<PAGE>
As filed with the Securities and Exchange Commission on February 10, 2000
Registration No. 333-
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
_______________________________________
UNITED LEISURE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-2652243
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
1990 Westwood Boulevard
Los Angeles, CA 90025
(310) 441-0900
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
_______________________________________
Brian Shuster
United Leisure Corporation
1990 Westwood Boulevard
Los Angeles, California 90025
(310) 441-0900
(Name, Address and Telephone Number
of Agent for Service)
_______________________________________
Copies to:
Gerald M. Chizever, Esq.
Nia Stefany, Esq.
Richman, Lawrence, Mann, Chizever & Phillips
9601 Wilshire Boulevard, Penthouse
Beverly Hills, California 90210
(310) 274-8300
(310) 274-2831 (fax)
_______________________________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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 [_]
Calculation of Registration Fee
<TABLE>
<CAPTION>
========================================================================================================================
Title of Each Class of Proposed Proposed Maximum
Securities to be Amount to be Maximum Offering Aggregate Offering Amount of
Registered Registered Price Per Unit Price Registration Fee
- ------------------------------ -------------------- ---------------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 4,945,000 (1) $4.00 $19,780,000 $5,222
========================================================================================================================
</TABLE>
(1) Consists of shares issuable upon exercise of common stock underlying
outstanding Class A Redeemable Common Stock Purchase Warrants, exercisable
at $4.00 per share. Pursuant to Rule 416, there are also being registered
such additional shares of common stock as may become issuable as a result
of the anti-dilution provisions of such warrants.
___________________________
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 this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
UNITED LEISURE CORPORATION
4,945,000 Shares of Common Stock
$4.00 per Share
This prospectus concerns the sale of our common stock upon the exercise
of our 4,945,000 outstanding Class A Redeemable Common Stock Purchase Warrants
(the "Warrants"). The amount of proceeds we will receive from such sales, if
any, depends on how many of the Warrants are exercised. The exercise price of
the Warrants is $4.00 per share. If all of the Warrants were exercised, we would
receive $19,780,000. There are no brokers or underwriters involved in these
sales, and no sales commission will be paid. We will receive the entire exercise
price of all Warrants exercised. We will pay the costs of registering the sale
of these shares.
Our common stock is quoted on the Nasdaq OTC Bulletin Board under the
symbol UTDL. On February 9, 2000, the closing price for our stock was $12.00 per
share. The Warrants are quoted on the Nasdaq OTC Bulletin Board under the symbol
UTDLW.
___________________________________
See "Risk Factors" beginning on page 6 of this prospectus
for a discussion of certain factors which you should consider
before you invest in the common stock described in this prospectus.
___________________________________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
___________________________________
This prospectus is dated __________, 2000
<PAGE>
ADDITIONAL INFORMATION
This prospectus is part of a registration statement on Form S-3 which we
have filed with the Securities and Exchange Commission (the "Commission"). It
does not include all of the information that is in the registration statement
and the additional documents filed as exhibits with it. For more detail you
should read the exhibits themselves.
We file annual, quarterly and special reports, proxy and information
statements and other information with the Commission. Such reports, proxy and
information statements and other information can be inspected and copied at the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7
World Trade Center, Suite 1300, New York, New York 10048. You may call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our Commission filings are also available on the SEC's website:
http://www.sec.gov. Our common stock is traded on the Nasdaq OTC Bulletin Board
- -------------------
under the symbol UTDL, and such reports, proxy statements and other information
concerning our Company also can be inspected at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006, or by calling the
Nasdaq Public Reference Room Disclosure Group at (800) 638-8241 or (202)
728-8298.
The Commission allows us to "incorporate by reference" certain
information we file with the Commission, rather than actually including this
information in this prospectus. This means that we are considered to have
disclosed to you important information contained in other documents filed with
the Commission by referring you to those documents. The information incorporated
by reference is an important part of this prospectus. Information we later file
with the Commission will automatically update and supersede this information. We
incorporate by reference the following documents:
. our annual report on Form 10-KSB for the year ended December 31, 1998;
. our quarterly report on Form 10-QSB for the quarter ended March 31,
1999;
. our quarterly report on Form 10-QSB for the quarter ended June 30, 1999;
. our quarterly report on Form 10-QSB for the quarter ended September 30,
1999;
. our special report on Form 8-K filed with the Commission on August 24,
1999;
. our special report on Form 8-K filed with the Commission on October 6
1999;
. our special report on Form 8-K filed with the Commission on October 26,
1999;
. the description of our common stock in Amendment No. 5 to our
registration statement on Form SB-2 (Commission File No. 33-81074)
filed with the Commission on November 10, 1994, including any
amendment or report filed for the purposes of updating such
description; and
. all documents filed by us under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 between the date of this prospectus
and the termination of the registration statement.
