<PAGE>
As filed with the Securities and Exchange Commission on July 5, 2000
Registration No. 333- 87291
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
PRE-EFFECTIVE
AMENDMENT NO. 4
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ANTRA HOLDINGS GROUP, INC.
(Name of small business issuer in its charter)
<TABLE>
<CAPTION>
Delaware 7389-1106 22-3517670
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1515 Locust Street
Philadelphia, Pennsylvania 19102
215-732-1300
(Address and telephone number of principal executive offices
and place of business)
JOSEPH M. MARRONE, JR., President
Antra Holdings Group, Inc.
1515 Locust Street
Philadelphia, Pennsylvania 19102
215-732-1300
(Name, address and telephone number of agent for service)
---------------------
Copies to:
MICHAEL D. DIGIOVANNA, Esq.
PARKER DURYEE ROSOFF & HAFT
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
---------------------
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement
If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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,
check the following box. /X/
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
Proposed Proposed
Title of Each Class Maximum Maximum
of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1) Per Security(2) Offering Price(2) Registration Fee
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value
per share ................... 6,870,000 $ 5.625 (3) $ 38,643,750(3) $ 10,742.96(5)
Common Stock, $0.001 par value
per share ................... 400,000 $ 7.8125(4) $ 3,125,000(4) $ 868.75(6)
Common Stock, $0.001 per value
per share ................... 2,896,665 $ 3.8125(7) $ 11,043,535(7) $ 2,915.49(8)
Totals ................... 10,166,665 -- $ 52,812,285 $ 14,527.21
============================================================================================================
</TABLE>
(1) Pursuant to Rule 416(a), the Registration Statement also relates to an
indeterminate number of additional shares of the Registrant's Common
Stock, issuable upon the conversion of notes or the exercise of warrants
pursuant to anti-dilution provisions contained therein, which shares of
Common Stock are registered hereunder.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended (the "Securities
Act").
(3) Estimated offering price based on the average of the bid and asked prices
as of September 15, 1999.
(4) Estimated offering price based on the average of the bid and asked prices
as of November 12, 1999.
(5) This part of the registration fee was paid with the original filing of this
SB-2 on September 17, 1999.
(6) This part of the registration fee was paid with Amendment No.1 to this SB-2
on November 19, 1999.
(7) Estimated offering price based on the average of the bid and asked prices
as of April 6, 2000.
(8) This part of the registration fee was paid with Amendment No. 2 to this
SB-2 on April 10, 2000.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement that is filed with
the Securities and Exchange Commission is declared 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.
SUBJECT TO COMPLETION JULY 5, 2000
PROSPECTUS
10,166,665 Shares
ANTRA HOLDING GROUP, INC.
Common Stock
---------------------
Stockholders of Antra Holdings Group, Inc. named under the caption
"Selling Security Holders" may offer and sell up to 10,166,665 shares of our
common stock.
Investing in Antra Holdings's common stock is risky. See "Risk Factors" on
page 6.
Our common stock current trades on the NASD OTC Bulletin Board under the
symbol "RECD."
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 the prospectus. Any representation to the contrary
is a criminal offense.
The date of this prospectus is July , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY ....................................................................... 3
RISK FACTORS ............................................................................. 5
Antra Holdings has limited operating revenues and an accumulated deficit .............. 5
Our revenues have been heavily dependent on one artist's recordings ................... 5
We may not be able to produce a record if we are unable to secure financing for that
record .............................................................................. 5
Our success will depend on our artists' performance ................................... 5
Antra depends on the continued popularity of urban music .............................. 5
CAPITALIZATION ........................................................................... 6
USE OF PROCEEDS .......................................................................... 6
SELECTED FINANCIAL DATA .................................................................. 6
MARKET INFORMATION ....................................................................... 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........................................ 7
BUSINESS ................................................................................. 9
SELLING SECURITY HOLDERS ................................................................. 16
PLAN OF DISTRIBUTION ..................................................................... 18
MANAGEMENT ............................................................................... 19
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ........................... 20
DESCRIPTION OF SECURITIES ................................................................ 22
CERTAIN TRANSACTIONS ..................................................................... 22
LEGAL MATTERS ............................................................................ 23
EXPERTS .................................................................................. 24
ADDITIONAL INFORMATION ABOUT ANTRA HOLDINGS .............................................. 24
</TABLE>
2
<PAGE>
PROSPECTUS SUMMARY
Antra Holdings Group, Inc. is a holding company. Through our wholly owned
subsidiary, Antra Music Group, Inc., we produce, acquire, license and
distribute high-quality recorded music. Antra Music was formed in 1997 and
entered into an agreement with Ricardo Brown, the urban recording artist known
as "Kurupt". We primarily focus on urban music, the area of the industry that
includes hip-hop, rap and rhythm and blues. We believe, based on industry
sources and census data, that this area offers significant growth and profit
potential.
The music business consists of several functions: publishing, production,
manufacturing, licensing, distribution and promotion. Antra is involved in
these areas.
Our offices are located at 1515 Locust Street, Philadelphia, Pennsylvania
19102 and our telephone number is 215-732-1300.
The Offering
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<S> <C> <C>
Shares outstanding before the
offering ....................... 12,344,620 Does not include shares subject to outstanding
convertible notes or warrants, some of which shares
may be sold under this prospectus after conversion
of these notes or the exercise of these warrants.
Maximum number of shares
offered ........................ 10,166,665 Includes shares subject to outstanding convertible
notes and warrants.
Shares to be outstanding after the
offering ....................... 22,511,285 Includes shares subject to outstanding convertible
notes and warrants that may be issued after the
effectiveness of the registration statement and sold
under this prospectus.
The terms of our notes require us to register more
shares than may be actually issued and sold under
this prospectus. The actual number of shares that
will be issued depends upon the price of Antra's
common stock at the time of conversion
Use of Proceeds .................. ---- Except upon exercise of warrants, Antra will not
receive proceeds. Any proceeds will be used for
working capital purposes.
Symbol for common stock .......... RECD
</TABLE>
3
<PAGE>
Summary Financial Information
<TABLE>
<CAPTION>
YEAR ENDING THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
--------------------------------- ------------------------------
1999 1998 2000 1999
--------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Income ....................................... $ 85,366 $ 20,000 $ 3,220,210 $ 18,390
Expenses ..................................... 2,334,821 1,415,107 4,461,108 78,101
(Loss) from operations ....................... (2,249,455) (1,395,107) (1,240,898) (59,711)
Net (loss) ................................... (1,696,676) (1,595,107) (1,500,628) (59,711)
(Loss) per share ............................. (0.15) (0.17) (0.12) (0.001)
Shares used in computing net loss
per share .................................. 11,118,546 9,268,030 12,344,210 9,544,280
BALANCE SHEET DATA: ..........................
Working capital (deficit) .................... $ (2,341,318) $ (75,030) $ (4,014,915)
Total assets ................................. 6,364,698 122,286 6,721,788
Total long-term debt ......................... 1,026,848 1,217,079 1,026,848
Total stockholders' equity (deficit) ......... 1,232,803 (1,205,321) (267,825)
</TABLE>
4
<PAGE>
RISK FACTORS
Before you decide to invest in Antra Holdings's common stock, you should
be aware that there are various risks, including those described below. You
should carefully consider these risks as well as the more detailed information
contained in this prospectus and in other documents we file with the Securities
and Exchange Commission before making your decision. You should be in a
position to risk losing your entire investment.
When we refer to "Antra," "we," "our" and "us" in this prospectus, we mean
Antra Holdings Group, Inc. including its subsidiary, Antra Music Group, Inc.,
unless otherwise indicated by the context.
Antra Holdings has limited operating revenues and an accumulated deficit.
Our activities since inception have been primarily limited to development
of the artists and the joint venture and the initial release. Our accumulated
deficit at March 31, 2000 was approximately $5,401,825. We incurred a net loss
in 1999 and first quarter 2000, respectively of $1,5696,676 and $1,500,628, and
a loss from operations of $2,249,455 and $1,240,898, respectively in 1999 and
first quarter 2000. Our accountants included a "going concern" opinion in their
report on our December 31, 1999 Financial Statements. There can be no assurance
that Antra will be able to operate profitably.
If we lose the services of our primary artist, we will have to rely on unproven
or lesser known artists for our revenues.
On November 16, 1999, we released "Tha Streetz Is A Mutha," the second
album by Kurupt and the only record we have released independent of our former
joint venture with A&M. Kurupt is Antra's best-known recording artist, and our
future plans envision other projects involving Kurupt, including another album
scheduled for release in the fourth quarter of 2000. Although we have other
artists whose recordings are in various stages of production and scheduled for
release in the first half of 2000, none are as well known as Kurupt. To date,
Antra has not marketed albums on behalf of these other artists, so it cannot
predict how these artists will be received by record buyers. Therefore, Antra
depends on the commercial success of Kurupt's current and future work and
Kurupt's continuing ability and willingness to create recordings for us. If,
for any reason, he becomes unavailable to produce new records for us, we would
have to rely on the unproven artists under contract to us and our joint venture
with Artemis. We cannot assure you that these other artists will be successful.
If we are unable to secure sufficient financing prior to the scheduled release
of a record, we may have to delay the release of that record.
Our business plan includes the release of a series of records in calendar
year 2000. Each record we produce is financed separately. We cannot assure you
that we will be able to arrange financing on acceptable terms when we need it.
The amount of our return with respect to each record we produce depends to a
great extent on whether we obtain financing and the terms of the financing. For
example, for the record we released on November 16, 1999, our distributor has
provided some of this financing in exchange for a greater fee based on a
percentage of profits. Under our new arrangements with the distributor, the
distributor will provide some financing for some of our records and other
records may be financed under our new joint venture with the distributor.
Nevertheless, there is no assurance that we will obtain sufficient financing or
that the joint venture will be funded sufficiently to enable us to produce each
record we would like to release.
Our success will depend on our artists' performance.
Antra Music has entered into recording contracts with several artists. We
cannot assure you that we will be able to attract additional artists. We may
not be able to develop our talent successfully or in such a manner that
produces significant sales. Furthermore, each recording is an individual
artistic work, the public acceptance of which cannot be known in advance.
Accordingly, we cannot assure you as to the financial success of any particular
release, the timing of such success or the popularity of any particular artist.
Antra depends on the continued popularity of urban music.
Antra currently produces records in the urban music segment of the
industry. Antra's artists are all in this segment of the market. Although Antra
believes that this sector will continue to grow, consumer taste is
unpredictable and constantly changing. If tastes quickly move away from this
type of music and Antra does not develop any alternatives, Antra may not be
able to sell enough records to be profitable.
5
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization at March 31, 2000. This
section should be read in conjunction with the financial statements and related
notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
March 31,
Short-Term Liabilities 2000
---------------------- ---------
<S> <C>
Long-Term Liabilities:*
Subordinated Convertible Notes ................................. $ 806,441
Deferred interest payable ...................................... 193,559
Officer loan payable ........................................... 21,334
Other long-term indebtedness ................................... 5,514
------------
Total long-term indebtedness ................................. $ 1,026,848
============
Preferred Stock, $.001 par value; 5,000,000 shares authorized;
none issued and outstanding .................................. $ 0
Common Stock, $.001 par value; 50,000,000 shares
authorized; 12,344,210 shares issued and outstanding ......... 12,344
Additional paid-in capital ..................................... 4,986,856
Accumulated deficit ............................................ (5,401,825)
------------
Total stockholders' equity (deficit) ......................... $ (267,825)
============
</TABLE>
* The above does not reflect outstanding secured convertible notes in the
principal amount of $4,866,666 which amount is treated as a current
liability.
USE OF PROCEEDS
Antra Holdings will not receive proceeds from the sale of the shares
offered hereby. Any proceeds received upon exercise of warrants will be
utilized as working capital.
SELECTED FINANCIAL DATA
The following selected financial information is derived from the audited
financial statements of Antra Holdings. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
YEAR ENDING THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
--------------------------------- ------------------------------
1999 1998 2000 1999
--------------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Income .............................. $ 85,366 $ 20,000 $ 3,220,210 $ 18,390
Expenses ............................ 2,334,821 1,415,107 4,461,108 78,101
(Loss) from operations .............. (2,249,455) (1,395,107) (1,240,898) (59,711)
Net (loss) .......................... (1,696,676) (1,595,107) (1,500,628) (59,711)
(Loss) per share .................... (0.15) (0.17) (0.12) (0.001)
Shares used in computing loss
per share .......................... 11,118,546 9,268,030 12,344,210 9,544,280
BALANCE SHEET DATA:
Working capital (deficit) ........... $ (2,341,318) $ (75,030) $ (4,014,915)
Total assets ........................ 6,364,698 122,286 6,721,788
Total long-term debt . .............. 1,026,848 1,217,079 1,026,848
Total stockholders' equity (deficit) 1,232,803 (1,205,321) (267,825)
</TABLE>
6
<PAGE>
MARKET INFORMATION
Our common stock is currently traded in the over-the-counter market on the
"pink sheets."
Set forth below are the high and low closing bid quotations for our common
stock for the periods indicated as reflected at the time on the OTC Bulletin
Board under the symbol "RECD." Such quotations reflect interdealer prices
without retail mark-up, mark-down or commissions, and may not reflect actual
transactions.
