laws of Alpine
4.1* Form of Common Stock Certificate
4.2* Form of Convertible Promissory Note
5.1* Opinion of Cassidy & Associates
10.1* Sample Sales Agency Agreement
10.2* Sample Licensing Agreement
21.1* Subsidiaries of Alpine
24.1 Consent of Weinberg & Company, certified public accountants
24.2* Consent of Cassidy & Associates (included in Exhibit 5)
27* Financial Data Schedule
_____
* To be filed by Amendment.
** Previously filed
(b) The following financial statement
schedules are included in this
Registration Statement.
None.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(b) Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission is that
such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the
time it was declared effective.
(ii) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Alpine Entertainment, Inc. certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form SB-2 and
has duly caused this Registration Statement on Form SB-2 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Van
Nuys, California on the 26th day of August, 1999.
ALPINE ENTERTAINMENT, INC.
By: /s/ Roland Carroll
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Ryan Carroll Chief Executive Officer August 27, 1999
Ryan Carroll Director
/s/ Roland Carroll President August 27, 1999
Roland Carroll Director
/s/ Greg Cozine Director August 27, 1999
Greg Cozine Vice President, Director
</TABLE>
WEINBERG & COMPANY, PA
Town Executive Center
6100 Glades Road, Suite 314
Boca Raton, Florida 33434
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form SB-2 of Alpine
Entertainment, Inc. our report for the years ended December 31, 1998
and 1997 dated June 6, 1999 relating to the financial statements of
Alpine Pictures International, Inc. which appear in such Form SB-2.
WEINBERG & COMPANY PA
Certified Public Accountants
Boca Raton, Florida
July 7, 1999