If information in incorporated documents conflicts with information in
this prospectus you should rely on the most recent information. If information
in an incorporated document conflicts with information in another incorporated
document, you should rely on the most recent incorporated document.
2
<PAGE>
We will provide you with copies of these documents at no cost to you if
you request them by writing or telephoning us at the following address:
United Leisure Corporation
1990 Westwood Boulevard
Los Angeles, California 90025
Telephone: (310) 441-0900
You should rely only on the information provided in this prospectus or
any prospectus supplement or incorporated in this prospectus by reference. We
have not authorized anyone to provide you with different information. You should
not assume that the information in this prospectus or any prospectus supplement
is accurate as of any date other than the date on the front of those documents.
You should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents, as the affairs of our Company may have changed since that time.
3
<PAGE>
SUMMARY
This summary highlights selected information from this prospectus and
may not contain all of the information that is important to you. We encourage
you to read the prospectus in its entirety as well as the documents incorporated
by reference.
OUR COMPANY
Through our wholly-owned subsidiary, United Internet Technologies, Inc.,
the Company, United Leisure Corporation, is primarily engaged in the business of
developing and licensing our proprietary Internet technology and sites on the
World Wide Web that incorporate our technology. We have developed two
proprietary technologies, Parallel Addressing Technology (PAV) and Dynamic
Integrated Video Overlay (DIVO). Our technology equips sites on the World Wide
Web with software that allows a CD-ROM or DVD-ROM to play a pre-recorded
full-motion video. The display of the video content at the user's end is
completely controlled by the Web server. Our technology lets users interact with
a Web site and experience full-motion video and stereo audio in broadcast
quality while the user is on line, without having to download files or play
"streaming" video or audio. The audio and video files can only be unlocked by
the server.
Primarily, we license the use of our technology to others. We have licensed
an application for television to National Broadcasting Corporation (NBC), an
application for wrestling and related activities to World Championship
Wrestling, Inc., and travel related applications to Genisys Reservation Systems,
Inc. We have marketing agreements with Earthlink Network, Inc., AT&T Corp.,
America Online, Inc., and Liquid Audio, Inc. We have other commercial and
educational applications under development. We intend to continue to pursue
licensing agreements with others and we may also develop our own Web sites.
Our in-house content and production capabilities span the spectrum from
development of video through distribution of the CD-ROM or DVD-ROM. We can
design a Web site's concept, write the script, shoot footage in various formats
to make it compatible with our technology, and distribute the final product.
We also have investments in several affiliated companies. These investments
consist of the following:
. Grand Havana Enterprises, Inc., which owns and operates private
membership restaurants and cigar clubs.
. HEP II L.P., which is in the motion picture production business.
Before February 1997, our primary business was to act as a developer and
manager of facilities for children's recreational activities. As part of our
decision to re-orient our business to developing and licensing our technology,
we closed our Camp Frasiers and Frasier's Frontiers amusement park and decided
to dispose of our Planet Kids Facilities.
In August 1999, we sold real property located in El Cajon, California
which was previously used for some of our children's recreational activities. In
October 1999, we sold our real estate holdings in Las Vegas, Nevada. In January
2000, we sold 2,240,000 shares of our common stock in a private offering to
persons who are not officers or directors.
4
<PAGE>
THE OFFERING
This prospectus concerns the sale of our common stock upon the exercise of
our outstanding Class A Redeemable Common Stock Purchase Warrants. The amount of
proceeds we will receive from such sales, if any, depends on how many of the
Warrants are exercised. We believe that the exercise of the Warrants will depend
on the market price of our common stock and its relation to the exercise price
of the Warrants. The exercise price is $4.00 per share. If all of the Warrants
were exercised, we would get $19,780,000. There are no brokers or underwriters
involved in these sales, and no sales commission will be paid. We will receive
the entire exercise price of all Warrants exercised. We will pay the costs of
registering the sale of these shares.
Our common stock is quoted on the Nasdaq OTC Bulletin Board under the
symbol UTDL. On February 9, 2000, the closing price for our stock was $12.00 per
share. The Warrants are quoted on the Nasdaq OTC Bulletin Board under the symbol
UTDLW.
OUR CONTACT
Brian Shuster, President, 1990 Westwood Boulevard, Los Angeles, California
90025, telephone number: (310) 441-0900.
5
<PAGE>
RISK FACTORS
Investing in our stock is very risky. You should be able to bear a complete
loss of your investment. Before you invest in our stock, you should be aware
that there are risks in doing so, including those described below. You should
consider carefully these risk factors together with all of the other information
included in this prospectus, any prospectus supplement and the documents we have
incorporated by reference.
If any of the following risks actually occurs, then our business, financial
condition or results of operations could be seriously harmed. In such event, the
trading price of our stock could decline and you may lose all or part of your
investment.
Statements contained in this prospectus (including those documents which
are incorporated by reference) that are not historical facts are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933.