Period Ending High Low
------------- ---- ---
December 31, 1999 ........... $8.375 $3.625
September 30, 1999 .......... 7.50 4.50
June 30, 1999 ............... 4.50 1.25
March 31, 1999 .............. 3.75 1.75
December 31, 1998 ........... 5.125 1.50
September 30, 1998 .......... 5.875 4.25
June 30, 1998 ............... 5.875 5.00
March 31, 1998 .............. 6.00 4.50
As of May 8, 2000, there were approximately recordholders of the our
common stock, although we believe that there are more than five hundred
beneficial owners of our common stock. There are no shares of preferred stock
currently outstanding.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and related notes contained elsewhere in this
prospectus.
This prospectus contains forward-looking statements.
We intend to identify forward-looking statements in this prospectus using
words such as "believes," "intends," "expects," "may," "will," "should,"
"plan," "projected," "contemplates," "anticipates," or similar statements.
These statements are based on our beliefs as well as assumptions we made using
information currently available to us. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this
prospectus.
Because these statements reflect our current views concerning future
events, these statements involve risks, uncertainties and assumptions. Actual
future results may differ significantly from the results discussed in the
forward-looking statements. Some, but not all, of the factors that may cause
these differences include those discussed in the Risk Factors section beginning
on page 5 of this prospectus. These include, among others,
o acceptance of the artist and the style of music
o ability to produce and release records
o ability to promote products
o ability to sign new artists
o need for additional financing
o the success of our Recordstogo.com joint venture.
7
<PAGE>
General
Prior to October 1998, we were essentially a development-stage company.
Therefore comparisons between 1999 and 1998 are of limited value.
On November 16, 1999 we released Kurupt's latest album, "Tha Streetz Iz A
Mutha." The album was the first album we released independent of our former
joint venture with A&M. Our plan of operation for 2000 is to release another 6
to 8 records, both independently and through our new Antra Records LLC joint
venture. On March 21, 2000, we released a single, "Things I've Seen," by
Spooks. Through the joint venture, we expect to release the original soundtrack
to the upcoming motion picture "Once in the Life," in July 2000. Our next
independent release is the debut album by Sheeba Black, which is expected to be
in July 2000. The joint venture plans to release an album by Spooks in July
2000. Later in the year, we expect to release albums by Crush, and Kurupt and
the soundtrack to the motion picture "O," a Miramax film.
We also plan to continue to sign new artists, to produce and release
additional records, to operate our Recordstogo.com joint venture, and to
develop our music-publishing business.
Our cash needs have been greatly reduced as a result of our new Antra
Records LLC joint venture. Accordingly, we expect to be able to satisfy our
cash requirements for approximately 6 months, but may have to raise additional
funds if our existing projects do not produce revenue consistent with our
current expectations.
First quarter 2000 compared to first quarter 1999 (unaudited)
During the first quarter of 2000 we had revenues of $3,220,200 compared to
revenues of $18,390 in the comparable quarter of the prior period. During 2000
our revenues arose from the sale of Kurupt's second album which accounted for
substantially all the first quarter revenue. There were no sales in the prior
comparable quarter.
Because of the release of this album and other activity we had production
costs of approximately $3,444,818 and selling expenses of $473,044 in the first
quarter 2000 compared to $9,505 and $52,566 of such expenses in the prior
comparable quarter.
Due to increased activity and contemplated activity as well as expense in
connection with our registration statement, our general and administrative
expenses increased from $16,030 (after reimbursement) in the first quarter of
1999 to $543,046 in the first quarter of 2000.
As a result of our increased production, selling and general and
administrative expenses rose overall expenses were $4,461,108 in the first
quarter 2000 compared to $78,101 in first quarter 1999. We had net loss from
operations in the first quarter 2000 of $1,240,898 compared to a loss of
$59,711 in first quarter 1999.
In first quarter 2000 we also incurred interest expense of $152,085 due to
our outstanding notes and had $103,126 equity in loss of our new joint venture.
These items plus a provision for taxes of $8,500 resulted in a net loss of
$1,500,628 for the first quarter of 2000.
Fiscal year 1999 compared to fiscal year 1998
Our revenue was $85,366 for 1999 while we received revenue of
approximately $20,000 for all of 1998. We derived substantially all of our
revenues in 1999 from the release of Kurupt's album.
We had a net loss during 1999 of $1,508,276, compared to a net loss in
1998 of $1,595,107. The decrease in loss was primarily a result of the $725,000
payment we received as part of the settlement of our joint venture with A&M.
Our net loss from operations for 1999 was $2,061,055, compared to a net loss
from operations of $1,395,107 in 1998.
Our operating expenses during 1999 were approximately $2,146,421, compared
to approximately $1,415,107 during the prior year. However, a significant
amount of overhead expenses were reimbursed in
8
<PAGE>
1998. Factoring out these reimbursed expenses, operating expenses would have
been less in 1999, primarily as a result of reduced salaries, promotional costs
and consulting expenses. Other expenses incurred in 1999, for example $357,378
for mechanical royalties, were higher than in 1998.
In 1998, we incurred expenses in setting up our joint venture with A&M.
The A&M joint venture incurred expenses in connection with the signing of the
artist, Kurupt, and with the recording, production, promotion and distribution
of his album, "Kuruption." All expenses were written off as incurred, in
accordance with industry practice.
Liquidity
Antra had a working capital deficit of $4,461,108 at March 31, 2000,
compared to a working capital deficit of $2,341,318 at December 31, 1999. The
decrease in working capital resulted almost entirely from prepayments of
expenses and other expenses as recording costs incurred in connection with the
release and promotion of an album in the last quarter of 1999. Antra used net
cash of $2,311,514 in its operating activities for 1999, compared with net cash
used in operating activities of $1,441,633 in 1998. We used net cash of
$1,048,073 in operations for the quarter ended March 31, 2000. A significant
portion of cash Antra has used was for the recording, production, promotion and
distribution of its second album.
From July 1999 through March 2000 we received gross proceeds of $4,866,666
from the sale of secured convertible debentures. We require significant working
capital to produce, manufacture, promote and distribute our music. To date we
have satisfied our working capital requirements through borrowing including our
borrowing through the private placement in July 1999. We believe we will
require additional working capital in connection with our albums to be released
in July 2000 and our other albums to be released thereafter.
In November 1999, holders of our secured convertible notes permitted us to
accelerate part of our option to require them to lend us additional funds. As a
result, we received $800,000 in gross proceeds from the private placement of
additional secured convertible notes to these investors. In March 2000, these
investors permitted us to accelerate the balance of this option, and agreed to
purchase a number of secured convertible notes over and above the amount
specified in their original agreement. As a result, we received $1,300,000 in
gross proceeds from the private placement of these additional secured
convertible notes to these investors.
Our need for working capital for the recently released Kurupt album and
for up to 8 records per year has been reduced somewhat by services and funding
provided by our distributor, Artemis Records, under our revised distribution
agreement. Under this agreement, the distributor advanced $800,000 to Antra
against future revenues under the agreement and agreed to advance funds for the
manufacture and promotion of our records. While we have benefitted from these
terms, our percentage participation in revenues derived from these albums is
reduced by the degree to which the distributor advances additional funding.
Unless our working capital position improves, we may be compelled to rely on
our relationship with the distributor.
Our need for working capital has also been reduced somewhat as a result of
our new joint venture arrangement. Under this arrangement, the joint venture
will produce albums for at least 3 artists in each year. The annual budget for
the joint venture will be funded by Artemis, which will also provide necessary
services to the venture. The joint venture will now produce the soundtrack
album for the motion picture "Once in the Life," which is scheduled for release
in June 2000, and an album by Spooks, also scheduled for release in June 2000.
Artemis will reimburse Antra for $150,000 of expenses incurred in connection
with the soundtrack album and all out-of-pocket expenses in connection with the
Spooks album.
We have an investment of 2,000,000 shares of Teltran International Group,
Ltd. common stock currently valued at $4,000,000 on our unaudited March 31,
2000 balance sheet. Based on the closing market price of approximately $1.875
of Teltran's common stock on June 29, 2000, the total value of the investment
on that date was approximately $3,750,000. If the price of Teltran's common
stock remains below $2.00 the value of the investment on our balance sheet may
be revised to reflect the reduced value of the shares.
BUSINESS
Introduction
Antra Holdings Group, Inc. is a holding company. Through our wholly owned
subsidiary, Antra Music Group, Inc., we produce, acquire, license and
distribute high-quality recorded music. Antra Music was formed in 1997 to
promote urban contemporary music. Also in 1997, Antra Music entered into an
agreement with
9
<PAGE>
Ricardo Brown, the urban recording artist known as "Kurupt". We primarily focus
on urban music, the area of the industry that includes hip-hop, rap and rhythm
and blues. We believe, based industry sources and census data, that this area
offers significant growth and profit potential.
Hip-Hop or Urban Music was the most dynamic segment of the contemporary
music industry in 1997. The Recording Industry Association of America figures,
compiled by Chilton Research Services, show Hip-Hop or Urban with the largest
percentage increase in consumer record purchases, accounting for 10.1% of total
shipments or $1.23 billion. This figure represents an increase of more than
250% over ten years.
Through a joint venture with A&M Records, we released our first recording
in October 1998. This was a two-CD set by our primary artist, Kurupt, entitled
"Kuruption." Kuruption sold between 300,000 to 400,000 copies. A&M terminated
the joint venture after its parent company, Polygram Holding Group, merged with
Seagrams. A&M transferred to us all of its rights in the former joint venture's
agreements with Kurupt and Baby S, but retained exclusive ownership of all
rights to recordings made prior to the termination.
We entered into an agreement with Artemis Records on July 28, 1999, which
was amended in December 1999. The distribution agreement replaces our former
joint venture and enables us to retain exclusive ownership of all of our master
recordings.
We have recording contracts and co-publishing contracts with several other
artists including Crush, Sheeba Black and Spooks.
Antra plans to enter into or has commenced several different ancillary
businesses:
o We have established a publishing subsidiary to receive revenues generated
from the publication of our artists.
o We are in the process of establishing a "Recordstogo.com" joint venture.
o We may in the future produce and sell music videos.
Structure of the Music Industry
The music business consists of several functions: publishing, production,
manufacturing, licensing, distribution and promotion.
Publishing. The process begins when a songwriter writes a piece of music
and agrees with a publishing company to market the work to the industry. By
contracting for the rights to music written by different songwriters, the
publishing company builds a library of music, known as a catalog. The
publishing company markets its music catalog to producers, artists and record
companies, and collects royalties on each recording of the music that is sold.
Antra currently has co-publishing agreements with several artists. Under
these publishing agreements, Antra and the artist jointly own some
compositions, in equal shares. Antra can exploit the compositions in any
commercial manner. Antra is entitled to all gross receipts earned by a
composition, but must pay fifty percent of the net income to the artist. Antra
recently established a publishing subsidiary.
Production. Once the record company decides to record a song with a
performing artist, the record company underwrites the costs associated with
producing a market-ready master recording of the song. This entails paying for
recording studio time, hiring studio musicians and paying sound mixers to edit
the tape. The artist is responsible for delivering satisfactory master
recordings to the record company.
Antra's joint venture with A&M produced Kurupt's initial album,
"Kuruption." Antra released "Tha Streetz Iz A Mutha," Kurupt's second album
with tracks produced by Daz Dillinger and Dr. Dre, on November 16, 1999. We
released Spooks' single, "Things I've Seen," in the first quarter of 2000 and
expect to release 6-8 albums during the balance of 2000.
Manufacturing. Once a master is completed, the record company contracts
with a manufacturer or duplicator of recording formats to make multiple copies.
Antra contracts with others to manufacture its records or arranges for
manufacturing through an agreement with its distributor. Amounts advanced by
the distributor for the manufacture of Antra's next album will be repaid out of
the revenues from the sale of this album.
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Licensing. Antra, like many other recorded music ventures, will license
the musical works it intends to sell. This means that Antra will purchase the
right to reproduce and sell the musical works in exchange for royalties paid to
the music publisher and artist.
Distribution. Once copies have been completed, the record company's
distribution system stocks, sells or markets, takes orders for and delivers the
copies of the recording to distribution outlets. In many ways, distribution is
the most critical function in the record business, since distributors provide
the access to, and thereby control, the marketplace. Distribution can be
divided into two distinct categories: Traditional and Non-traditional.
Traditional outlets include small independent record stores, leased
departments of large retail stores, and large chain record stores.
Non-traditional outlets are also known as alternative distribution.
Independent retail outlets not served by traditional distributors, direct
response marketing and Internet sales comprise the bulk of non-traditional
sales. Non-traditional outlets are a rapidly growing area of distribution.
Antra has agreements for the distribution of Kurupt's album "Tha Streetz
Iz A Mutha" in Europe, Australia and New Zealand. Antra will receive royalties
from the sale of the album under these agreements at rates between 20 and 24
percent.
