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Filed with the Securities and Exchange Commission on August 15, 1997
Registration No. 333-____.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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STUART ENTERTAINMENT, INC.
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(Exact name of registrant as specified in its charter)
Delaware 84-0402207
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3211 Nebraska Avenue, Council Bluffs, Iowa 51501, (712) 323-1488
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(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
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Michael A. Schalk
3211 Nebraska Avenue, Council Bluffs, Iowa 51501, (712) 323-1488
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(Name, address, including ZIP code, and telephone number,
including area code, of agent for service)
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COPIES TO:
Warren L. Troupe, Esq. and Deborah A. Schultz, Esq.
Morrison & Foerster LLP
370 17th Street, Suite 5200, Denver, Colorado 80202
(303) 592-1500
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please 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 this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
Title of each class of Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
securities to be registered registered price per share(1) offering price(1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share 1,322,680 $2.00 $2,645,360 $801.62
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 2
PROSPECTUS
1,322,680 SHARES
STUART ENTERTAINMENT, INC.
COMMON STOCK, $.01 PAR VALUE
This Prospectus relates to an aggregate of 1,322,680 shares of common
stock, $.01 par value per share (the "Common Stock") of Stuart Entertainment,
Inc., a Delaware corporation (the "Company"), which may be offered from time to
time by the selling stockholders named herein (the "Selling Stockholders"). The
Company will not receive any proceeds from the sale of the shares of Common
Stock offered by the Selling Stockholders hereby. The Company will pay all
expenses incident to the registration of the Common Stock under the Securities
Act of 1933, as amended (the "Securities Act").
Sales by the Selling Stockholders hereby may be effected from time to time
in one or more transactions for the Selling Stockholders' own account (which
may include block transactions) on the Nasdaq Stock Market or in negotiated
transactions. Sales will be at prices and on terms then prevailing or at prices
related to the current market price or at negotiated prices and terms. In
connection with any sales of the Common Stock offered hereby, the Selling
Stockholders and participating agents, brokers or dealers may be deemed to be
underwriters as that term is defined under the Securities Act, and commissions
or discounts or any profit realized on the resale of such securities may be
deemed to be underwriting commissions or discounts under the Securities Act.
See "Plan of Distribution."
The Common Stock is listed for trading on the Nasdaq Stock Market under
the symbol "STUA." On August 12, 1997, the last reported sale price of the
Common Stock was $2.00 per share.
THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN PURCHASING THE SHARES OF
COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is August __, 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048,
and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website that contains
reports, proxy and information statements and other information regarding the
Company. The address of the site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus:
(1) the Company's Annual Report on Form 10-K for the year ended December
31, 1996;
(2) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(3) the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996;
(4) the Company's Current Report on Form 8-K dated July 1, 1997; and
(5) The description of the Common Stock contained in its Registration
Statement on Form 8-A filed with the Commission on October 28, 1982.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15 (d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering covered by this
Prospectus will be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing of such documents. Any
statement contained herein or in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such documents).
Such requests should be directed to Stuart Entertainment, Inc. Attention:
Corporate Secretary, 3211 Nebraska Avenue, Council Bluffs, Iowa 51501, (712)
323-1488.
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RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. This Prospectus contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 and are thus
prospective. Such forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from results expressed or implied by such forward-looking
statements. Further, any forward-looking statements speak only as of the date
on which such statements are made, and the Company undertakes no obligation to
update any forward-looking statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. Therefore forward-looking statements should not be relied
upon as a prediction of actual future results. In addition to the other
information contained in this Prospectus, prospective investors should
carefully consider the following risk factors before purchasing the Common
Stock offered hereby.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE AND REFINANCE DEBT
In connection with the Company's acquisition of Trade Products, Inc.
("Trade Products") in November 1996 (the "Trade Acquisition") and the
simultaneous issuance of $100,000,000 in Senior Subordinated Notes due 2001
(the "Notes"), the Company has incurred a significant amount of indebtedness.
In addition, subject to the restrictions in its Amended and Restated Credit
Agreement (the "Credit Agreement") and the indenture related to the Notes (the
"Indenture"), the Company may incur additional indebtedness from time to time
to finance acquisitions or capital expenditures or for other purposes.