These forward-looking statements may be identified by the use of forward-looking
terms such as "believes," "expects," "may," "will," "should" or "anticipates" or
by discussions of strategy that involve risks and uncertainties. From time to
time, we have made or may make forward- looking statements, orally or in
writing. These forward-looking statements include statements regarding
anticipated future revenues, sales, operations, demand, competition, capital
expenditures, and other statements regarding matters that are not historical
facts, involve predictions which are based upon a number of future conditions
that ultimately may prove to be inaccurate. Our actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that may cause or contribute to
such differences include those discussed under Risk Factors, as well as those
discussed elsewhere in this prospectus. We caution you however, that this list
of factors may not be complete.
Limited Operations; Lack of Diversification. Our primary business is
-------------------------------------------
developing and licensing proprietary interactive Internet technology. These
activities are conducted through our wholly-owned subsidiary, United Internet
Technologies, Inc. ("United Internet"). Our interactive Internet business has
been our primary business focus since 1998 and our operations from that business
are limited in scope and duration. Our other business consists of (i) children's
recreational activities and (ii) investments we make in affiliated companies.
Our children's recreational activities have been an increasingly smaller part of
our business and revenues since February 1997, and we intend to dispose of our
remaining children's recreational facilities. Therefore, our business may not be
sufficiently diversified to spread the risk of any downturn in the growth of the
Internet or in the development and licensing of our interactive Internet
technology.
Sustained Losses. We have sustained operating losses for the last several
----------------
years from our traditional business of children's recreational activities. In
addition, we have significant working capital requirements and these needs are
expected to continue to be significant. Moreover, we have significant
investments in affiliates, Grand Havana Enterprises, Inc. and HEP II L.P. Most
of the affiliates have substantial losses and working capital deficits. If these
losses continue, a substantial portion of our net worth would be at risk.
Limited Operating History for Our Internet Business. Our Internet
---------------------------------------------------
subsidiary, United Internet, was formed to develop and market our proprietary
interactive Internet technology and related products. So far, United Internet's
operations have been limited to developing, marketing and licensing a small
number of applications of our technology. Our success depends upon developing
and licensing, or selling, additional applications of our technology. If
additional applications of our technology are not successfully developed and
licensed or sold, it would seriously harm our business, results of operations
and financial condition.
6
<PAGE>
Future Revenues Are Uncertain. We cannot forecast revenues from our
-----------------------------
Internet business accurately. This is because of the limited operating history
of our Internet business and the rapidly developing nature of the Internet
market. The market for our technology is uncertain. We intend to increase
substantially our operating expenses to accomplish certain goals. These include:
. further developing our technology
. creating new applications of our technology
. increasing sales and marketing activities
. purchasing additional equipment for operations.
Many of these and other expenses of operating our Internet business are fixed
expenses. If we are not successful in increasing revenues, we may be unable to
adjust spending quickly to compensate for any revenue shortfall. This could lead
to further losses. Alternatively, we might have to reduce certain operating
expenses, and this could have a negative effect on developing the Internet
business and generating revenues. Either of these situations could seriously
harm our business, results of operations and financial condition.
We May Need Additional Financing. Through United Internet, we intend to
--------------------------------
enter into additional license agreements for our technology. We expect that
these license agreements will generate revenue that United Internet can use to
develop our Internet business further. However, it is not known whether we will
be successful in entering into additional license agreement. If license
agreements and other arrangements do not generate enough revenue to develop our
Internet business further, we will need to raise money. This would probably be
done by selling our stock, stock of United Internet, our investment in
affiliated companies, or other securities in public or private offerings. It is
not known whether we would be successful in raising additional money in the
future. Depending upon how much money we raise, United Internet may have more or
less ability to expand our Internet business rapidly. If we are unable to
generate revenue from our business operations or raise additional funds when
needed or on favorable terms, United Internet may not be able to continue
developing our Internet business. That would seriously harm our business,
results of operations and financial condition.
Our Internet Business is Not Diversified. Because we have developed a
----------------------------------------
small number of applications of our interactive Internet technology, we are more
vulnerable than a more diversified business to any unanticipated occurrences. So
far, only a limited number of applications of our technology have been developed
and licensed.
The Genisys Transaction Has Special Risks. Since we entered into the
-----------------------------------------
transaction with Genisys and NII, the transaction has been restructured in some
significant ways. These include the amount and the type of securities that
United Internet will receive from Genisys. The stockholders of Genisys must
approve the transaction for the original terms of the deal to apply. In
addition, if the Genisys stockholders do not approve the original transaction,
the entire transaction with Genisys will be unwound.
Risks Associated with NII License. Genisys and its subsidiary, NetCruise
---------------------------------
Interactive, Inc. ("NII"), have had serious delays launching Internet travel
services that use our technology. Significant additional delays could seriously
harm Genisys' revenues and the price of its stock, of which we have a
significant amount.