Promotion. Once the record is ready for market it must be promoted to
ensure sales upon distribution. The traditional and most effective means of
promoting recorded music is by radio airplay. Obtaining radio air play for a
new release is an extremely competitive process. As radio stations increasingly
focus on specific music formats, it is becoming easier for independent
producers to target the stations that are most likely to air a particular new
recording. In a number of markets, hiring independent regional promoters can be
quite effective in gaining airplay for a release. Public and college radio
stations are useful venues for promoting lesser-known artists. Music video air
play on MTV or VH-1, or other video stations or programs, is essential to the
commercial success of recording music artists and their records. Promoting
urban contemporary music may involve more-direct promotional efforts in urban
communities. For example, albums may be promoted at local dance clubs.
Songs that are aired on a major radio station are chosen by the program
director, often in conjunction with a format consultant. Once a recording is
aired, the amount of repeat play it receives depends on listener requests and
feedback, as well as actual sales data. Since listener response and sales
depend in large measure how often a release is aired, building a commercial hit
depends on an ongoing cycle of air play and sales. Nurturing this cycle
requires constant marketing attention and careful coordination with
advertising, concert schedules and other promotional activities. Other
promotional tools include print advertising, retail promotions and concert
tours.
The key to finding an audience for new for new artists is to properly
coordinate all these promotional activities to maximize awareness and exposure.
Antra will, where possible, use its in-house expertise to direct, coordinate or
assist with the promotional activities of its artists in order to keep its
costs down. In conjunction with its first release with its distributor,
Artemis, Antra will utilize the promotional and marketing personnel of Artemis
and its affiliates. By coordinating or providing assistance with these
activities, to the extent practicable, in-house, costs will be further kept
under control.
The recorded-music industry has special considerations.
As a recent entrant into the recorded-music business, we will be subject
to all the factors involved in establishing a new business. Additionally, there
are particular risks common in the recorded music industry. For example:
o Changes in the timing of new releases can cause significant fluctuations
in quarterly operating results. We cannot assure you that we will be able
to generate sufficient revenues from successful releases to cover the
costs of unsuccessful releases.
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o It is industry practice to sell recorded music products on a returnable
basis. We will primarily follow this practice in the future. We may have
to establish reserves for future returns of products based on our return
policies and return experience. If more of our product gets returned that
we anticipate in these reserves, it could adversely affect our results of
operations.
o The business of manufacturing records can be transformed as new
technologies affect the formats used to make copies of recordings. The
development of new formats often positively impacts growth. Sales of vinyl
LP records have been nearly extinguished by cassettes and CDs. We expect
that new formats employing digital technology -- for example, digital
audiotape and downloadable MP3 -- will gain wider acceptance in the near
future. Digital formats offer the ability to make nearly perfect copies of
recordings. Therefore, while we believe the development of these formats
should have a positive overall effect on our industry, we are concerned
that unauthorized reproduction of recordings using these technologies
could have a negative effect.
Talent development has special considerations.
o To secure the services of music artists, we will have to pay advances
consistent with industry standards. If an artist's album does not sell
well, or if the artist fails to produce an album, a producer generally
cannot recover the amount of the advance already paid to the artist. We
cannot assure you that any of the artists to whom we make advances will
produces sales revenues for us. Even if they do, the revenue may not be
sufficient to recoup any advances we have made to them.
o Any artist developed by Antra Music might request a release from his or
her agreement with us. The artist's contractual obligations are highly
personal and creative in nature, so it is not feasible to force an
unwilling artist to perform the terms of his or her contract. If we sign
an artist and later lose that artist, it could have a materially adverse
effect on Antra's business.
Our joint venture with A&M and its termination
On March 13, 1998, Antra Music and A&M Records, a division of Polygram,
formed a joint venture called Wall Street Records LLC. A&M and Antra each owned
50% of the joint venture. The joint venture was intended to be a vehicle by
which Antra Music and A&M could produce, manufacture and distribute recordings
and related materials through Polygram's worldwide distribution channels.
However, in April 1999 A&M terminated the joint venture after Polygram merged
with Seagrams.
A&M was to be responsible for significant periodic contributions towards
the joint venture's operating budget for expenses associated with new recording
albums produced by the joint venture's recording artists. The joint venture was
to cover significant costs of promotion and production that Antra would
otherwise have to bear alone.
In accordance with the agreement that terminated the joint venture:
o Antra transferred to A&M all of its interest in the joint venture's
limited liability company;
o A&M paid Antra $725,000;
o A&M transferred to us all of its rights in the former joint venture's
agreements with Kurupt and Baby S, but retained exclusive ownership of
all rights to recordings made prior to the termination;
o A&M disclaimed any rights to several artists previously submitted to the
joint venture by Antra.
New Distribution Agreement
On July 29, 1999 Antra Music entered into a three-year distribution
agreement with Artemis Records. The distribution agreement replaces Antra's
former joint venture and enables it to retain exclusive ownership of all of its
master recordings. Artemis further distributes records though RED Distribution,
Inc., Edel, a German record company and Sony. In December 1999 and January
2000, Artemis advanced to Antra an aggregate of $800,000 against moneys payable
under the distribution agreement.
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The distribution agreement makes Artemis the exclusive distributor of one
album by Kurupt and one other album by Sheeba Black. Antra may submit up to 8
albums under the agreement in any contract year. Kurupt's album "Tha Streetz iz
a Mutha" has already been released under the distribution agreement. Artemis
advanced funds for the manufacture of the "The Streetz" under this agreement.
The advance will be repaid out of the proceeds of the sale of the record. To
secure the repayment of these advances, Antra has granted Artemis a security
interest in inventory, production parts and components and accounts receivable
from the distributor under the agreement.
During each contract year, Artemis will advance independent promotion
costs, usually for radio promotion, for up to 4 albums designated by Antra. The
distributor will advance up to $50,000 for albums that are categorized as "pop"
or "urban" and up to $75,000 for albums categorized as "crossover," meaning
they are also popular in more than one category.
In general, Artemis will receive a distribution fee based upon a
percentage of total sales under the agreement, less returns, credits, rebates
and reserves. The percentage is reduced if net sales exceed $10,000,000 in any
given contract year. The percentage is further reduced if net sales exceed
$20,000,000 in any given contract year
Under our distribution agreement, manufacturing costs are administered and
advances by Artemis on our behalf. Antra will not have any out-of-pocket costs
for manufacturing. While we have benefitted from these terms, our percentage
participation in revenues derived from these albums is reduced by the degree to
which the distributor advances additional funding.
Artemis will warehouse Antra's inventory of these records and will fulfill
orders and distribute these records through the industry's normal retail
channels in the United States. Artemis will also handle all returns of the
applicable records.
Recordstogo.com
On September 30, 1999, Antra Holdings and Teltran International Group Ltd.
formed a joint venture, Recordstogo.com. The joint venture is a corporation
formed to establish and operate a website for the sale of music recordings.
Both the website and the joint venture corporation are named Recordstogo.com.
The board of directors of the corporation consists of two members, one
nominated by each of Teltran and Antra. We and Teltran have each contributed at
least $75,000 to the joint venture and each now owns 49% of the joint venture
corporation's stock. Each of us have provided services to the venture, which
will be reimbursed from the funds of the joint venture. We and Teltran are each
obligated, if requested upon unanimous decision of the board of directors, to
contribute an additional $175,000 to this venture. We and Teltran may also make
additional voluntary contributions to the joint venture from time to time. The
remaining two percent of the shares are owned by one of the joint venture's
suppliers who is not affiliated with either Teltran or Antra.
Recordstogo.com, Inc. has entered into two agreements with distributors of
music recordings for the distribution of records owned by these entities over
the Internet and through the website. The records in each case are not being
currently marketed by their original producer or distributor.
The Recordstogo.com website, http://www.recordstogo.com/, has been
designed and completed and may be viewed on the Internet. Recordstogo.com.,
Inc. has retained an agency to further develop the joint venture's marketing
strategy and has been actively seeking relationships with a variety of
different businesses that can provide content for or direct potential customers
to the Recordstogo.com website. The joint venture corporation is also in the
process of completing the appropriate databases and fulfillment capabilities at
the warehouse of one of its suppliers. The joint venture commenced commercial
operations in May 2000.
We expect Recordstogo.com to generate revenues through the sale of
records, advertisements and music merchandise. Additionally, visitors to the
website can:
o Buy records and CDs from a database of music titles ranging from the
early days of vinyl recordings to present-day CDs. At first this database
will contain approximately 360,000 titles, although we expect it to grow
significantly by year-end 2000;
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o Download music in MP3 and other formats;
o Purchase "hard-to-find" records and CDs and sell used records and CDs to
others in our auction house;
o Buy music memorabilia and possibly other entertainment products,
including videos;
o Listen to interviews with musical artists from all generations; and
o Discuss music and the music industry in our interactive chat rooms.
New Antra Records LLC Joint Venture
In December 1999, Antra Music and Artemis Records agreed to form a
Delaware Limited Liability Company, named "Antra Records LLC," of which they
will each be 50/50 co-owners. This joint venture vehicle will operate out of
Antra Holdings' current offices in Philadelphia. It will initially run for 3
years and will be automatically extended for an additional two years unless
Artemis terminates the agreement.
Antra Music will select artists to submit to Antra Records for production
and distribution. Antra Music will have sole discretion to determine which
artists it will furnish under the joint venture agreement and which it will
furnish under the distribution agreement. Antra must submit no fewer than 5
artists to the joint venture during the term. Artemis can accept or reject
these artists, but Artemis must accept at least 3 artists in each year. Antra
can submit any artist rejected by the joint venture under the distribution
agreement with Artemis.
Artemis is obligated to fund the joint venture, to the extent the venture
does not fund itself from operations, based on an annual budget that has been
approved by both Antra Music and Artemis for each year of the term. Artemis'
obligation takes the form of a line of credit that Artemis will make available
for Antra Record to draw upon. The joint venture will pay interest on drawings
under the line of credit at 1% over Citibank's prime rate. Neither Antra Music
nor Joseph Marrone has an obligation to repay these loans.
Artemis will also reimburse Antra for $150,000 of expenses in connection
with the soundtrack album for the motion picture "Once in the Life," which is
scheduled for release in June 2000, and will reimburse all out-of-pocket
expenses in connection with the Spooks album, also scheduled for release in
June 2000.
Recording Agreements
Antra has recording agreements with six artists: Kurupt, Spooks, Sheeba
Black, and Crush. Antra assigned its contract with Spooks to its Antra Records
LLC joint venture. These provide for initial terms of twelve months, with
additional twelve-month options exercisable by Antra. The Recording Agreement
provides that during the term of the agreements, Antra owns all right, title
and interest in all musical recordings recorded under the agreements. Antra's
rights under these agreements will survive even after they terminate. Under
these agreements, Antra also has the right to use and publish each artist's
name and likeness in connection with video and commercial purposes. According
to the agreements, the artist receives a royalty for sales of recording albums
and singles in line with industry norms, which typically range from ten to
fifteen percent.
Exclusive Production Recording Agreements
Antra currently has exclusive production recording agreements with Kurupt.
Kurupt has agreed to provide Antra with his exclusive personal services as a
phonograph-recording artist for a period of twelve months. Antra has the option
to extend the contract by additional one-year options, subject to other terms
and conditions. Antra is required by the agreement to seek agreements with
third-party record companies who will manufacture and distribute the artist's
recordings. Antra has the right to select the producer and musical composition
for any albums produced by the artist under the recording agreement. Antra also
has the exclusive right to the artist's name and likeness and owns all right,
title and interest in all recordings produced under the agreement.
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Relationship with Artists
Our plan is to sign and develop new or emerging urban or hip-hop oriented
music artists and, to the extent practicable, sign established artists. We
intend to recruit new and emerging artists and to enter into exclusive,
long-term recording contracts. These contracts are expected to cover an initial
album, with options to record four to seven additional albums, at Antra's
discretion). Antra will concentrate its resources on a small number of artists,
developing a tailored marketing and promotion plan for each. There can be no
assurance that Antra will be able to attract new and emerging music talent or
established artists, or, if Antra is able to attract such talent, that Antra
will be able to develop that talent successfully or in such a manner so as to
commercially exploit.
If Antra develops commercially successful music artists, there can be no
assurance that Antra will be able to maintain its relationships with such
artists even if it has entered into exclusive recording contracts with them.
Furthermore, performing artists occasionally request releases form their
exclusive recording agreements. Among the reasons that may cause an artist to
engage in so-called "label jumping" are expectations of greater income,
advances or promotional support by a competing label. There can be no assurance
that any given artist developed by Antra will not determine to request a
release form his or her agreement with Antra. Because of the highly personal
and creative nature of the artist's contractual obligations to Antra, it is not
feasible to force an unwilling artist to perform the terms of his or her
contract with Antra.
Copyrights
Antra's recorded music business, like that of other companies involved in
recorded music, will primarily rest on ownership and or control and
exploitation of musical works and sound recordings. Antra's music products,
including its commercial music, are and will be protected under applicable
domestic and international copyright laws.
Although circumstances vary from case to case, rights and royalties
relating to a particular recording typically operate as follows:
When a recording is made, copyright in that recording either vests in the
recording artist and then is licensed to the record company or vests in the
record company itself, depending on the terms of the agreement between them.
Similarly, when a musical composition is written, copyright in the composition
either vests in the writer and is then licensed to a music publishing company
or vests in a publishing company. A public performance of a record will result
in money being paid to the writer and publisher. The rights to reproduce songs
on sound carriers results in mechanical royalties being payable by the record
company to the recording artists for the use of the recording. Antra operates
in an industry which revenues are adversely affected by the unauthorized
reproduction of recordings for commercial sale, commonly referred to as
"piracy", and by home taping for personal use.