The level of the Company's indebtedness could have important consequences
to stockholders, including: (a) a substantial portion of the Company's cash
flow from operations must be dedicated to debt service and will not be
available for other purposes; (b) the Company's ability to obtain additional
debt financing in the future for working capital, capital expenditures or
acquisitions may be limited; and (c) the Company's level of indebtedness could
limit its flexibility in reacting to changes in the industry and economic
conditions generally. Moreover, if the Company incurs any indebtedness under
the Credit Agreement, the borrowings will be at variable rates of interest and,
therefore, a substantial increase in interest rates could adversely affect the
Company's ability to service its debt obligations.
The Company's ability to satisfy its debt obligations will depend upon its
future operating performance, which will be affected by prevailing economic
conditions and financial, business and other factors, certain of which are
beyond its control. The Company believes that cash flow from operations,
together with its other available sources of liquidity, will be adequate to
make required payments of principal and interest on its indebtedness, to fund
anticipated capital expenditures and to meet working capital requirements,
although there is no assurance that this will be the case. To the extent that
cash flow from operations is insufficient to satisfy the Company's cash
requirements, the Company will seek to raise additional cash through debt or
equity (in all such cases to the extent permitted by the Credit Agreement and
the Indenture). No assurance can be given that any such financing will be
available to the Company at the time or times needed or on terms acceptable to
the Company, if at all.
RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Indenture restricts the ability of the Company and its subsidiaries
to, among other things, incur additional indebtedness, incur liens, pay
dividends or make certain other restricted payments or investments, consummate
certain asset sales, enter into certain transactions with affiliates, incur
indebtedness that is subordinate in right of payment to any senior indebtedness
and senior in right of payment to the Notes, imposes restrictions on the
ability of a subsidiary to pay dividends or make certain payments to the
Company or any of its subsidiaries, merge or consolidate with any other person
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of the assets of the Company.
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In addition the Credit Agreement contains certain consolidated interest
coverage ratios, maximum consolidated leverage ratios and minimum consolidated
fixed charge coverage ratios. Company's ability to meet such financial ratios
and tests may be affected by events beyond its control. There can be no
assurance that the Company will meet such tests. A breach of any of these
covenants could result in an event of default under the Credit Agreement. If
such an event of default occurs, the lenders could elect to declare all amounts
borrowed under the Credit Agreement, together with accrued interest, to be
immediately due and payable and to terminate all commitments under the
revolving credit facility. If the Company were unable to repay all amounts
declared due and payable, the lenders could proceed against the collateral
granted to them to satisfy the indebtedness and other obligations due and
payable. Substantially all of the assets of the Company are pledged as security
under the Credit Agreement.
As of March 31, 1997, the Company had not drawn any amounts under the
Credit Agreement. The Company was not in compliance with certain covenants
under the Credit Agreement at March 31, 1997, which noncompliance has been
waived by the Company's principal banks. The Company is currently attempting to
renegotiate the Credit Agreement and until such time, the Company may not draw
amounts under the Credit Agreement. There can be no assurance that the Company
will be able to renegotiate the Credit Agreement on terms acceptable to the
Company, if at all.
RELIANCE ON BINGO INDUSTRY
The future profitability and growth of the Company's business is
substantially dependent upon factors beyond the Company's control, including,
among others, the continued popularity of bingo as a leisure activity and as a
means of charitable fundraising. The bingo industry is a mature industry and
there can be no assurance that it will not decline in the future due to an
increase in competing forms of entertainment such as lotteries, on-line gaming
products and the continued expansion of the legalization by the United States
and foreign jurisdictions of casino gaming. During the first half of 1997, the
Company experienced a continuing softness in the U.S. pulltab market due to
such competitive pressures and competition within the pulltab industry.
Management believes that the Company will continue to experience softness in
the U.S. pulltab ticket market throughout at least the remainder of 1997. In
addition, the growth of the use of electronic bingo products could encroach
upon the use of bingo paper and ink products, which represent the Company's
core business. There can be no assurance that the Company will be able
successfully to adapt its core business to such a change in the bingo industry.