Strategic Alliances. We intend to enter into additional strategic alliances
-------------------
and license agreements. However, we do not know if we will be able to enter into
any such agreements or if any agreements entered into will be favorable to us.
If additional agreements are not entered into, the cost of introducing new
applications of our technology in the marketplace may be prohibitive under our
current business plan and capitalization.
7
<PAGE>
Development Risks. We do not know if United Internet will be able to
-----------------
develop any additional applications of the technology which are commercially
viable or competitive. Additional development is required for new commercial and
educational applications of our technology. Additionally, we do not know if
United Internet will be able to expand its present staff of technicians and
software designers to create a large enough staff that is capable of developing
commercial and educational applications of the technology in a timely manner.
Uncertainty About The Internet as a Medium of Commerce; Dependence on the
-------------------------------------------------------------------------
Internet. Our ability to earn revenue from our Internet products depends in part
- --------
upon increased acceptance of the Internet as a medium for "e-commerce" by
consumers. The Internet may not develop into a viable commercial marketplace as
quickly as some industry estimates suggest. E-commerce on the Internet may not
develop to the extent anticipated. Rapid growth and interest in the Internet and
other online services is a recent development. We do not know if the use of the
Internet for e-commerce will continue to develop or that a large enough number
of consumers will use the Internet and other online services for e-commerce.
Because global commerce on the Internet is still new and evolving, we cannot
predict the extent to which the Internet will be a viable commercial
marketplace. In addition, there are several factors that could have an impact of
the growth of e-commerce. These include:
. security
. reliability of service
. cost of Internet access
. how easy it is to use the Internet or e-commerce features on the
Internet
. how easy it is to gain access to the Internet
. quality of service
. delays in developing of new standards and protocols to handle increased
Internet traffic
. increased governmental regulation
Slow growth of e-commerce on the Internet for these or any other reasons could
have a material adverse effect on our business, results of operations and
financial condition.
We depend upon Web browsers, Internet Service Providers and Online Service
Providers to allow Internet users to access United Internet's own Web sites and
Web sites of United Internet's licensees. From time to time, users may
experience difficulties accessing or using Web sites due to system failures or
delays which are not related to United Internet's systems. These difficulties
may negatively affect audio and video quality or result in interruption of video
delivery. Any significant delays or failure of service could reduce the
attractiveness of our technology and applications to our licensees, users,
advertisers and content providers. Any of these events could seriously harm our
business, results of operations and financial condition.
Security Risks. Even though we employ security measures, United Internet's
--------------
Web sites and the Web sites of United Internet's licensees may be vulnerable to
unauthorized access, computer viruses, Trojan horses, worms and other
disruptions. A party who is able to circumvent security measures could
misappropriate proprietary information or cause interruptions in United
Internet's or its licensees' Internet operations. Internet Service Providers and
Online Service Providers have experienced, and may in the future experience,
interruptions in service as a result of the accidental or intentional actions of
Internet users, their own current and former employees or others. We may be
required to spend significant capital or other resources to protect against the
threat of security breaches or to solve problems caused by these sorts of
security breaches. Although United Internet intends to continue to implement
industry-standard security measures, we do not know if the measures implemented
by United Internet will be circumvented in the future. Eliminating computer
viruses, Trojan horses and worms and solving other security
8
<PAGE>
problems may require interruptions or delays in service to users who access
United Internet's or its licensees' Web sites. Any of these things could
seriously harm our business, results of operations and financial condition.
Intense Competition. There is significant competition in the evolving
-------------------
market for video delivery on the Internet. We and our primary competitors have
each approached Internet video delivery using different technologies. Many of
our competitors have substantially greater financial, marketing, personnel and
other resources than we have. Our management believes that the barriers to enter
this market are relatively high and there is significant lead time required to
market a competitive Internet video delivery technology.
There is significant competition for content development and broadcasting
on the Internet. The largest competitors in the context development and
broadcast area are Broadcast.com, Inc. and RealNetworks, Inc. These, and many
other competitors in the content development and broadcast area, have
substantially greater assets then we do. We expect competition in this area to
remain strong and to increase further.
Technological Obsolescence. The Internet, computer hardware and software
--------------------------
markets, and the field of e-commerce, all are undergoing rapid technological
changes. Newer technologies, techniques or products could be developed which
might perform functions similar to our technology and which operate as
efficiently and easily, or which solve the problem of long download times for
multimedia files in other ways. For example, a new technological advance that
allows faster downloading of information from computer networks, or the
development of entirely new methods of data transmission, could seriously harm
our business, results of operations and financial condition.
It is probable that existing broadband technology will eventually develop
to allow streaming video to provide television-quality video in direct
competition with our technology, as well as with other alternative video
delivery systems. While some industry estimates project that such developments
may not occur for the next six to eight years, we do not know if these
technological developments will occur sooner. In any event, over time we will
need to respond to technological innovation in a rapidly changing industry.