Potential publishing revenues may be derived from Antra's ownership
interest in musical compositions, written in whole or in part by artists.
Management anticipates securing an ownership position in the copyright to any
compositions written by its recording artists, where such rights are available
and have not been previously sold or assigned. Generally, revenues from
publishing are generated in the form of:
o Mechanical royalties, paid by the record company to the publisher for the
mechanical duplication of the copyright to a particular composition. This
is distinct from the copying of the artist's performance of that
composition.
o Performance royalties, collected and paid by performing rights entities
such as ASCAP and BMI for the actual public performance of the composition
as represented by radio airplay, Musak, or as a theme or jingle broadcast
in synchronization with a visual image via television.
o Sub-publishing revenues derived from copyright earnings in foreign
territories, and publishers in those territories acting as designated
collection agents for Antra. and
o Licensing fees derived from printed sheet music, uses in synchronization
with images as in video or film scores, computer games and other software
applications, and any other use involving the composition.
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Competition
Antra will face intense competition for discretionary consumer spending
from numerous other record companies and other forms of entertainment offered
by film companies, video companies and others. Antra will compete directly with
other recorded music companies, including the major recorded music companies,
which distribute contemporary music, as well as with other record companies for
signing artists and acquiring music catalogs. Many of these competitors have
significantly longer operating histories, greater financial resources and
larger music catalogs than Antra. Antra's ability to compete successfully in
the recorded music business will be largely dependent upon its ability to sign
and retain artists who will prove to be successful and to introduce music
products which are accepted by consumers.
Employees/Independent Contractors
As of May 8, 2000 Antra had 20 employees, all of whom were located at our
Philadelphia offices. None of our employees is represented by a labor union. We
have not experienced any work stoppage and considers relations with our
employees to be good.
As is customary in the music business, Antra also utilizes the services of
artists, performers, producers, engineers, roadies, booking agents and others
who are independent contractors. These independent contractors hire out their
services on an as needed basis and receive a set fee from Antra per assignment.
Independent contractors are utilized because the individuals providing these
services do so only on this basis, the services performed by these independent
contractors are less expensive than having full time employees perform these
services.
Properties
Antra's executive offices are located at 1515 Locust Street, Philadelphia,
Pennsylvania 19102, where it subleases approximately 10,400 square feet. This
sublease expires on September 30, 2003. The annual base rental for this space
is approximately $104,000.
Dividends
We have not paid any dividends on our common stock since the formation of
our company and we do not expect to pay any cash or other dividends in the
foreseeable future. If we have any earnings in the future from our operations,
we plan to retain those earnings to help finance our future operations and
growth. Any decision on the future payment of dividends is solely at the
discretion of the board of directors and will depend on various factors
including the results of our operations and our financial condition.
Legal Proceedings
Antra and some of its stockholders are defendants in a legal action
brought in the Third Judicial District Court in and for Salt Lake County, Utah
in October 1997. Plaintiffs allege that Antra or the stockholders failed to
convey 100,000 shares of Antra's common stock. However, the transaction alleged
involves only the plaintiffs and those stockholders. The complaint does not
allege that Antra participated in the transaction in any way. Although it was
shares of Antra that were involved in the alleged transaction, Plaintiffs do
not allege that Antra itself was a party to the transaction. Therefore, Antra
believes that it was incorrectly named as a party to this lawsuit and denies
any liability.
However, Antra's motion to dismiss the action was denied by the court. If
the outcome of this case is unfavorable, Antra's exposure would depend on the
price of its stock. Assuming $5 per share is the price of the stock, the
liability could be approximately $500,000. If treble damages were to be
awarded, Antra's exposure could be approximately $1,500,000.
Organizational History
Antra Music was formed in 1997 as a New Jersey corporation named Wall
Street Records, Inc. On April 24, 1998, it changed its name to Antra Music.
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Antra Holdings was formerly known as Opell, Inc. Opell was formed as a
Utah corporation on October 7, 1981 with the name "Summit Race Horse, Inc." In
January 1995, it merged with Opell, Inc., a Nevada corporation, solely to
change its domicile to Nevada. Opell had no operations or substantial assets
until it acquired all the outstanding shares of Antra Music in June 1997. In
January 1998, Opell was reincorporated in Delaware by merger into its wholly
owned subsidiary, Wall Street Records, Inc., a Delaware corporation. In April
1998, Wall Street Records, Inc. changed its name to Antra Holdings.
SELLING SECURITY HOLDERS
The shares of common stock being registered for the account of selling
security holders may be sold by those security holders or their transferees
commencing on the date of this prospectus. These shares may only be sold if the
holder of a convertible note first converts it into shares or a holder of a
warrant first exercises it to purchase shares.
The following table sets forth, as of May 8, 2000, information with
respect to the beneficial ownership of our common stock by each selling
security holder. The table assumes that all of the shares being offered will be
sold. Because the selling security holders may sell all, some or none of the
shares that he, she or it holds, the actual number of shares held by the
selling security holder before or after this offering may vary.
The column under the heading "Before the Offering -- Shares Beneficially
Owned" includes all shares currently outstanding, shares issuable upon
conversion of convertible notes currently outstanding and shares issuable upon
exercise of warrants currently outstanding.
The number of shares in the columns entitled "Before the Offering --
Shares Beneficially Owned"and "Shares Offered" reflect the maximum number of
shares Antra is required to register under its agreement with the holders of
the convertible notes and warrants. Depending on the price of Antra's common
stock at the time of conversion, the actual number of shares that Antra will
issue to holders of convertible notes is expected to be lower than as reflected
in these columns.
<TABLE>
<CAPTION>
Before the Offering After the Offering
--------------------- -----------------------------
Shares Shares Percent of
Identity of Stockholder or Beneficially Shares Beneficially Shares
Group (and relationship, if any) Owned Offered Owned Outstanding
-------------------------------- ------------ ------- ------------ -----------
<S> <C> <C> <C> <C>
Austost Anstalt Schaan ....................... 2,022,940 2,022,940 0 0
Balmore S.A. ................................. 2,022,940 2,022,940 0 0
Berkeley Group Ltd. .......................... 351,821 351,821 0 0
Castlebay Ltd. ............................... 400,000 400,000 0 0
Coastal Provinces Ltd. ....................... 407,240 407,240 0 0
Craighouse Limited ........................... 192,760 192,760 0 0
Ellis Enterprises, Ltd. ...................... 107,245 107,245 0 0
Nesher, Inc. ................................. 234,547 234,547 0 0
United Securities Services, Inc. ............. 175,846 175,846 0 0
Libra Finance S.A. ........................... 3,338,555 3,338,555 0 0
Hyett Capital Ltd. ........................... 292,048 292,048 0 0
Talbiya B. Investments Ltd. .................. 380,723 380,723 0 0
International Global Communications, Inc...... 220,000 220,000 0 0
</TABLE>
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PLAN OF DISTRIBUTION
Sales of shares of the common stock may be made from time to time by the
selling security holders, or, subject to applicable law, by pledgees, donees,
distributees, transferees or other successors in interest. These sales may be
made on the over-the-counter market or foreign securities exchanges, in
privately negotiated transactions or otherwise or in a combination of
transactions at prices and at terms then prevailing or at prices related to the
then current market price, or at privately negotiated prices. In addition, any
shares covered by this prospectus which qualify for sale pursuant to Section
4(1) of the Securities Act or Rule 144 under the Securities Act may be sold
under those provisions rather than by this prospectus. Without limiting the
generality of the foregoing, the shares may be sold in one or more of the
following types of transactions:
o a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the
selling security holders may arrange for other brokers or dealers to
participate in the resales.
In connection with distributions of the shares or otherwise, the selling
security holders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered under this prospectus in the course of hedging the
positions they assume with the selling security holders. The selling security
holders may also sell shares short and deliver the shares to close out such
short positions. The selling security holders may also enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares registered under this prospectus, which the
broker-dealer may resell by this prospectus. The selling security holders may
also pledge the shares registered hereunder to a broker or dealer and upon a
default, the broker or dealer may effect sales of the pledged shares by this
prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling security holders in
amounts to be negotiated in connection with the sale. These brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act.
Information as to whether underwriters who may be selected by the selling
security holders, or any other broker-dealer, is acting as principal or agent
for the selling security holders, the compensation to be received by
underwriters who may be selected by the selling security holders, or any
broker-dealer, acting as principal or agent for the selling security holders
and the compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
prospectus. Any dealer or broker participating in any distribution of the
shares may be required to deliver a copy of this prospectus, including a
prospectus supplement, if any, to any person who purchases any of the shares
from or through such dealer or broker.
Each of the selling security holders have executed an agreement in which
they confirm the method of distribution described in this section and agree not
to sell the shares if the registration statement is not current.
Antra Holdings has advised the selling security holders that if at any
time they may be engaged in a distribution of the shares, they are required to
comply with Regulation M under the Exchange Act. The selling security holders
have acknowledged such advice by separate agreement and also agreed in that
agreement to comply with the regulation. In general, Regulation M precludes the
selling security holders, any affiliated purchasers and any broker-dealer or
other person who participates in such distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase any
security which is the subject of the
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distribution until the entire distribution is complete. A "distribution" is
defined in the rules as an offering of securities that is distinguished from
ordinary trading activities and depends on the "magnitude of the offering and
the presence of special selling efforts and selling methods." Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security.
It is anticipated that the selling security holders will offer all of the
shares for sale. Further, because it is possible that a significant number of
shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the common stock.
MANAGEMENT
The following are the officers and directors of Antra Holdings:
Name Age Position
----- --- --------
Chairman of the Board,
Joseph M. Marrone, Jr. ......... 34 Chief Executive Officer and Director
Thomas R. Kessler .............. 61 Director
Arthur G. Rosenberg ............ 61 Director
Joseph M. Marrone, Jr. formed Antra Music in 1997 and now devotes
substantially all of his time to Antra's business. He has been engaging in
private law practice in the Philadelphia area since 1993, although his practice
is no longer accepting new matters. He previously served as a City Solicitor
for the City of Philadelphia and worked as a campaign strategist for Mayor Ed
Rendell in the 1991 election. Mr. Marrone successfully negotiated the release
of Kurupt from his previous contract and has since managed Kurupt's career. He
has been a director of Antra Holdings since 1997.
Thomas R. Kessler has extensive experience in the banking and securities
businesses. From 1961 to 1993, Mr. Kessler held various positions at Euro
Canadian Bank, Continental Bank International, and Compass Bank & Trust Company
Ltd,. Since 1994, he has been a managing director of Montaque Securities
International Limited. Mr. Kessler received his law degree from Cleveland
Marshall College of Law, Cleveland State University. He has been a director of
Antra Holdings since 1998.
Arthur G. Rosenberg has been a principal of The Associated Companies, a
real estate development firm, since 1987 and became a principal of Millennium
Development Group LLC in 1998. Prior to that, Mr. Rosenberg was a practicing
lawyer in Huntington, New York and served as general counsel for ITT Levitt &
Sons, Inc., an international builder. Mr. Rosenberg currently serves on the
boards of directors of Mike's Original, Inc. and Phar Mor Inc. He has been a
director of Antra Holdings since 1997.
Directors are elected to serve until the next annual meeting of
stockholders of Antra Holdings or until their successors are elected and
qualified. There are no audit, compensation or other committees of the board of
directors.
Executive Compensation
The following table sets forth information concerning compensation paid or
accrued by Antra Holdings or its subsidiaries for services rendered during
fiscal years 1999, 1998 and 1997 to our chief executive officer. No other
executive officer's compensation exceeded $100,000 during any of these fiscal
years.
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Position Year Salary
--------------------------- ----- --------
<S> <C> <C>
Joseph M. Marrone, Jr., Chairman and Chief Executive Officer .......... 1999 $ 65,200
1998 $130,769
1997 $ 0
</TABLE>
Mr. Marrone did not accrue any salary in 1999 under his employment
agreement but did receive $65,200 as compensation.
19
<PAGE>
Employment Agreement
Antra Holdings entered into an employment agreement with Joseph M. Marrone
on March 12, 1998. The agreement expires on March 29, 2001, which will be
automatically renewed annually unless terminated by either party. Mr. Marrone
is required by the agreement to oversee, develop, produce and manage music
products for Antra Music and to participate and oversee all entertainment
projects of Antra Music. Mr. Marrone agreed to act as an executive of Antra
Music and Antra Holdings and to provide services to other affiliates of ours.
Mr. Marrone's base salary for the first year of his employment agreement
is $200,000. He may be awarded an increase in base salary or a bonus, in either
case solely at the discretion of the board of directors based upon a review of
Antra's performance in the prior year. He is also entitled to all benefits
generally offered to Antra's other executives, if any, and to an automobile
allowance. Since November 1998, all of Mr. Marrone's salary payments and
accruals ceased with his consent. Based upon Antra's performance and Mr.