As a result of such factors, no assurance can be given of the Company's
continued growth or profitability.
COMPETITION
The markets in which the Company's products compete are extremely
competitive. The principal competitive factors within the bingo paper and
pulltab ticket markets are quality, service and price. The Company also
competes with other forms of entertainment such as lotteries, on-line gaming
products and the continued expansion of the legalization by the United States
and foreign jurisdictions of casino gaming. There can be no assurances that the
Company will continue to remain competitive in these or other areas.
RELATIONSHIPS WITH DISTRIBUTORS
The Company has enjoyed a history of cooperative relationships with most
distributors of its products. The failure to maintain these relationships on a
widespread basis may have a material adverse effect on the business of the
Company.
DEPENDENCE ON KEY PERSONNEL
The operations of the Company depend to a great extent on the management
efforts of its officers and other key personnel and on the ability to attract
new key personnel and retain existing key personnel in the future. There can be
no assurance that the Company will be successful in attracting and retaining
such personnel, or that it will not incur increased costs in order to do so.
The Company's failure to attract additional qualified employees or to retain
the services of key personnel could have a material adverse effect on the
business of the Company.
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TRADE ACQUISITION
Prior to the Trade Acquisition, which was completed on November 13, 1996,
Stuart and Trade Products were under separate ownership and management, and
their businesses were conducted separately. There can be no assurance that
Stuart will be able to successfully integrate the management, staffs,
operations and accounting and management information systems of Trade Products
with its own. There can also be no assurance that the Company will realize
enhanced product development, manufacturing, marketing, distribution or
management capabilities as a result of the Trade Acquisition.
GOVERNMENT REGULATION
The Company is subject to regulation by authorities in most jurisdictions
in which its bingo, bingo-related products and electronic gaming systems are
sold or used by persons or entities licensed to conduct gaming activities. The
gaming regulatory requirements vary from jurisdiction to jurisdiction, and
licensing, other approval or finding of suitability processes with respect to
the Company, its personnel and its products can be lengthy and expensive. Many
jurisdictions have comprehensive licensing, reporting and operating
requirements with respect to the sale and manufacture of bingo and
bingo-related products, including bingo paper, ink dabbers and electronic bingo
hall equipment. These licensing requirements have a direct impact on the
conduct of the day-to-day operations of the Company. Generally, gaming
regulatory authorities may deny applications for licenses, other approvals or
findings of suitability for any cause they may deem reasonable. There can be no
assurance that the Company, its products or its personnel will receive or be
able to maintain any necessary gaming licenses, other approvals or findings of
suitability. The loss of a license in a particular state will prohibit the
Company from selling products in that state. The loss of one or more licenses
held by the Company could have an adverse effect on the Company's business.
Loss of one or more licenses for an extended period may have an adverse effect
on the Company's business, and the loss of one license could result in the loss
of other licenses by the Company.
The Indian Gaming Regulatory Act of 1988 ("IGRA") defines Class II gaming
to include "the game of chance commonly known as bingo, whether or not
electronic, computer or other technologic aids are used in connection
therewith," and defines Class III gaming devices to include "electronic or
electromechanical facsimiles of any game of chance or slot machines of any
kind." The Company believes that Power Bingo KingTM and System 12TM, which are
designed to be played in conjunction with traditional paper bingo products,
should properly be classified as Class II games, and has obtained a legal
opinion to the effect that System 12TM is a Class II game. The Company has
applied for an advisory opinion from the National Indian Gaming Commission (the
"NIGC") that System 12TM is a Class II game, as defined by IGRA, but has not
yet received such designation. The Company has not applied for or received any
advisory opinion by the NIGC that Power Bingo KingTM is a Class II game. It is
possible that one or more regulatory authorities could take the position that
Power Bingo KingTM or System 12TM should be classified as Class III devices. If
either of the Company's electronic gaming systems were classified as Class III
devices, these products could not be sold to Indian casinos that did not meet
the requirements of IGRA and their host state for carrying Class III devices.
Such a result would have a material adverse effect on the Company's sale of its
electronic bingo products.