Government Regulation and Legal Uncertainty. Although there are currently
-------------------------------------------
few laws and regulations that directly apply to the Internet, it is likely that
new laws and regulations will be adopted in the United States and elsewhere
covering a wide range of Internet-related issues. This could include broadcast
license fees, music licensing, copyrights, privacy, pricing, sales taxes, and
characteristics and quality of Internet services. It is also possible that laws
could be passed that may apply to us in the areas of content, network security,
encryption, privacy protection, electronic authentication or "digital"
signatures, illegal and harmful content, access charges and re-transmission
activities. If restrictive laws or regulations are adopted, it could slow
Internet growth. If certain laws or regulations apply to us and the type of
Internet business or service we provide, it could expose us to significant
liabilities associated with the content on United Internet's Web sites, and
possibly for the content on the Web sites of United Internet's licensees. We do
not know if laws will be adopted that apply to our business on the Internet. If
such laws and regulations are adopted, we do not know if they will affect our
business. Any new legislation or regulation or enforcement of existing laws and
regulations could limit the growth of the Internet, increase our cost of doing
business or increase our legal exposure.
There are also uncertainties about how existing laws in other areas apply
to the Internet. Some of these laws deal with such issues as property ownership,
libel, taxation, defamation and personal privacy. The majority of these laws
were adopted before the widespread use of the Internet. Therefore, they do not
address the unique issues of the Internet and related technologies. There are
very few cases about the interpretation of these types of law
9
<PAGE>
on Internet use. If such laws apply to the Internet, it could limit growth of
the Internet and could seriously harm our business, results of operations and
financial condition.
Congress enacted the Communications Decency Act in 1996. The U.S. Supreme
Court ruled that certain sections of that Act which would have imposed criminal
penalties on anyone distributing "indecent" material to minors over the Internet
were unconstitutional. We do not know if similar laws will be adopted and
upheld. Even though we do not currently distribute the types of materials on the
Internet that the Act may have considered illegal, we do not know how any future
laws or regulations regarding decency might be interpreted. In addition to the
potential for liability, these types of laws could also damage the growth of the
Internet generally. That would have the effect of decreasing the demand for our
technology and its applications. Any of these developments could seriously harm
our business, results of operations and financial condition. So far, we have not
required our licensees to indemnify us for this type of liability and we do not
have insurance for this type of liability.
If we are considered to be a distributor of Internet content, we face
potential liability for negligence, copyright, patent, trademark, defamation,
indecency and other claims. These types of lawsuits have been brought against
Internet content distributors. In addition, we could be liable for the broadcast
content, or unauthorized duplication of broadcast content. So far, we have not
required our licensees to indemnify us for this type of liability. Any liability
that is not covered by insurance or an indemnification by a licensee could
seriously harm our business, results of operations and financial condition. At
present, we do not have insurance for this type of liability.
Patent Matters. We filed an application for a utility patent for our PAV
--------------
and DIVO technology with the U.S. Patent and Trademark Office in July 1997. This
patent was issued November 30, 1999. We filed a second patent application
relating to enhancements to our DIVO technology in May 1999. We do not know if
that patent will be issued or, if it is issued, how broad it will be. It is
therefore possible that our competitors will be able to use products and
technologies similar to our own. That could significantly reduce our competitive
advantage. However, even if a patent is not issued, we believe that the value of
our DIVO technology will not be critically impaired. We also do not know if any
patent that we might receive in the future will provide protection from
infringement or if our patent applications will be challenged. If any of our
patents are challenged, we do not know what the result of the challenge would be
and we also do not know if we would have adequate resources to enforce or defend
our rights.
Patent Infringement Lawsuit. On June 7, 1999 we were sued by Hyperlock
---------------------------
Technologies, Inc. in the United States District Court for the Northern District
of Illinois, Eastern Division. Hyperlock maintains that they have been assigned
United States Patent No. 5,892,825, entitled "Method of Secure Server Control of
Local Access of Encrypted Data on Local Media and United States Patent No.
5,937,164, entitled "Method and Apparatus of Secure Server Control of Local
Media Via a Trigger Through a Network For Instant Local Access of Encrypted Data
on Local Media With a Platform Independent Networking System." Hyperlock is
seeking an injunction against us and unspecified damages. Hyperlock also seeks
treble damages, court costs and reasonable attorneys' fees and such other and
further relief as the court may deem to be just and proper. We cannot predict
the outcome of this litigation. Based on the review of their '825 patent, and
their '164 patent, we believe that the suit is without merit. However, an
adverse result would seriously harm our business, results of operations and
financial condition. We have asserted our patent, United State Patent No.
5,996,000, entitled "Method and Apparatus For Using Distributed Multimedia
Information" by filing an action in the Central District of California on
February 7, 2000. We cannot predict the outcome of this litigation, but we are
seeking an injunction and damages from Broadbridge Media, LLC & Hyperlock
Technologies.