Marrone's waiver of his salary, the board of directors, in its sole discretion,
may award Mr. Marrone a bonus in the future. It has from time to time made
payments to him in lieu of salary called for under the agreement. These
payments totaled $65,200 in 1999 and during the first quarter of 2000.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the date of this
prospectus regarding the ownership of Antra Holdings's common stock by: each
person we know owns 5% or more of our outstanding shares; each of our
directors; and all officers and directors of Antra Holdings as a group. Each
owner of the common stock has sole voting and investment power for all shares
listed below, except as otherwise indicated.
Three selling security holders, Austost Anstalt Schaan, Balmore S.A. and
Libra Finance S.A., technically own beneficially in excess of ten percent of
Antra's common stock prior to the offering. The bulk of these security holders'
apparent ownership is in the form of convertible notes and/or warrants. Under
an agreement with Antra, each of these security holders is not allowed to
convert notes or exercise warrants if its total ownership of shares at any time
would exceed 9.99% of Antra's outstanding shares. Therefore, despite what
appears to be the ownership of over ten percent of Antra's common stock, each
of these holders is actually a holder of less than 10%.
The number of shares beneficially owned by Libra Finance S.A. consists
solely of shares subject to presently exercisable warrants.
Antra has been advised that Balmore S.A has changed its name from Balmore
Funds S.A. and that Matityahu Kaniel, who is a citizen of Israel, is the
beneficial owner of 100% of the shares of Balmore S.A.
Antra has been advised that Austost Anstalt Schaan is a corporation formed
under the laws of Austria. Antra has not been able to obtain any information
about Libra Finance S.A.
The column "Percent of Class" includes shares that may be acquired by that
holder upon exercise of warrants or conversion of convertible notes held by
that holder.
20
<PAGE>
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Ownership of Class
-------------- ----------- ----------- --------
<S> <C> <C> <C>
Common Stock, $.001 par Joseph M. Marrone, Jr. 1,900,000 15.4%
value per share Antra Holdings Group, Inc.
1515 Locust Street
Philadelphia, Pennsylvania 19102
Teltran International Group, Ltd. 2,800,000 22.7%
One Penn Plaza, Suite 4430
New York, New York 10119
Autost Anstalt Schaan 2,022,940 14.1%
7440 Fuerstentum
Lichenstein, Landstrasse 163
Balmore S.A. 2,022,940 14.1%
P.O. Box 4603
Zurich, Switzerland
Libra Finance S.A. 3,338,555 21.3%
P.O. Box 4603
Zurich, Switzerland
All directors and officers 1,900,000 15.4%
as a group (3 persons)
</TABLE>
21
<PAGE>
DESCRIPTION OF SECURITIES
Antra Holdings is currently authorized to issue 50,000,000 shares of
common stock, $.001 par value and 5,000,000 shares of preferred stock, par
value $.001 per share.
Common Stock
Each share of common stock entitles the holder thereof to one vote on all
matters submitted to a vote of the stockholders. Since the holders of common
stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of the directors of Antra Holdings and holders
of the remaining shares by themselves cannot elect any directors. The holders
of common stock do not have preemptive rights or rights to convert their common
stock into other securities. In the event of a liquidation, dissolution or
winding up of Antra Holdings, holders of the common stock have the right to a
ratable portion of the assets remaining after payment of liabilities. All of
the outstanding shares of common stock are duly authorized, validly issued,
fully paid and non-assessable.
The holders of shares of common stock are entitled to dividends when and
as declared by the board of directors from funds legally available therefor.
Antra Holdings has never declared or paid cash dividends on its common stock.
Antra Holdings intends to retain its net income, if any, to increase its
capital base and, accordingly, does not currently anticipate paying cash
dividends.
Preferred Stock
Antra Holdings's certificate of incorporation authorizes the issuance of
"blank check" preferred stock with whatever designation, rights and preferences
as may be determined by the board of directors. Accordingly, the board is
empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of common stock. The
preferred stock could be utilized, under some circumstances, as a method of
discouraging, delaying or preventing a change in control of Antra. Although we
do not currently intend to issue any shares of preferred stock, there can be no
assurance that we will not do so.
Secured Convertible Notes
The secured convertible notes bear interest at 10% per annum. The secured
convertible notes mature on July 20, 2002, unless accelerated to any date after
July 20, 2000 at the option of the holder of the note. Under limited conditions
and at limited times, Antra Holdings may redeem the secured convertible notes.
The secured convertible notes are convertible into shares of our common
stock. The conversion price is equal to 50% of the average of the closing bid
prices for shares of our common stock over the preceding 5 trading days, but is
limited to $3.25 per share. For example, if a note holder elects to convert
$500,000 of notes into shares and the average closing bid price of our common
stock is $6.25, the converting holder will receive 160,000 shares. The shares
of our common stock that are issuable upon exercise of the secured convertible
notes are being registered in this registration statement.
Subordinated Convertible Notes
The currently outstanding subordinated convertible notes bear interest at
10% per annum and mature on January 15, 2002. The subordinated convertible
notes may be prepaid, in whole or in part, at any time without penalty. The
subordinated convertible notes are convertible into shares of our common stock
at the same conversion price as the secured convertible notes described in the
previous section. The shares of our common stock that are issuable upon
exercise of the subordinated convertible notes are being registered in this
registration statement.
Placement Warrants
The placement warrants are convertible into shares of common stock. The
warrants are exercisable, at a price of $2.00 per share, until February 7,
2005. The shares of our common stock that are issuable upon exercise of the
placement warrants are being registered in this registration statement.
22
<PAGE>
CERTAIN TRANSACTIONS
Teltran
In April 1999, we exchanged 2,000,000 of our shares for 2,000,000 shares
of Teltran International Group Ltd. Teltran is a publicly traded company
engaged in the telecommunications business. As a result of the transaction
Teltran may be deemed a principal stockholder of Antra. Teltran paid two stock
dividends of 5% in 1999, so we now own 2,205,000 shares of Teltran.
We made the exchange because we intended to enter into ventures with
Teltran and because we thought that their stock was of comparable value. To
protect each party, the parties agreed that there would be an adjustment in the
number of shares owned by an entity if there was a disparity in the relative
market value of the two entities on January 1, 2000. As a result we issued to
Teltran an additional 800,000 shares of Antra's common stock.
With Teltran, we formed our Recordstogo.com joint venture. See "Business
-- Recordstogo.com" for more information about the joint venture and our plans
for its operations.
Teltran's president owns 100% of International Global Communications,
Inc., one of the selling security holders. International Global received
warrants to purchase 220,000 shares of Antra and approximately $248,333 as
finder's fees in connection with the secured convertible notes described below.
Secured Convertible Notes
On July 20, 1999, Antra sold $2,766,666 of secured convertible notes.
As security for our obligations under the notes, we deposited 1,000,000 of
our Teltran shares with a collateral agent.
Antra Holdings paid an aggregate of $343,999 as cash commissions to
several placement agents in connection with the issuance of the notes. Some of
these placement agents also received warrants to purchase an aggregate of
1,146,666 shares of our common stock at $2.00 per share. If we exercise the Put
Option, these placement agents will receive $172,000 in cash and an additional
573,334 warrants.
Antra Holdings agreed to file a registration statement on Form SB-2 with
the Securities and Exchange Commission by September 18, 1999 to register the
shares that can be acquired by the conversion of the notes and the exercise of
the warrants.
As part of the same transaction, Antra Holdings was granted the option to
require all of the holders of secured convertible notes to purchase up to
$1,383,334 of additional notes. We refer to this option as the "Put Option". In
November 1999, Antra and the holders of the secured convertible notes agreed to
accelerate a portion of the Put Option. As a result, we received gross proceeds
of $800,000 and issued secured convertible notes in the same principal amount.
Antra paid $108,800 in fees and expenses, including $96,000 as cash
commissions. Antra also issued to some of the placement agents warrants to
purchase an aggregate of 720,000 shares of Antra's common stock at $2.00 per
share. 400,000 of these warrants were issued as consideration for the partial
acceleration of the Put Option. In March 2000, these investors permitted us to
accelerate the balance of the Put Option, and agreed to purchase a number of
secured convertible notes over and above the amount specified in their original
agreement. As a result, we received gross proceeds of $1,300,000 and issued
secured convertible notes in the same principal amount. Antra paid $176,813 in
fees and expenses, including $156,000 as cash commissions. Antra also issued to
some of the placement agents warrants to purchase an aggregate of 2,433,333
shares of Antra's common stock at $2.00 per share. The shares issuable upon the
exercise of these warrants and the conversion of the notes sold upon Antra's
exercise of the Put Option are being registered in this registration statement.
The conversion price of the notes and the exercise price of the warrants
were determined in arm's-length negotiations between representatives of Antra
Holdings and the investors. These prices are not based on Antra Holdings's net
worth or any other established valuation criteria.
23
<PAGE>
Refinancing of Subordinated Convertible Notes
On July 31, 1999, Antra refinanced $1,000,000 of its outstanding
subordinated convertible notes. In addition to the features of the subordinated
convertible notes described above in "Description of Securities," these notes
also have registration rights similar to those of the secured convertible
notes. Therefore, the registration statement filed in connection with this
prospectus also covers the shares that can be acquired by the conversion of the
subordinated convertible notes.
LEGAL MATTERS
Some legal matters in connection with the shares of common stock being
offered hereby will be passed upon for Antra Holdings by Parker Duryee Rosoff &
Haft, P.C., New York, New York.
EXPERTS
The financial statements for the years ended December 31, 1999 and 1998,
included in this prospectus have been audited by Liebman Goldberg & Drogin LLP,
Garden City, New York, independent certified public accountants, as indicated
in their report.
ADDITIONAL INFORMATION ABOUT ANTRA HOLDINGS
Antra Holdings has filed with the Securities and Exchange Commission, the
("SEC"), a registration statement on Form SB-2 with respect to the common stock
being offered. Antra Holdings has also filed with the SEC a Form 10-SB. In the
future, Antra Holdings will file with the SEC our annual, quarterly and special
reports, proxy statements and other information that the SEC requires.
This prospectus is only part of the registration statement and does not
contain all of the information included in the registration statement. Whenever
a reference is made in this prospectus to any contract or other document , the
reference may not be complete and you should refer to the exhibits that are a
part of the registration statement for a copy of the contract or document.
You may read and copy any of the information on file with the SEC at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Filed documents are also available to the
public at the SEC's website at http://www.sec.gov.