Additionally, state and local laws in the United States, and provincial
laws in Canada, which govern the sale and use of gaming products, are widely
disparate and continually changing due to legislative and administrative
actions and court interpretations. Changes in gaming laws through statutory
enactment or amendment, court interpretation or administrative action, so as to
restrict the manufacture, distribution or use of some or all of the Company's
products could have a material adverse effect on the Company's business.
EXPOSURE TO FLUCTUATIONS IN PAPER
COSTS; RELIANCE ON SUPPLIERS
The principal raw material used in the Company's business is paper, which
is subject to pricing cycles. The cyclical nature of paper pricing may have a
material adverse effect on the Company's business.
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For certain of its electronic products, the Company is dependent on
suppliers to provide the Company with parts and components in adequate amounts
and on a timely basis. The failure of one or more suppliers to meet the
Company's performance specifications, quality standards or delivery schedules
could have a material adverse effect on the Company's operations.
INTELLECTUAL PROPERTY RIGHTS
The Company regards its products as proprietary and relies on a
combination of trademark, copyright and trade secret laws and employee and
third-party nondisclosure agreements to protect its proprietary rights. Defense
of intellectual property rights can be difficult and costly, and there can be
no assurance that the Company will be able effectively to protect its
technology from competitors. In addition, the protections offered by trademark,
copyright and trade secret laws may not prevent a competitor from designing
games having an appearance and function that closely resemble the Company's
games.
As the number of electronic gaming products in the industry increases, and
the uses and functions of these products further overlap, electronic gaming
developers may increasingly become subject to infringement claims. The Company
may also become subject to infringement claims. Any such claims or litigation
could be costly and could result in a diversion of management's attention,
which could have a material adverse effect on the Company's business and
financial condition. Any settlement of such claims or adverse determinations in
such litigation could also have a material adverse effect on the Company's
business and financial condition.
NEW PRODUCT DEVELOPMENT; RISK OF OBSOLESCENCE
The market for certain of the Company's products, particularly for its
electronic bingo hall equipment and for the products of Video King Gaming
Systems, Inc. products, is characterized by changing technology, new
legislation, evolving industry standards and product innovations and
enhancements. The introduction of products embodying new technology, the
adoption of new legislation, or the emergence of new industry standards could
render existing products obsolete or unmarketable. The Company's continued
ability to anticipate such changes and to develop and introduce or obtain the
rights to technological advancements and new products that will gain customer
acceptance may be a significant factor in the Company's ability to expand,
remain competitive or attract and retain customers. The Company's business may
be adversely affected if the Company incurs delays in developing new products
or enhancements or if such products or enhancements do not gain market
acceptance. In addition, there can be no assurance that products or
technologies developed by others will not render the Company's products or
technologies noncompetitive or obsolete.
THE NASDAQ NATIONAL MARKET
In a letter dated February 5, 1997, the Company was notified by The Nasdaq
Stock Market, Inc. that it was not in compliance with the requirement for
listing on the Nasdaq National Market to maintain minimum net tangible assets
of $1.0 million. On April 8, 1997, the Company received a waiver of this
requirement, however, this decision is currently being reviewed by The Nasdaq
Listing and Hearing Review Committee. There can be no assurance that the
Company will be successful in maintaining its listing on the Nasdaq National
Market. However, if the Common Stock is delisted from the Nasdaq National
Market, the Company believes it would be eligible for trading on the Nasdaq
SmallCap Market. However, there can be no assurance that the Company would
remain eligible for listing on the Nasdaq SmallCap Market. Failure to maintain
its listing on either the Nasdaq National Market or the Nasdaq SmallCap Market
could have a material adverse effect on the liquidity of the Common Stock.
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CONCENTRATION OF OWNERSHIP
Morgan Lewis Githens & Ahn, Inc., an investment banking firm ("MLGA"), and
its affiliates own approximately 46.5% of the Company's outstanding common
stock (the "Common Stock"). In addition, Leonard A. Stuart, Chairman of the
Board of Directors; Albert F. Barber, Chief Executive Officer and a director;
and Timothy R. Stuart, President and a director, collectively own approximately
18.4% of the outstanding Common Stock. Therefore, MLGA and management of the
Company have effective control of all matters submitted to the stockholders of
the Company, including the election of the Board of Directors of the Company.