Intellectual Property. Our copyrights, trademarks, trade secrets and other
---------------------
intellectual property rights are critical to our success. We rely on copyright
and trademark laws, trade secret protection, and confidentiality and non-
disclosure agreements with our employees and third parties to protect our
proprietary rights. We do not know if these steps will be adequate. We do not
know if we will be able to obtain trademark registrations for our marks in the
United States or other countries. We do not know if third parties will infringe
upon or misappropriate our copyrights, trademarks, service marks and other
intellectual proprietary rights. None of our marks or rights are
10
<PAGE>
registered at present. In addition, meaningful copyright and trademark
protection may be unenforceable or limited in certain countries. In the future,
it is possible that we would have to sue to protect our copyrights, trademarks,
trade secrets and other intellectual property rights. We cannot give any
assurance as to our ability to enforce our rights or the outcome of any suits to
protect those rights.
United Internet generally enters into nondisclosure agreements with its
employees and consultants. United Internet also limits access to and
distribution of its software, sensitive documents and other proprietary
information. We do not know if the steps taken by United Internet to prevent
misappropriation of its proprietary information will be successful. If these
agreements are breached we do not know if we will have adequate remedies
available, or if the agreements themselves would be enforceable. Even with the
precautions taken by United Internet, it might be possible for a third party to
copy, obtain and use, our proprietary information without authorization. It is
also possible that our trade secrets will be independently developed by
competitors.
We Depend on Certain Personnel. An important part of our performance
------------------------------
depends upon the services of our senior management, certain other key personnel,
and technical and business consultants. The loss of their services could have a
material adverse effect on our business, results of operations and financial
condition.
Dilution. If we raise additional funds by selling common stock or other
--------
equity securities, the interests of current stockholders would be diluted. We
may also issue common stock or options or warrants to purchase our common stock
to provide incentives to officers, employees, consultants, advisors and other
people who perform services for us. Stock which is issued when options and
warrants are exercised will dilute our present stockholders' ownership
percentage in our Company.
Control of Our Company by Certain Stockholders. Brian Shuster and certain
----------------------------------------------
of his relatives are principal stockholders of our Company. Harry Shuster, the
father of Brian Shuster, owns 34.9% of our common stock, and Brian Shuster owns
7.1% of our common stock. Therefore, Brian Shuster and members of his family
have the ability largely to control the outcome of Company actions requiring the
approval of our stockholders. These matters include:
. election of directors
. mergers, sales of all or most of our assets; or
. other change of control of our Company.
Brian Shuster is Chairman of the Board, President, Chief Executive Officer and a
director of our Company.
Dividends. We have not paid dividends on our common stock in the past and
---------
we do not expect to declare dividends on our common stock in the foreseeable
future. We intend to continue to retain earnings for use in the operation and
expansion of our business. Dividend policy in the future is at the discretion of
our Board of Directors and will depend upon our financial condition, results of
operations, capital requirements and other factors that the Board of Directors
considers relevant. We are not a party to any agreement restricting the payment
of dividends.
11
<PAGE>
PLAN OF DISTRIBUTION
This prospectus concerns the sale of our common stock upon the exercise of
our outstanding Class A Redeemable Common Stock Purchase Warrants. The sales, if
any, will be made directly by our Company upon receipt of notification of
exercise by a Warrant holder. There are no brokers or underwriters involved in
these sales, and no sales commission will be paid. We will receive the entire
exercise price of all Warrants exercised.
USE OF PROCEEDS
The amount of proceeds we will receive from exercise of the Warrants, if
any, depends on how many of the Warrants are exercised. We believe that the
exercise of the Warrants will depend on the market price of our common stock and
its relation to the exercise price of the Warrants. The exercise price is
$4.00 per share. Our common stock is quoted on the Nasdaq OTC Bulletin Board
under the symbol UTDL. On February 9, 2000, the closing price for our stock was
$12.00 per share. If all of the Warrants were exercised, we would receive
$19,780,000.
We intend to use the net proceeds from the exercise of the Warrants, if
any, for marketing, research and development, working capital and general
corporate purposes. Until we use the proceeds for these purposes, we intend to
place the funds in interest-bearing investments such as bank accounts,
certificates of deposit and United States Government obligations.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Certain members of the firm of Richman, Lawrence, Mann, Chizever &
Phillips, which serves as outside general counsel to the Company and which has
rendered the opinion as to the validity of the common stock being offered by
this prospectus, own in the aggregate, 76,000 shares of the common stock of the
Company.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Company's Certificate of Incorporation and By-laws provide for
indemnification of its directors and officers to the fullest extent permitted by
Delaware law. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
our Company pursuant to the foregoing provisions, we have been informed that in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-KSB of our Company for the year ended December 31,
1998, have been incorporated in reliance on the report of Hollander, Lumer &
Co., LLP, independent certified public accountants, given upon the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for our
Company by Richman, Lawrence, Mann, Chizever & Phillips, Beverly Hills,
California.