24
<PAGE>
ANTRA HOLDINGS GROUP, INC
CONSOLIDATED BALANCE SHEET
March 31, 2000
(Unaudited)
<TABLE>
<S> <C>
Assets
Current Assets:
Cash in bank ........................................................................ $ 415,805
Accounts Receivable ................................................................. 1,026,202
Prepaid expenses .................................................................... 34,360
Prepaid recording costs ............................................................. 471,483
------------
1,947,850
Property and Equipment, Net .......................................................... 105,283
Other Assets:
Investment .......................................................................... 4,000,000
Advances to joint venture ........................................................... 89,221
Security deposits ................................................................... 14,943
Deferred financing costs ............................................................ 558,504
Other ............................................................................... 987
Goodwill ............................................................................ 5,000
------------
Total assets ..................................................................... $ 6,721,788
============
Liabilities and Stockholders' Deficit
Current Liabilities:
Convertible debentures payable ...................................................... $ 4,866,666
Accrued expenses payable ............................................................ 307,055
Deferred income ..................................................................... 789,044
------------
Total current liabilities ........................................................ 5,962,765
------------
LongTerm Liabilities:
Loan payable ........................................................................ 5,514
Loan payable subordinated ........................................................... 806,441
Deferred interest payable ........................................................... 193,559
Officer loan payable ................................................................ 21,334
------------
Total long-term liabilities ...................................................... 1,026,848
------------
Total liabilities ................................................................ 6,989,613
------------
Commitments and Contingencies
Stockholders' Deficit:
Common stock, par value $.001; 50,000,000 shares authorized, 12,344,210 and 9,544,210
shares issued and outstanding, respectively ....................................... 12,344
Additional paid in capital .......................................................... 5,121,656
Accumulated Deficit ................................................................. (5,401,825)
Total stockholders' deficit ...................................................... (267,825)
------------
Total liabilities and stockholders' deficit ...................................... $ 6,721,788
============
</TABLE>
F-1
<PAGE>
ANTRA HOLDINGS GROUP, INC
CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
--------------- --------------
<S> <C> <C>
Income:
Sales .......................................................................... $ 3,156,175 $ --
Show fees ...................................................................... 44,724 7,794
Royalties ...................................................................... 19,311 10,596
------------ ----------
3,220,210 18,390
------------ ----------
Cost of Production:
Recording and production expenses .............................................. 984,191 6,923
Distribution fees .............................................................. 789,044 --
Advertising .................................................................... 452,565 --
Bodyguards ..................................................................... 5,500 --
Studio expenses ................................................................ 18,217 2,582
Mechanical royalties ........................................................... 1,195,302 --
Total cost of production .................................................... 3,444,818 9,505
============ ==========
Selling Expenses:
Publicity and promotion ........................................................ 312,864 6,647
Consulting expenses ............................................................ 40,227 11,823
Equipment lease ................................................................ 8,280 --
Auto expenses .................................................................. 30,316 5,202
Travel and entertainmnet ....................................................... 81,357 28,894
------------ ----------
Total selling expenses ...................................................... 473,044 52,566
============ ==========
General and Administrative Expenses:
Professional fees .............................................................. 72,258 5,000
Donated Services ............................................................... 50,000 --
Salaries ....................................................................... 97,116 25,485
Payroll taxes .................................................................. 4,767 3,491
Rent ........................................................................... 36,476 20,380
Telephone ...................................................................... 29,186 14,630
Office ......................................................................... 10,243 11,158
Miscellaneous expenses ......................................................... 31,526 3,081
Insurance expense .............................................................. 25,805 19,232
Repairs and maintenance ........................................................ 13,703 5,679
Internet ....................................................................... 21,653 --
Dues and subscriptions ......................................................... 1,085 279
Postage and delivery ........................................................... 60,920 2,516
Contributions .................................................................. 3,500 --
Depreciation expense ........................................................... 6,623 4,447
Amortization ................................................................... 43,804 --
Registration Expense ........................................................... 34,581 --
Reimbursed overhead ............................................................ -- (99,348)
------------ ----------
Total general and administrative expenses ................................... 543,246 16,030
------------ ----------
Total expenses .............................................................. 4,461,108 78,101
------------ ----------
Net loss from operations (1,240,898) (59,711)
Other income(expense):
Interest Income ................................................................ 3,981 --
Interest expense ............................................................... (152,085) --
Equity in (loss) of unconsolidated joint venture ............................... (103,126) --
------------ ----------
Net (loss) before provision for income taxes .................................... (1,492,128) (59,711)
Provision for income taxes ...................................................... (8,500) --
------------ ----------
Net loss ........................................................................ $ (1,500,628) $ (59,711)
============ ==========
Net (loss) per share of common stock based upon 12,344,210 and 9,544,210 weighted
average shares ................................................................. $ (0.12) $ (0.001)
============ ==========
</TABLE>
F-2
<PAGE>
ANTRA HOLDINGS GROUP, INC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended March 31,
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss ) ................................................................... $ (1,450,628) $ (59,711)
------------- ----------
Adjustments to Reconcile Net (loss) to Net Cash (Used in) Operating Activities:
Depreciation ................................................................. 50,426 4,447
Equity in (loss) of joint venture ............................................ 103,126 --
Changes in Assets and Liabilities:
Increase in accounts receivable .............................................. (1,026,202) --
Decrease in prepaid expenses and recording costs ............................. 864,486 (125,709)
(Increase) in advances to joint venture ...................................... (147,000) --
Increase (Decrease) in accrued expenses payable .............................. 168,675 64,113
Increase in deferred income .................................................. 389,044 --
------------- ----------
Total adjustments ......................................................... 402,555 (57,149)
------------- ----------
Net cash (used in) operating activities ................................... (1,048,073) (116,860)
------------- ----------
Cash Flows from Investing Activities:
Acquisition of property and equipment ........................................ (2,721) (18,241)
------------- ----------
Cash Flows from Financing Activities:
Borrowings from stockholders' and related parties ............................ -- 136,205
Sale of convertible notes .................................................... 1,300,000 --
Deferred financing costs ..................................................... (176,800) --
------------- ----------
Net cash provided by financing activities ................................. 1,123,200 136,205
------------- ----------
Net increase in cash ......................................................... 72,406 1,104
Cash -- Beginning of period .................................................. 343,399 13,121
------------- ----------
Cash -- End of period ........................................................ $ 415,805 $ 14,225
============= ==========
</TABLE>
F-3
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
Note 1 -- Basis of Presentation:
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim period.
The results of operations for the three months ended March 31, 2000 are
not necessarily indicative of the results to be expected for the full year.
Note 2 -- Material Events:
During the quarter ended March 31, 2000, the Company exercised the
remainder of the convertible put option of $533,334. Additionally, the Company
increased the put option by $766,666; totaling $1,300,000 and now having a
total of $4,866,666 in convertible debentures outstanding at March 31, 2000. Of
the $1,300,000 in exercised put options, the Company received net proceeds of
$1,123,200.
During the quarter ended March 31, 2000, the Company advanced an
additional $147,000 to its joint venture investment; Recordstogo.com. Antra
incurred a loss of $103,126 as its share of the joint venture for the quarter
ended March 31, 2000.
F-4
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
with
INDEPENDENT AUDITORS' REPORT
F-5
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONTENTS
<TABLE>
<CAPTION>
Page
--------
<S> <C>
Auditors' Report ........................................................................ 7
Consolidated Financial Statements:
Consolidated Balance Sheets at December 31, 1999 and 1998 ............................ 8
Consolidated Statements of Operations for the years ended December 31, 1999 and 1998 . 9
Consolidated Statements of Stockholders' Equity for the years ended December 31, 1999
and 1998 ............................................................................ 10
Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 1998 . 11
Notes to Consolidated Financial Statements ........................................... 12 - 16
</TABLE>
F-6
<PAGE>
The Board of Directors
Antra Holdings Group, Inc.
We have audited the accompanying consolidated balance sheets of Antra Holding
Group, Inc. as of December 31, 1999 and 1998, and the related consolidated
statements of operations and stockholders' equity, and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated 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 audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatements. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
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 provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Antra Holding
Group, Inc. as of December 31, 1999 and 1998 and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to
the financial statements, the Company has suffered recurring losses from
operations and has a working capital deficiency, which raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters also are described in Notes 2 and 8. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Liebman Goldberg & Drogin, LLP
Garden City, New York
February 2, 2000
F-7
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1999 1998
-------------- ---------------
<S> <C> <C>
Assets
Current Assets:
Cash in bank ................................................. $ 343,399 $ 13,121
Loan receivable .............................................. 14,009 --
Prepaid expenses ............................................. 6,166 22,377
Prepaid recording costs ...................................... 1,406,321 --
------------ ------------
Total current assets ....................................... 1,763,729 35,498
Property and Equipment, Net ................................... 109,185 67,777
Other Assets:
Investment ................................................... 4,000,000 --
Advances to joint venture .................................... 45,347 --
Security deposits ............................................ 14,943 13,024
Deferred financing costs ..................................... 425,507 --
Other ........................................................ 987 987
Goodwill ..................................................... 5,000 5,000
------------ ------------
Total assets ............................................... $ 6,364,698 $ 122,286
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Convertible debentures payable ............................... $ 3,566,666 $ 110,528
Accrued expenses payable ..................................... 138,381 --
Deferred income .............................................. 400,000 --
------------ ------------
Total current liabilities .................................. 4,105,047 110,528
------------ ------------
Long-Term Liabilities:
Loan payable ................................................. 5,514 388,505
Loan payable - subordinated .................................. 786,050 807,240
Deferred interest payable .................................... 213,950 --
Officer loan payable ......................................... 21,334 21,334
------------ ------------
Total long-term liabilities ................................ 1,026,848 1,217,079
------------ ------------
Total liabilities .......................................... 5,131,895 1,327,607
------------ ------------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, $.001 par value; 5,000,000 shares authorized;
none issued and outstanding ................................ -- --
Common stock, $.001 par value; 50,000,000 shares authorized
12,344,210 and 9,544,210 shares issued and outstanding,
respectively ............................................... 12,344 9,544
Additional paid in capital ................................... 5,121,656 989,656
Accumulated deficit .......................................... (3,901,197) (2,204,521)
------------ ------------
Total stockholders' equity ................................. 1,232,803 (1,205,321)
------------ ------------
Total liabilities and stockholders' equity ................. $ 6,364,698 $ 122,286
============ ============
</TABLE>
See notes to financial statements.
F-8
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
<TABLE>
<CAPTION>
1999 1998
----------------- -----------------
<S> <C> <C>
Income:
Show income ............................................... $ 10,044 $ 20,000
Royalties ................................................. 75,322 --
------------- -------------
85,366 20,000
------------- -------------
Cost of Production:
Recording and production expenses ......................... 410,235 476,199
Bodyguards ................................................ -- 32,750
Studio expenses ........................................... 20,826 14,163
Mechanical royalties ...................................... 357,378 --
------------- -------------
Total cost of production ................................ 788,439 523,112
------------- -------------
Selling Expenses:
Publicity and promotion ................................... 115,316 342,302
Consulting expenses ....................................... 60,725 159,765
Equipment lease ........................................... 36,272 --
Auto expenses ............................................. 38,751 208,279
Travel and entertainment .................................. 142,338 298,728
------------- -------------
Total selling expenses .................................. 393,402 1,009,074
------------- -------------
General and Administrative Expenses:
Professional fees ......................................... 274,870 246,210
Donated Services .......................................... 200,000 --
Salaries .................................................. 163,936 331,239
Payroll taxes ............................................. 17,025 24,055
Rent ...................................................... 109,241 29,623
Telephone ................................................. 63,989 53,423
Office .................................................... 16,262 49,329
Miscellaneous expenses .................................... 25,714 32,040
Insurance expense ......................................... 85,240 40,530
Repairs and maintenance ................................... 24,455 2,143
Internet .................................................. 46,744 --
Dues and subscriptions .................................... 2,164 434
Postage and delivery ...................................... 37,873 24,608
Contributions ............................................. 2,620 16,320
Depreciation expense ...................................... 22,092 10,939
Amortization .............................................. 60,293 --
Registration expense ...................................... 12,062 18,950
Reimbursed overhead ....................................... -- (996,922)
------------- -------------
Total general and administrative expenses ............... 1,152,980 (117,079)
------------- -------------
Total expenses .......................................... 2,334,821 1,415,107
------------- -------------
Net loss from operations ................................... (2,249,455) (1,395,107)
Other income (expense):
Interest income ........................................... 12,146 --
Interest expense .......................................... (79,714) --
Equity in (loss) of unconsolidated joint venture .......... (104,653) (200,000)
Settlement of Joint Venture ............................... 725,000 --
------------- -------------
Net (loss) ................................................. $ (1,696,676) $ (1,595,107)
============= =============
Net loss per share of common stock based upon 11,118,546 and
9,268,030 weighted average shares ......................... $ (0.15) $ (0.17)
============= =============
</TABLE>
See notes to financial statements.
F-9
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Additional Total
------------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------------ ---------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C>
Balance -- January 1, 1998 ........... 7,824,210 $ 7,824 $ 131,276 $ (609,414) $ (470,314)
Shares issued as repayment ........... 1,720,000 1,720 858,380 -- 860,100
Net (loss) for the period ............ -- -- -- (1,595,107) (1,595,107)
--------- ------- ---------- ------------ ------------
Balance -- December 31, 1998 ......... 9,544,210 9,544 989,656 (2,204,521) (1,205,321)
Investment ........................... 2,800,000 2,800 3,997,200 -- 4,000,000
Donated Services ..................... 134,800 134,800
Net (loss) for the period ............ (1,696,676) (1,696,676)
------------ ------------
Balance -- December 31, 1999 ......... 12,344,210 $12,344 $5,121,656 $ (3,901,197) $ 1,232,803
========== ======= ========== ============ ============
</TABLE>
See notes to financial statements.
F-10
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
<TABLE>
<CAPTION>
1999 1998
---------------- ----------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) ............................................................. $ (1,696,676) $ (1,595,107)
------------ ------------
Adjustments to Reconcile Net (loss) to Net Cash (used in) Operating
Activities:
Equity in (loss) of joint venture ..................................... 104,653 --
Depreciation .......................................................... 82,385 10,939
Donated Services ...................................................... 134,800 --
Changes in Assets and Liabilities:
(Increase) decrease in prepaid expenses and recording costs ......... (1,383,944) 43,255
(Increase) in other assets .......................................... (1,918) (10,354)
Increase in accrued expenses ........................................ 27,852 109,634
Increase in deferred income ......................................... 400,000 --
------------ ------------
Total adjustments .................................................. (636,172) 153,474
------------ ------------
Net cash (used in) operating activities ............................ (2,332,848) (1,441,633)
------------ ------------
Cash Flows from Investing Activities:
Acquisition of property and equipment ................................. (63,500) --
Investment in and advances to joint venture ........................... (150,000) (41,668)
Loan receivable ....................................................... (14,009) --
------------ ------------
Net cash (used in) investing activities ............................ (227,509) (41,668)
------------ ------------
Cash Flows from Financing Activities:
Borrowings from stockholders' and related parties (net of
repayment) .......................................................... (190,231) 1,479,846
Sale of secured convertible notes ..................................... 3,566,666 ---
Deferred financing costs .............................................. (485,800) --
------------ ------------
Net cash provided by financing activities .......................... 2,890,635 1,479,846
------------ ------------
Net increase (decrease) in cash ....................................... 330,278 (3,455)
Cash -- January 1 ..................................................... 13,121 16,576
------------ ------------
Cash -- December 31 ................................................... $ 343,399 $ 13,121
============ ============
Non-Cash Investing and Financing Activities:
Non-cash issuance of common stock ..................................... $ 4,000,000 $ 860,100
============ ============
Supplemental Disclosures:
Income tax ............................................................ $ -- $ --
============ ============
Interest expense ...................................................... $ 7,249 $ --
============ ============
</TABLE>
See notes to financial statements.