FORWARD-LOOKING STATEMENTS
The statements contained in this Registration Statement that are not
historical fact are forward- looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995), which can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," should," or "anticipates," or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. Management wishes to caution the reader that these
forward-looking statements such as the timing, costs and scope of its
acquisition of, or investments in, the bingo industry and new product
development, and other matters contained in this Registration Statement or the
documents incorporated by reference regarding matters that are not historical
facts, are only predictions. No assurances can be given that the future results
indicated, whether expressed or implied, will be achieved. While sometimes
presented with numerical specificity, these projections and other
forward-looking statements are based upon a variety of assumptions relating to
the business of the Company, which, although considered reasonable by the
Company, may not be realized. Because of the number and range of the
assumptions underlying the Company's projections and forward-looking
statements, many of which are subject to significant uncertainties and
contingencies that are beyond the reasonable control of the Company, some of
the assumptions inevitably will not materialize, and unanticipated events and
circumstances may occur subsequent to the date of this Registration Statement
or the documents incorporated by reference. These forward-looking statements
are based on current expectations and the Company assumes no obligation to
update this information. Therefore, the actual experience of the Company and
results achieved during the period covered by any particular projections or
forward-looking statements may differ substantially from those projected.
Consequently, the inclusion of projections and other forward-looking statements
should not be regarded as a representation by the Company or any other person
that these estimates and projections will be realized, and actual results may
vary materially. There can be no assurance that any of these expectations will
be realized or that any of the forward-looking statements contained herein will
prove to be accurate.
THE COMPANY
The Company is a leading manufacturer of a full line of bingo and
bingo-related products, including disposable bingo paper, pulltab tickets, ink
dabbers, electronic bingo systems and related equipment and supplies. The
Company enjoys a worldwide reputation for innovation and new product
development and has been a leader in the bingo industry for over 60 years,
having popularized many important breakthroughs in bingo, such as disposable
bingo paper and electronic bingo systems.
Bingo is one of North America's most popular forms of gaming and
entertainment. Many nonprofit organizations sponsor bingo games for fundraising
purposes, while commercial entities, Indian gaming enterprises, casinos and
government sponsored entities operate bingo games for profit. The Company sells
its products to this diverse group of end-users through more than 300
distributors, its direct sales force and Company-owned distribution outlets.
A wholly-owned subsidiary, Video King Gaming Systems, Inc. ("Video King"),
has developed and is currently manufacturing a line of electronic gaming
products, a comprehensive gaming management tracking system and video lottery
terminals and slot machines. Video King markets its products within the bingo
industry, as well as the domestic and international for-profit gaming market.
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The Company was reincorporated in Delaware in 1986, and is a successor, by
merger effective as of January 21, 1987, to a business founded in 1948. The
Company's principal executive officers are located at 3211 Nebraska Avenue,
Council Bluffs, Iowa 51501 and its telephone number is (712) 323-1488.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of the Common Stock by
the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth (i) the identity of the Selling
Stockholders, (ii) the nature of any position or other material relationship,
if any, that each Selling Stockholder has had with the Company, its
predecessors or affiliates during the past three years (iii) the amount of
Common Stock owned by each Selling Stockholder prior to the offering, (iv) the
amount of Common Stock offered by each Selling Stockholder, and (v) the amount
and (if one percent or more) the percentage of shares of the outstanding Common
Stock that will be owned by each Selling Stockholder after the offering is
complete:
<TABLE>
<CAPTION>
AMOUNT OF SHARES TO BE OWNED AFTER
POSITION OR RELATIONSHIPS WITH SHARES OWNED AMOUNT OF THE OFFERING
NAME OF SELLING THE PRIOR TO SHARES --------------------
SHAREHOLDER COMPANY OFFERING OFFERED AMOUNT(1) PERCENTAGE
--------------- ------- ------------ ------- --------- ----------
<S> <C> <C> <C> <C> <C>
Leonard A. Stuart Chairman of the Board 1,141,087 1,141,087 -- --
Karen Elizabeth Sisson 18,160 18,160 -- --
Terrance Edgar Sisson 163,440 163,440 -- --
</TABLE>
PLAN OF DISTRIBUTION
The Common Stock may be offered by the Selling Stockholders from time to
time in one or more transactions for his or her own account on the Nasdaq Stock
Market or in negotiated transactions. Sales will be at prices and on terms then
prevailing or at prices related to the current market price or at negotiated
prices and terms. The Common Stock may be sold by one or more of the following
methods: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the Common Stock as agent, but may position and resell a
portion of the block as principal in order to consummate the transaction; (b)
purchase by a broker or dealer as principal, and the resale by such broker or
dealer for its account pursuant to this Prospectus, including resale to another
broker or dealer; (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers, or (d) in privately negotiated transactions.