12
<PAGE>
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell
any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current as of the date of this prospectus.
__________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Additional Information.................................................... 2
Summary................................................................... 4
Risk Factors.............................................................. 6
Plan of Distribution...................................................... 12
Use of Proceeds........................................................... 12
Interests of Named Experts and Counsel.................................... 12
Indemnification for Securities Act Liability.............................. 12
Experts................................................................... 12
Legal Matters............................................................. 12
</TABLE>
UNITED LEISURE CORPORATION
up to 4,945,000 Shares of Common Stock
________________________________________________________________________________
PROSPECTUS
________________________________________________________________________________
___________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a schedule of the estimated expenses (all of which will
be borne by the Company) incurred in connection with the offering of the
securities registered hereby, other than underwriting discounts and commissions,
if any. All of the amounts shown are estimates, except the Commission
registration Fee.
Commission registration fee............................... $5,222
Blue Sky fees and expenses................................ $10,000
NASDAQ additional listing fee............................. Not Applicable
Accounting fees and expenses.............................. None
Legal fees and expenses................................... $10,000
Transfer Agent and registrar fee.......................... $2,500
Printing.................................................. $5,000
Miscellaneous............................................. $2,500
Total..................................................... $35,222
=======
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
grants corporations the right to indemnify their directors, officers, employees
and agents in accordance with the provisions therein set forth. The Company's
Bylaws provide for indemnification of such persons to the full extent allowable
under applicable law. In addition, the Company has entered into indemnity
agreements with each of its Directors, which generally provide contractual
indemnity protection which is coextensive with the indemnity provisions of the
General Corporation Law of the State of Delaware and the Company's Certificate
of Incorporation.
Item 16. Exhibits.
Exhibit
Number Description
- ------ -----------
2-1 Asset Purchase Agreement dated as of June 30, 1998 by and among United
Leisure Interactive, Inc., NetCruise Interactive, Inc., Genisys
Reservation Systems, Inc. and United Leisure Corporation, filed an exhibit
to the Company's Current Report on Form 8-K dated August 7, 1998 (as
amended on November 4, 1998), is hereby incorporated herein by reference
2-2 Agreement dated October 27, 1998, by and among United Internet
Technologies, Inc., Genisys Reservation Systems, Inc., Warren D.
Bagatelle, Loeb Holding Corporation, Loeb Partners Corp., HSB Capital,
David W. Sass, Mark A. Kenny, John H. Wasko, Joan E. Wasko, Lawrence E.
Burk and S. Charles Tabak, filed as Exhibit 2-2 to the Company's Current
Report on Form 8-K/A (Amendment No.1) dated November 4, 1998, is hereby
incorporated herein by reference
2-3 Agreement dated as of January 25, 1999, by and among United Internet
Technologies, Inc. (formerly knows as United Leisure Interactive, Inc.),
NetCruise Interactive, Inc., Genisys Reservation Systems, Inc.
II-1
<PAGE>
Exhibit
Number Description
- ------ -----------
and United Leisure Corporation, filed as Exhibit 2-3 to the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
is hereby incorporated herein by reference
4-1 Warrant Agreement, dated November 18, 1994, between the Company and OTR,
Inc., filed as Exhibit 4-1 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1994, is hereby incorporated herein
by reference
4-2 Form of Warrant to Purchase Common Stock used in connection with 12%
Promissory Note unit private placement and Bankruptcy Court deposit, filed
as Exhibit 4-3 to the Company's registration statement on Form SB-2
(Registration No. 33-81074), is hereby incorporated herein by reference
4-3 Underwriters Unit Purchase Option, dated November 18, 1994, issued to
Stratton Oakmont, Inc., filed as Exhibit 4-3 to the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1994, is
hereby incorporated herein by reference
4-4 Warrant to Purchase 600,000 Shares of Common Stock of United Leisure
Corporation dated April 2, 1998, issued to Strata Equities Limited, filed
as Exhibit 4-4 to the Company's Quarterly Report on Form 10-QSB for the
Quarter Ended June 30, 1998, is hereby incorporated herein by reference
4-5 Warrant Agreement dated as of June 25, 1998 between United Leisure
Corporation and Sands Brothers & Co., filed as Exhibit 4-5 to the
Company's Quarterly Report on Form 10-QSB for the Quarter Ended September
30, 1998, is hereby incorporated herein by reference
4-6 Agreement dated April 13, 1999 between United Leisure Corporation and
Strata Equities Limited, filed as Exhibit 4-6 to the Company's Quarterly
Report on Form 10-QSB for the Quarter Ended June 30, 1999, is hereby
incorporated herein by reference
5* Opinion of Richman, Lawrence, Mann, Chizever & Phillips
23-1* Consent of Richman, Lawrence, Mann, Chizever & Phillips (included in
Exhibit 5)
23-2* Consent of Hollander, Lumer & Co., LLP, independent public accountants
24* Powers of Attorney (included on the signature page in Part II of this
registration statement)
______________________
* filed herewith
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
II-2
<PAGE>
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
maybe 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 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) 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
registrant pursuant to section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes 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.