F-11
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note 1 -- Operations:
Opell, Inc., now known as Antra Holdings Group, Inc. ("the Company"), was
formed as a Nevada Corporation and through June 1997 was not engaged in any
business activity and had nominal assets. On June 10, 1997, the Company
acquired all the shares of Wall Street Records, Inc. a New Jersey Corporation
("the Subsidiary"). The Subsidiary was formed on March 20, 1997 to engage in
various aspects of the music business, including the production and
distribution of recorded music. In connection with the acquisition of the
Subsidiary, the Company issued 5,000,000 shares of its Common Stock to
stockholders of the Subsidiary, who then owned a majority of the outstanding
shares of the Company. The acquisition was treated as a purchase and as a
reverse acquisition so that the historical financials of the Subsidiary
represent the financials of the Company. The Company reincorporated in Delaware
and in April 1998, the Company changed its name to Antra Holdings Group, Inc.
and the Subsidiary changed its name to Antra Music Group, Inc. The Subsidiary's
activities, consisted of negotiating agreements and arrangements with artists,
and thereby incurred substantial expenses.
Note 2 -- Summary of Significant Accounting Policies:
Principles of Consolidation:
The consolidated financial statements include the accounts of the company
and its wholly-owned subsidiary. Intercompany balances and transactions have
been eliminated.
Revenue Recognition:
The Company produces licenses and distributes recorded music. It
recognizes revenues as follows:
Production and Distribution -- As a producer and distributor, the Company
will recognize revenue upon the sale of a completed album. Also upon completion
of an album, the Company will recognize any costs recoverable from the artist.
License Agreements -- Revenues will be recognized when the licensor signs
a noncancelable contract, agrees to a fixed fee, delivers the rights and meets
all significant obligations to furnish a record or music.
Prepaid Recording Costs:
In accordance with FASB Statement No. 50, "Financial Reporting in the
Record and Music Industry", advances to artists and producers are capitalized
as an asset when the current popularity and past performance of the artist or
producer provides a sound basis for estimating the probable future recoupment
of such advances from earnings otherwise payable to the artist or producer. Any
portion of such advances not deemed to be recoupable from future royalties is
reserved at the balance sheet date. All other significant advances which do not
meet the above criteria are expensed as incurred.
The Company in anticipation of completion of record production makes
various advances and payments on behalf of the recording artist. These payments
are prepaid and will be expensed when the record production is completed and
the record issued. The Company anticipates to amortize prepaid recording costs
within twelve months upon the release of a completed record.
Prepaid recording costs of $1,406,321 represent production costs paid on
behalf of the Company's recording artists. Of this amount approximately
$1,195,000 represents costs advanced for the Company's major recording artist.
The album relating to these costs was released in late 1999 and revenues from
sales will offset these costs in 2000. The remaining balance of costs are for
artists who will have albums released in the year 2000.
F-12
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1999
Note 2 -- Summary of Significant Accounting Policies: -- (Continued)
Property and Equipment:
Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets, which range from five to seven
years. Leasehold improvements are amortized over the shorter of the lease term
or the useful life of the asset.
Development Stage Activities and Operations:
The Company was a development stage enterprise prior to October, 1998.
Ability to continue as a Going Concern:
The Accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which contemplates
continuation of the company as a going concern. The Company, as shown in the
accompanying consolidated financial statements, has a working capital
deficiency of $2,341,318 in 1999 and an accumulated deficit of $3,901,197 at
December 31, 1999.
The Company has relied upon debt and equity funding from stockholders and
other sources since inception. Additional equity is planned to be raised by
private-placement sales of common stock to new and existing stockholders in
order to fund operations until the Company is consistently profitable. While
management believes that such funding will be available, the adequacy of such
funding, if any, is uncertain. Management has not determined the amount of
funding necessary to support its sales at current levels or the amounts needed
for increased sales. This uncertainty, combined with the Company's recurring
losses, raises substantial doubt about the entity's ability to continue as a
going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Income Taxes:
The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109, "Accounting for Income Taxes". Deferred income taxes reflect the
impact of temporary differences between the amounts of assets and liabilities
for financial reporting purposes and such amounts as measured by tax laws.
Loss Per Common Share:
The Company adopted Financial Accounting Standards Board (FASB) Statement
No. 128, "Earnings per Share". The Statement establishes standards for
computing and presenting earnings per share (EPS). It replaced the presentation
of primary EPS with a presentation of basic EPS and also requires dual
presentation of basic and diluted EPS on the face of the income statement. The
Statement was retroactively applied to the 1998 loss per share but did not have
any effect.
Basic loss per share was computed by dividing the company's net loss by
the weighted average number of common shares outstanding during the period.
There is no presentation of diluted loss per share as the effect of common
stock options, warrants and convertible debt amounts are antidilutive. The
weighted average number of common shares used to calculate loss per common
share during 1999 and 1998 was 11,118,546 and 9,268,030 shares, respectively.
In 1998, the Company issued 1,250,000 shares and 470,000 shares
respectively of common stock as repayment of $860,100 loans previously
received.
F-13
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1999
Note 2 -- Summary of Significant Accounting Policies: -- (Continued)
Use of Estimates:
The preparation of 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 amounts.
Fair Value of Financial Instruments:
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not recognized in
the balance sheet, where it is practicable to estimate that value. The carrying
value of cash, cash equivalents and accounts receivable approximates fair
value.
Impairment of Long-Lived Assets:
The Company has not completed it's evaluation of the adoption of SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of." However, management believes any such effect will not be
material.
Accounting Pronouncements:
The Financial Accounting Standards Board ("FASB") issued SFAS No. 130,
"Reporting Comprehensive Income", which is effective for financial statements
with fiscal years beginning after December 15, 1997. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. The Company does not
expect adoption of SFAS No. 130 to have a material effect, if any, on its
financial position or results of operations.
The FASB issued SFAS 131, "Disclosure about Segments of an Enterprise and
Related Information", issued by FASB, which is effective for financial
statements with fiscal years beginning after December 31, 1998. This statement
establishes standards for the way that public entities report selected
information about operating segments, products, and services, geographic areas,
and major customers in interim and annual financial reports. The Company does
not expect adoption of SFAS No. 131 to have a material effect, if any, on its
financial position or results of operations.
Note 3 -- Convertible Debentures Payable and Deferred Financing Costs:
During 1999, the Company sold $3,566,666 of secured convertible notes
receiving $3,080,866 in net proceeds after commissions and other expenses of
the sale. As security for these obligations under the notes, Antra deposited
1,000,000 of its Teltran shares with a collateral agent. The secured
convertible notes bear interest at 10% per annum and mature on July 20, 2002.
These notes can be accelerated to any date after July 20, 2000 at the option of
the holder of the note and, therefore, is shown as a current liability. The
outstanding convertible debentures can be converted into the Company's common
stock at a conversion price equal to one-half of the common stock's closing bid
price for the five proceeding trading days but limited to $3.25 per share. The
Company had incurred $485,800 in deferred financing costs in connection with
the transaction which is being amortized over the life of the notes. As of
December 31, 1999, the unamortized deferred financing costs are $425,507.
Additionally, the Company issued warrants to the bond placement agents to
purchase 720,000 shares of common stock at $2 per share until February 5, 2005.
Note 4 -- Loan Payable:
During the period July 15, 1997 to December 31, 1998, the Company received
various loans totaling $2,055,845. In 1998, 1,720,000 shares of common stock
were issued as repayment of $860,100 of these loans.
F-14
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1999
Note 4 -- Loan Payable: -- (Continued)
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
1999 1998
---------- ------------
<S> <C> <C>
Note payable, Coastal Provinces Ltd. Currently no
set maturity date and interest is forgiven ......... $ 5,514 $ 388,505
Note payable, to Coastal Provinces, Ltd., terms as
above, net of deferred interest payable ............ 786,050 807,240
Loan payable, officer, currently no interest due and
no maturity date ................................... 21,334 21,334
-------- ----------
812,898 1,217,079
Less: current portion ................................ -- --
-------- ----------
$812,898 $1,217,079
======== ==========
</TABLE>
In accordance with APB #21, the Company has imputed interest to account
for interest on the Coastal Provinces, Ltd. loans as if the terms were similar
to other Company borrowings Re: Interest payable @ 10% per annum and payable on
July 20, 2002.
As of December 31, 1999 the Company received loans from Coastal Provinces
Ltd. amounting to $1,005,514. Of this amount, the Company has agreed to
subordinate $1,000,000 and $807,240 as of December 31, 1999 and 1998 to Coastal
Provinces Ltd.
Note 5 -- Income Taxes:
Deferred income taxes reflect the impact of temporary differences between
the amounts of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws. The deferred tax assets and liabilities as of
December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
December 31,
1999 1998
------------ ------------
<S> <C> <C>
Deferred Tax Assets
Net operating loss carryforwards ......... $ 919,020 $ 542,300
Deferred Tax Liabilities:
-- --
---------- ----------
919,020 542,300
Valuation allowance ...................... (919,020) (542,300)
---------- ----------
$ -- $ --
========== ==========
</TABLE>
At December 31, 1999, the Company has approximately $3,000,000 of net
operating loss carryforwards for income tax purposes, which expire in the years
2016 through 2019.
At December 31, 1999, the Company's net deferred tax assets are fully
offset by a valuation allowance. The Company will continue to assess the
valuation allowance and to the extent it is determined that such allowance is
no longer required the tax benefit of the remaining net deferred tax assets
will be recognized in the future.
Note 6 -- Commitments and Contingencies:
The Company entered into an agreement with its chairman and chief
executive officer on March 12, 1998. The agreement expires on March 29, 2001,
which will be automatically renewed annually unless terminated by either party.
The officer is required by the agreement to oversee, develop, produce and
manage music products for Antra Music and to participate and oversee all
entertainment projects of Antra Music.
The base salary for the first year of his employment agreement is
$200,000. The agreement allows for an increase in base salary or a bonus, in
either case solely at the discretion of the board of directors based upon a
F-15
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1999
Note 6 -- Commitments and Contingencies: -- (Continued)
review of Antra's performance in the prior year. The officer is also entitled
to all benefits generally offered to Antra's other executives, if any, and to
an automobile allowance. Since November 1998, the officer's salary payments and
accruals ceased with his consent. At December 31, 1999, the Chief Executive
Officer had received payments of $65,200 the balance of $134,800 based upon his
annual contract prior to cessation of $200,000 is reflected as additional
paid-in capital for the value of donated services since he continues to work
full time for the Company in his capacity as Chief Executive Officer.
The Company and certain stockholders are defendants in a legal action,
whereby plaintiffs allege the failure of the Company or those stockholders to
convey 100,000 shares of the Company's common stock. Attorneys for the Company
filed a motion to dismiss the action on behalf of the Company which was denied
by the court. The Company denies any liability and does not expect this action
to have any significant impact on the results of operations, liquidity or
financial condition.
The Company subleases office space expiring September 30, 2003. Rent
expense for the years ended December 31, 1999 and 1998 amounted to $109,241 and
$29,623, respectively. The annual rental commitments are as follows:
2000 .................. $107,942
2001 .................. 120,947
2002 .................. 127,449
2003 .................. 101,439
--------
$457,777
========
Note 7 -- Investment in Joint Venture:
In April 1998, the Subsidiary and A & M Records formed an LLC (Limited
Liability Corporation) (the "Joint Venture") for the purpose of promoting,
recording and distributing records or videos of certain of the Subsidiary's
recording artists. The Joint Venture released its first recording in October
1998 and commenced amortizing prepaid recording cost over the estimated future
revenues. During 1998, the Company received overhead reimbursements relating to
production and other costs of $873,515.
During December 31, 1998, the Company realized a loss of $200,000 on its
investment in the joint venture.
In April 1999, the Company agreed to terminate the joint venture agreement
with A & M Records in exchange for the future rights to the artists that were
assigned to the LLC, release of all liability and debt incurred by the LLC and
payment to the Company of $725,000.
In July 1999, the Company entered into a three year distribution agreement
with Artemis Records. Such agreement replaces the A & M Records distribution
agreement. The distribution agreement was amended in December 1999 and Artemis
Records advanced the Company $400,000 against monies payable under the
distribution agreement. In January 2000, Artemis advanced an additional
$400,000.
In December 1999, Antra Music and Artemis Records agreed to form a
Delaware Limited Liability Company, named "Antra Records LLC," of which they
will each be 50/50 co-owners. The LLC will initially operate for three years
and will be automatically extended for an additional two years unless Artemis
terminates the agreement. Each party elected a Director and major operating
decisions require unanimous decisions.
Artemis is obligated to fund the joint venture, to the extent the venture
does not fund itself from operations, based on an annual budget that has been
approved by both Antra Music and Artemis for each year of the term.
F-16
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1999
Note 7 -- Investment in Joint Venture: -- (Continued)
On July 26, 1999, Antra invested $75,000 and advanced an additional
$75,000 for working capital as their initial investment in a joint venture with
Teltran International Group, Ltd. The joint venture, known as Recordstogo.Com
will be utilized as a vehicle to sell records belonging to unaffiliated third
parties. Revenues may also be generated from numerous sources that are part of
the joint venture website. As of December 31, 1999, Antra's share of the joint
ventures loss was $104,653. There is no deadlock resolution provision provided
for in the joint venture agreement. Should a deadlock not be resolved, there is
a possibility that the joint venture entity, could be dissolved or unable to
operate.