Any such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
Common Stock for whom such broker-dealers may act as agent or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). The Selling Stockholders and any
broker-dealers that act in connection with the sale of the Common Stock may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commissions received by them and any profit on the
resale of the Common Stock as principal might be deemed to be underwriting
discounts and commissions under the Securities Act.
The shares of Common Stock covered by this Prospectus may be sold under
Rule 144 rather than this Prospectus if such shares qualify for sale under Rule
144. As of the date of this Prospectus, 1,141,087 shares of such Common Stock
may qualify for resale under Rule 144.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which have been
omitted in accordance with the rules and regulations of the Commission.
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Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit or incorporated by reference to the Registration Statement of which
this Prospectus forms a part, each such statement being qualified in all
respects by such reference. For further information with respect to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement. Copies of the Registration Statement may be inspected, without
charge, at the offices of the Commission, or obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
LEGAL MATTERS
Certain legal matters relating to the Common Stock to be offered hereby
will be passed upon for the Company by Morrison & Foerster, LLP, 370 17th
Street, Suite 5200, Denver, Colorado 80202.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in
accounting and auditing.
9
<PAGE> 11
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING,
OTHER THAN THOSE MADE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AVAILABLE INFORMATION.................................. 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE.............................. 2
RISK FACTORS........................................... 3
THE COMPANY............................................ 8
USE OF PROCEEDS........................................ 9
SELLING STOCKHOLDERS................................... 9
PLAN OF DISTRIBUTION .................................. 10
ADDITIONAL INFORMATION................................. 10
LEGAL MATTERS.......................................... 10
EXPERTS .............................................. 11
</TABLE>
================================================================================
================================================================================
1,322,680 SHARES
STUART ENTERTAINMENT, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
AUGUST __, 1997
================================================================================
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be borne by the
Registrant, other than underwriting discounts and commissions, in connection
with the issuance and distribution of the Common Stock hereunder.
<TABLE>
<CAPTION>
Payable by the
Registrant
----------
<S> <C>
SEC registration fee.......................................... $ 801.62
Accounting fees and expenses.................................. 2,500.00
Legal fees and expenses....................................... 5,000.00
Printing costs................................................ 500.00
Blue Sky fees and expenses.................................... 250.00
Miscellaneous................................................. 250.00
Total.................................................... $9,301.62
</TABLE>
The foregoing items, except for the SEC registration fee, are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides generally and
in pertinent part that a Delaware corporation may indemnify its directors and
officers against expenses, judgments, fines and settlements actually and
reasonably incurred by them in connection with any civil suit or action, except
actions by or in the right of the corporation, or any administrative or
investigative proceeding if, in connection with the matters in issue, they
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of the corporation, and in connection with any
criminal suit or proceeding, if in connection with the matters in issue, they
had no reasonable cause to believe their conduct was unlawful. Section 145
further provides that in connection with the defense or settlement of any
action by or in the right of the corporation, a Delaware corporation may
indemnify its directors and officers against expenses actually and reasonably
believed to be in, or not opposed to, the best interests of the corporation.
Section 145 permits a Delaware corporation to grant its directors and officers
additional rights of indemnification through bylaw provisions and otherwise and
to purchase indemnity insurance on behalf of its directors and officers.
Article Eight of the Certificate of Incorporation of the Registrant
requires the Registrant to indemnify, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, all directors and officers
of the Registrant, which it has the power to indemnify, from and against any
and all expenses, liabilities or other matters referred to in Section 145.