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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing 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 Los Angeles, State of California, on this 10/th/ day
of February 2000.
UNITED LEISURE CORPORATION
By /s/ Brian Shuster
------------------------------------------------------------
Brian Shuster, President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Brian Shuster his attorney-in-fact with power of
substitution for him in any and all capacities, to sign this registration
statement and any amendments, supplements, or subsequent registration statements
relating to the offering to which this registration statement relates, or other
instruments necessary or appropriate, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said attorney-in-
fact or his substitute may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in their stated
capacities on this 10/th/ day of February 2000.
Signature Title
- ------------------------------------ ----------------------------------------
/s/ Brian Shuster Chairman of the Board, President,
- ------------------------------------ Chief Executive Officer, Chief Financial
Brian Shuster Officer and Director
*/s/ Alvin Alexander Director
- ------------------------------------
Alvin Alexander
*/s/ Alvin Cassel Director
- ------------------------------------
Alvin Cassel
*/s/ J. Brooke Johnston Director
- ------------------------------------
J. Brooke Johnston
*By /s/ Brian Shuster Attorney-in-Fact
--------------------------------
Brian Shuster
II-4
<PAGE>
EXHIBIT 5
[Letterhead of Richman, Lawrence, Mann, Chizever & Phillips]
February 10, 2000
United Leisure Corporation
1990 Westwood Boulevard
Los Angeles, California 90025
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as securities counsel to United Leisure Corporation, a
Delaware corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "Securities Act"), of a Registration Statement on Form S-3
(the "Registration Statement"). The Registration Statement relates to the sale
of up to 4,945,000 shares of the Common Stock of the Company (the "Shares")
upon the exercise of its outstanding Class A Redeemable Common Stock Purchase
Warrants (the "Warrants").
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-B under the Securities Act.
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records and other instruments as we have deemed
necessary or appropriate as a basis for the opinions set forth herein, including
(i) the Registration Statement of the Company filed with the Securities and
Exchange Commission; (ii) the Certificate of Incorporation and the Bylaws of the
Company; (iii) the form of Common Stock Certificate; (iv) copies of certain
resolutions adopted by the Board of Directors of the Company and any amendments
of supplements thereto and related matters made available to us by the
Corporation for inspection; and (v) such other documents as we have deemed
necessary or appropriate as a basis for the opinions set forth below.
<PAGE>
United Leisure Corporation
February 10, 2000
Page 2
In our examination, we have assumed the genuineness of all signatures, the
legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties had the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity and binding effect thereof. As to any
facts material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers and other representatives of the Company and others.
We express no opinion as to compliance with the securities or "blue sky"
laws of any state in which the Common Stock are proposed to be offered and sold
or as to the effect, if any, which non-compliance with such laws might have on
the validity of issuance of such securities.
Based on the foregoing, it is our opinion that, subject to effectiveness
with the Securities and Exchange Commission of the Registration Statement and to
registration or qualification under the securities laws of the states in which
securities may be sold, upon the exercise of the Warrants according to their
terms, the Shares will be duly and validly authorized and will constitute
legally issued, fully paid and nonassessable shares of Common Stock of the
Company.
We consent to the use of our name under the caption "Legal Matters" in the
Registration Statement, and to the filing of this opinion as an exhibit to the
Registration Statement. By giving you this opinion and consent, we do not admit
that we are experts with respect to any part of the Registration Statement
within the meaning of the term "expert" as used in Section 11 of the Securities
Act or the rules and regulations promulgated thereunder, nor do we admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act.
The opinions set forth herein are based upon the federal laws of the United
States of America and the laws of the State of Delaware, all as now in effect.
We express no opinion as to whether the laws of any particular jurisdiction
apply, and no opinion to the extent that the laws of any jurisdiction other than
those identified above are applicable to the subject matter hereof. The
information set forth herein is as of the date of this letter. We disclaim any
undertaking to advise you of changes which may be brought to our attention after
the effective date of the Registration Statement.
Respectfully submitted,
/s/ RICHMAN, LAWRENCE, MANN, CHIZEVER &
PHILLIPS
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Registration Statement on Form S-3 of our
report dated March 6, 1999 relating to the Financial Statements of United
Leisure Corporation and Subsidiaries which appears in such Registration
Statement. We also consent to the reference to us under the heading "exports".
HOLLANDER, LUMER & CO. LLP
Los Angeles, California
February 11, 2000
ULS-3 CONSENT