Note 8 -- Investment:
In April 1999, the Company acquired 2,000,000 shares of Teltran
International Group Ltd.'s ("Teltran") common stock in exchange for 2,000,000
shares of the company stock. The agreement contains a provision for additional
shares of stock to be issued by either party based on the change in the market
price as of December 31, 1999. In January 2000, the Company issued Teltran and
additional 800,000 shares. The financial statements give effect to such
adjustment. At December 31, 1999, the Company adjusted its investment in
Teltran by $2,000,000 to give effect to the non-liquidity and thin market of
the shares originally issued. This investment has been classified as "available
for sale" in accordance with FASB 115. Future changes in Fair Market Value will
be reported as other comprehensive income or (loss).
F-17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Articles Sixth and Seventh of the Certificate of Incorporation of the
Company provides with respect to the indemnification of directors and officers
that the Company shall indemnify to the fullest extent permitted by Sections
102(b)(7) and 145 of the Delaware General Corporation Law, as amended from time
to time, each person that such Sections grant the Company the power to
indemnify. Article Seventh of the Certificate of Incorporation of the Company
also provides that no director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the liability of
the corporation's directors to the corporation or its stockholders to the
fullest extent permitted by Section 102(b)(7) of Delaware General Corporation
Law, as amended from time to time.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth various expenses, other than underwriting
discounts, which will be incurred in connection with this offering. Other than
the SEC registration fee amounts set forth below are estimates:
SEC registration fee ..................... $14,527
Blue sky legal fees ...................... 0
Printing and engraving expenses. ......... 10,000
Legal fees ............................... 40,000
Accounting fees. ......................... 10,000
Miscellaneous expenses ................... 2,500
-------
$77,027
=======
Item 26. Recent Sales of Unregistered Securities
The following sets forth information relating to all unregistered
securities of the Company sold by it in the last 3 years. There were no
reportable transactions prior to June 1997.
On June 10, 1997, Opell, Inc. ("Opell"), a Nevada corporation, issued
5,000,000 shares to the stockholders of Wall Street Records, Inc. ("Wall
Street"), a New Jersey corporation, in exchange for all of the outstanding
capital stock of Wall Street. Opell subsequently merged with a subsidiary
corporation formed in Delaware and the surviving entity changed its name to
Antra Holdings Group, Inc. The former holders of Wall Street were directors,
officers and promoters of Wall Street and their families, so the Company
believes the transaction is exempt from the registration requirements pursuant
to Section 4(2) of the Securities Act. Because Opell had an accumulated
stockholders' deficit at the time of the transaction, the shares issued to the
holders of Wall Street were valued at their par value ($.001 per share), or
$5,000 in the aggregate.
On July 11, 1997, the Company issued 2,500,000 shares to a limited number
of foreign entities in a transaction in accordance with Regulation 504 of the
Securities Act of 1933 for $100,000.
Between January 9, 1998 and March 3, 1998, the Company issued 1,720,260
shares to a limited number of foreign entities in a transaction in accordance
with Regulation 504 of the Securities Act of 1933 for $860,130.
On October 2, 1998, the Company issued a Subordinated Convertible Note in
exchange for existing indebtedness in the amount of $807,240. The note was
issued to a single, accredited investor. Therefore, the Company believes the
issuance of such note is exempt from the registration requirements pursuant to
Section 4(2) of the Securities Act.
II-1
<PAGE>
In November 1998, the Company issued an additional Subordinated
Convertible Note in exchange for existing indebtedness in the amount of
$192,760. The note was issued to a single, accredited investor. Therefore, the
Company believes the issuance of such note is exempt from the registration
requirements pursuant to Section 4(2) of the Securities Act.
In April 1999, the Company and Teltran International Group Ltd. exchanged
shares of our respective companies. Teltran is a publicly traded company
engaged in the telecommunications business. The Company believes that the
transaction is exempt from the registration requirements pursuant to Section
4(2) of the Securities Act. The Company acquired 2,000,000 shares of Teltran's
common stock at a time when the market price of Teltran's common stock was
$3.00. As a result of two 5% stock dividends, the Company now owns 2,205,000
shares of Teltran's common stock. As a result of the transaction Teltran may be
deemed a principal stockholder of the Company. The share exchange was made at a
time when each company's market capitalization was roughly equivalent. To
protect each company from market fluctuations in the other's stock, the parties
entered into an agreement that requires an adjustment in the shares delivered
in connection with the exchange described above. On the first business day of
the year 2000, if either Teltran's shares or the Company's shares are trading
less than 20% below the market price of the other company's shares, the company
whose shares are trading lower must issue additional shares to the other. On
January 3, 2000, Antra issued 800,000 shares to Teltran. Teltran now owns
2,800,000 shares of Antra's common stock.
On July 20, 1999, the Company sold $2,766,666 of secured convertible
notes. All of the investors were accredited investors and the transaction is
exempt from the registration requirements under the Securities Act pursuant to
Rule 506. The Company paid an aggregate of $343,999 as cash commissions to
several placement agents in connection with the issuance of the notes. Some of
these placement agents also received warrants to purchase an aggregate of
1,146,666 shares of our common stock at $2.00 per share.
On July 31, 1999, the Company issued new notes to the holders of its
outstanding subordinated convertible notes. Because the new notes were issued
to accredited investors who already owned securities of the Company, the
Company believes that the transaction is exempt from the registration
requirements pursuant to Section 4(2) of the Securities Act.
In November 1999, the investors in the July 20, 1999 transaction permitted
us to accelerate part of the put option. As a result, we received $800,000 in
gross proceeds from the private placement of additional secured convertible
notes to these investors. Antra paid $108,800 in fees and expenses, including
$96,000 as cash commissions. Antra also issued to some of the placement agents
warrants to purchase an aggregate of 720,000 shares of Antra's common stock at
$2.00 per share. 400,000 of these warrants were issued as consideration for the
partial acceleration of the put option. This transaction, involving the same
parties as the July 20, 1999 transaction, was believed to be exempt from
registration pursuant to Section 4(2).
In February 2000, the investors in the July 20, 1999 transaction permitted
us to accelerate the balance of the put option, and agreed to purchase a number
of secured convertible notes over and above the amount specified in their
original agreement. As a result, we received gross proceeds of $1,300,000 and
issued secured convertible notes in the same principal amount. Antra paid
$176,813 in fees and expenses, including $156,000 as cash commissions. Antra
also issued to some of the placement agents warrants to purchase an aggregate
of 2,433,333 shares of Antra's common stock at $2.00 per share. The
transaction, involving the same parties as the July 20, 1999 transaction, was
believed to be exempt from registration pursuant to Section 4(2).
On October 4, 1999, Antra entered into an agreement with Strategic Growth
International, Inc. ("SGII") under which SGII will provide us with consulting
services on investor relations matters. In addition to cash compensation of
$8,000 per month, Antra agreed to grant SGII options to purchase 500,000 shares
of Antra. As of the date hereof, Antra had not yet granted such options.
II-2
<PAGE>
Item 27. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Certificate of Incorporation*
3.2 By-laws*
5.1 Opinion of Parker Duryee Rosoff & Haft****
10.1 Employment Agreement between Joseph M. Marrone, Jr. and Registrant*
10.2 Distribution Agreement between Sheridan Square Entertainment, L.L.C. d/b/a Artemis Records
and the Registrant*
10.2(a) Amendment, dated December 17, 1999, to Distribution Agreement***
10.3 Form of Subscription Agreement for Secured Convertible Notes and Common Stock Purchase
Warrants*
10.4 Form of Secured Convertible Notes*
10.5 Form of Common Stock Purchase Warrants*
10.6 Form of Security Agreement*
10.7 Stockholders' Agreement dated as of September 30, 1999 among Teltran International Group,
Ltd., Antra Group Holdings, Inc., and Recordstogo.com Inc.**
10.8 Exclusive Recording Agreement between Wall Street Records LLC and Ricardo Emanuel
Brown (p/k/a "Kurupt"), dated as of March 13, 1998.**
10.9 Exclusive Production/Recording Agreement between Wall Street Records LLC and Grant
Eldridge (p/k/a "El-Drex"), dated as of March 17, 1997.**
10.10 Co-Publishing Agreement between Wall Street Records LLC and Grant Eldridge (p/k/a
"El-Drex")**
10.11 Agreement between Wall Street Records LLC and David Ware (p/k/a "Baby S"), dated as of
August 19, 1998**
10.12 Label Agreement between Antra Music Group, Inc. and Legal Grind Entertainment, Inc., dated
as of October 28, 1999**
10.13 Co-Publishing Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"),
dated as of October 1, 1999**
10.14 Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"), dated as of
October 1, 1999**
10.15 Agreement between Antra Music Group, Inc. and five individuals collectively professionally
known as "Spooks", dated as of July 1, 1999**
10.16 Operating Agreement, dated December 17, 1999, by and between Sheridan Square
Entertainment, LLC d/b/a Artemis Records and Antra Music Group, Inc.***
10.17 Put Exercise Agreement, dated November 19, 1999***
10.18 Put Exercise Agreement, dated March 7, 2000.***
21.1 Subsidiary List**
23.1 Consent of Liebman, Goldberg & Drogin LLP****
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1 hereto)
24 Power of Attorney (included in the Signature page of Part II of this Registration Statement)
27 Financial Data Schedule****
</TABLE>
------------
* Submitted with the original filing of this SB-2 on September 17, 1999.
** Submitted with Amendment No. 1 to this SB-2 on November 19, 1999.
*** Submitted with Amendment No. 2 to this SB-2 on April 12, 2000.
**** Submitted herewith.
II-3
<PAGE>
Item 28. Undertakings
Registrant hereby undertakes:
(1) That for purposes of determining any liability under the Securities
Act, 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 Registrant pursuant to Rule 424(b)(1) or (4) 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.
(2) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(b) 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;
(c) 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.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Registrant pursuant to Item 24 of this Part II to the Registration
Statement, or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by Registrant of expenses incurred or paid by a director, officer
or controlling person of 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, 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 the public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Philadelphia, State of Pennsylvania, on the 5th day of July 2000.
ANTRA HOLDINGS GROUP, INC.
By: /s/ Joseph M. Marrone, Jr.
----------------------------------------
Chairman of the Board, Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints JOSEPH M. MARRONE, JR., his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
and on the dates stated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Joseph M. Marrone, Jr. Chairman of the Board, Chief July 5, 2000
--------------------------------- Executive Officer, Director
Joseph M. Marrone, Jr.
(Principal Executive Officer)
/s/Thomas R. Kessler Director July 5, 2000
---------------------------------
Thomas R. Kessler
/s/Arthur Rosenberg Director July 5, 2000
---------------------------------
Arthur Rosenberg
Chief Financial and
/s/Jerry L. Misterman Accounting Officer
---------------------------------
Jerry L. Misterman
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
3.1 Certificate of Incorporation*
3.2 By-laws*
5.1 Opinion of Parker Duryee Rosoff & Haft****
10.1 Employment Agreement between Joseph M. Marrone, Jr. and Registrant*
10.2 Distribution Agreement between Sheridan Square Entertainment, L.L.C. d/b/a Artemis
Records and the Registrant*
10.2(a) Amendment, dated December 17, 1999, to Distribution Agreement***
10.3 Form of Subscription Agreement for Secured Convertible Notes and Common Stock
Purchase Warrants*
10.4 Form of Secured Convertible Notes*
10.5 Form of Common Stock Purchase Warrants*
10.6 Form of Security Agreement*
10.7 Stockholders' Agreement dated as of September 30, 1999 among Teltran International Group,
Ltd., Antra Group Holdings, Inc., and Recordstogo.com Inc.**
10.8 Exclusive Recording Agreement between Wall Street Records LLC and Ricardo Emanuel
Brown (p/k/a "Kurupt"), dated as of March 13, 1998.**
10.9 Exclusive Production/Recording Agreement between Wall Street Records LLC and Grant
Eldridge (p/k/a "El-Drex"), dated as of March 17, 1997.**
10.10 Co-Publishing Agreement between Wall Street Records LLC and Grant Eldridge (p/k/a
"El-Drex")**
10.11 Agreement between Wall Street Records LLC and David Ware (p/k/a "Baby S"), dated as of
August 19, 1998**
10.12 Label Agreement between Antra Music Group, Inc. and Legal Grind Entertainment, Inc.,
dated as of October 28, 1999**
10.13 Co-Publishing Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a
"Crush"), dated as of October 1, 1999**
10.14 Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"), dated as of
October 1, 1999**
10.15 Agreement between Antra Music Group, Inc. and five individuals collectively professionally
known as "Spooks", dated as of July 1, 1999**
10.16 Operating Agreement, dated December 17, 1999, by and between Sheridan Square Entertain-
ment , LLC d/b/a Artemis Records and Antra Music Group, Inc.***
10.17 Put Exercise Agreement, dated November 19, 1999***
10.18 Put Exercise Agreement, dated March 7, 2000.***
21.1 Subsidiary List**
23.1 Consent of Liebman, Goldberg & Drogin LLP****
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1 hereto)
24 Power of Attorney (included in the Signature page of Part II of this Registration Statement)
27 Financial Data Schedule****
</TABLE>
------------
* Submitted with the original filing of this SB-2 on September 17, 1999.
** Submitted with Amendment No. 1 to this SB-2 on November 19, 1999.
*** Submitted with Amendment No. 2 to this SB-2 on April 12, 2000.
**** Submitted herewith.
<PAGE>