The Registrant's Certificate of Incorporation also provides in Article
Seven that directors shall not be personally liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of a director's duty of loyalty to the
Registrant or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or knowing violations of law, (iii) under
Section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit.
Article III, Section 16 of the Registrant's By-laws provides, in general,
that the Registrant shall indemnify its directors and officers to the fullest
extent permitted by the Delaware General Corporation Law.
The Registrant maintains liability insurance coverage for its directors
and officers.
<PAGE> 13
ITEM 16. EXHIBITS.
The following is a complete list of exhibits filed as part of the
Registration Statement. Exhibit numbers correspond to the numbers in the
Exhibit Table of Item 601 of Regulation S-K.
5.1 Opinion of Morrison & Foerster, LLP as to the legality of the
Common Stock being registered.
23.1 Consent of Morrison & Foerster, LLP (see Exhibit 5.1).
23.2 Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(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. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed what was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(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;
Provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the
registration statement is on Form S- 3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the undersigned pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Council Bluffs, State of
Iowa, on August 1, 1997.
STUART ENTERTAINMENT, INC.
By:
-----------------------------------
Timothy R. Stuart, President
<PAGE> 15
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Timothy R. Stuart, 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 or all amendments to this Registration Statement on Form S-3 and file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto such
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, to all intents and purposes and as full as they might or could do in
person, hereby ratifying and confirming all that such attorney-in-fact and
agent, or his substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
- ------------------------------------ Director August 1, 1997
Sangwoo Ahn
- ------------------------------------ Vice Chairman of the Board August 1, 1997
Albert F. Barber and Chief Executive Officer
- ------------------------------------ Director August 1, 1997
Perry J. Lewis
- ------------------------------------ Director and Executive August 1, 1997
Ronald G. Rudy Vice President
- ------------------------------------ Director August 1, 1997
Richard D. Spizzirri
- ------------------------------------ Director August 1, 1997
Ira Starr
- ------------------------------------ Chairman of the Board August 1, 1997
Leonard A. Stuart
- ------------------------------------ President, Chief Operating August 1, 1997
Timothy R. Stuart Officer and Director
- ------------------------------------ Director August 1, 1997
Stanley M. Taube
- ------------------------------------ Vice President-Finance, August 1, 1997
Paul C. Tunink Treasurer and
Chief Financial Officer
</TABLE>
<PAGE> 16
EXHIBIT INDEX
5.1 Opinion of Morrison & Foerster, LLP as to the legality of the
Common Stock being registered.*
23.1 Consent of Morrison & Foerster, LLP (see Exhibit 5.1).*
23.2 Consent of Deloitte & Touche LLP.*
24.1 Powers of Attorney.*
- ----------------
* Filed herewith.
<PAGE> 1
EXHIBIT 5.1
OPINION OF MORRISON & FOERSTER, LLP
August 15, 1997
Stuart Entertainment, Inc.
3211 Nebraska Avenue
Council Bluffs, Iowa 51501
Ladies and Gentlemen:
We have acted as your counsel in connection with the filing of the
Registration Statement on Form S-3 (the "Registration Statement") and related
prospectus (the "Prospectus") under the Securities Act of 1933, as amended (the
"Act"), relating to 1,322,680 shares of your common stock, $.01 par value per
share (the "Shares"). In connection therewith, we have reviewed such
Registration Statement, certain of your corporate records and proceedings taken
in connection with the authorization and issuance of the Shares, and such other
factual and legal matters as we have considered necessary for purposes of this
opinion.
Based on and subject to the foregoing, we are of the opinion that the
Shares will, when sold, be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in such Registration Statement. This consent does not
constitute a consent under Section 7 of the Act, and in consenting to the
reference to our firm under such heading we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under Section 7 or the rules and regulations
of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ MORRISON & FOERSTER, LLP
MORRISON & FOERSTER, LLP
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Stuart Entertainment, Inc. on Form S-3 of our report dated March 14, 1997,
appearing in the Annual Report on Form 10-K of Stuart Entertainment, Inc. for
the year ended December 31, 1996 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
August 11, 1997
