As filed with the Securities and Exchange Commission on May
6, 1997
Registration No.33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FIRST ENTERTAINMENT, INC.
(Exact name of Registrant as specified in its charter)
Colorado 84-0974303
(State Or Other (IRS Employer
ID No.)
Jurisdiction Of
Incorporation)
1380 Lawrence Street, Suite 1400 A.B. Goldberg
Denver, Colorado 80204 1380 Lawrence Street,
Suite 1400
(303) 592-1235 Denver, Colorado 80204
(Address, including zip code (303) 592-1235
and telephone number, including (Name, address,
including zip
area code of Registrant's code, and telephone
number,
principal executive offices) including area code, of
agent
for service)
The Commission is requested to send copies of all communications
and notes to:
DAVID J. WAGNER, ESQ.
David Wagner & Associates, P.C.
8400 E. Prentice Ave, Penthouse
Englewood, Colorado 80111
(303) 793-0304
Approximate date of commencement of proposed sale to the
public:
As soon as practicable following the date on which the
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,
check the following space. X
<TABLE>
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C> Proposed
Title of Each Maximum Proposed
Class of Amount Offering Maximum Amount of
Securities to Be To Be Price Aggregate Registration
Registered Registered Per Unit(1) Offering Fee
Price(1)
COMMON SHARES 430,000 $!.00 $430,000 $138
$.008 par value
WARRANTS TO
PURCHASE 100,000 -0- -0- -
0-
COMMON SHARES
COMMON SHARES 100,000 $1.00 $100,000 $ 32
$0.008 par value SHARES
TOTAL $170
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457.
</TABLE>
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.
FIRST ENTERTAINMENT, INC.
Cross Reference Sheet Required by Items 1 through 13, Part I of
Form S-3
Item No. and Caption Caption in Prospectus
1. Forepart of the Registration Facing page of the
Registration
Statement and Outside Front Statement and Outside
Front
Cover Page of Prospectus Cover Page of Prospectus
2. Inside Front and Outside Back Inside Front and Outside
Back
Cover Pages of Prospectus Cover Pages of Prospectus
3. Summary Information, Risk The Company; Risk Factors
Factors, and Ratio of Earnings
to Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Determination of Offering
Price
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to Description of
Securities;
be Registered Plan of Distribution
10. Interest of Named Experts Not applicable
and Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Incorporation by
Reference
Information by Reference
13. Disclosure of Commission Not applicable
Position on Indemnification for
Securities Act Liabilities
14. Other Expenses of Issuance Part II
and Distribution
15. Indemnification of Part II
Directors and Officers
16. Exhibits Part II
17. Undertakings Part II
PROSPECTUS
FIRST ENTERTAINMENT, INC.
A maximum of 430,000 Shares at the Current Market Bid Price per
Share
A maximum of 100,000 Shares Underlying Stock Purchase Warrants at
the Current Market Bid Price Per Share
Outstanding common stock of First Entertainment, Inc. (the
"Company") is hereby offered for sale at the current market bid
price by certain shareholders of the Company (the "Selling
Shareholders") directly to investors on a "best efforts" basis,
for the period of effectiveness of this Prospectus, in an amount
up to the amount registered hereby (the "Shares"). See "SELLING
SHAREHOLDERS" and "DESCRIPTION OF SECURITIES." There are no
minimum number of Shares which must be sold by the Selling
Shareholders to utilize the proceeds of the offering. See "PLAN
OF DISTRIBUTION."
The Company's Common Stock is traded in the over-the-counter
market on the NASD Automated Quotation System (NASDAQ) under the
trading symbol FTET. On May 2, 1997, the closing bid price of the
Company's Common Stock was $1.06 per share.
See "Risk Factors" for a discussion of certain factors that
should be carefully considered by prospective purchasers of the
Shares offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE 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 Shares are offered by the Selling Shareholder, from time
to time, and on a continuous basis at the then-current market bid
price during the effectiveness of this Prospectus, subject to
prior sale and the right to reject orders in whole or in part.
For the determination of the Offering Price, See
"Determination of Offering Price".
The Selling Shareholders intend to contract from time to
time with licensed Broker-Dealers ("the Broker"), as their agents
for the period of the effective date of this Prospectus for sale
of their Shares on a "best efforts" basis. The term "best
efforts" basis means that the Broker is obligated to use its best
efforts to sell the Shares. All proceeds from the sale of Shares
will be distributed to the Selling Shareholders and none will be
used by the Company. There is no minimum amount which must be
sold by the Selling Shareholders. The Selling Shareholders will
pay the Broker a commission in accordance with the applicable
NASD requirements for all sales of Shares sold through the
Broker. See "PLAN OF DISTRIBUTION".
The date of this Prospectus is May 5, 1997.
THE SHARES OFFERED HEREBY ARE OFFERED BY THE SELLING
SHAREHOLDERS SUBJECT TO PRIOR SALE, TO ALLOTMENT AND WITHDRAWAL
AND TO CANCELLATION OR MODIFICATION OF THE OFFER WITHOUT NOTICE.
ANY MATERIAL CHANGE TO THE OFFER WILL BE REFLECTED BY AN
AMENDMENT OR SUPPLEMENT TO THE REGISTRATION STATEMENT, OF WHICH
THIS PROSPECTUS IS A PART. THE SELLING SHAREHOLDERS AND ITS
SELLING AGENTS RESERVE THE RIGHT TO REJECT ORDERS IN WHOLE OR IN
PART FOR THE PURCHASE OF ANY OF THE SHARES OFFERED HEREBY.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 and in accordance therewith
is required to file reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission").
All reports, proxy statements and other information filed by
the Company with the commission can be inspected and copied at
the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20459. Copies can be
obtained from the Commission at prescribed rates by writing to
the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549.
The Company has filed with the Commission a registration
statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Shares offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. For further
information, reference is hereby made to the Registration
Statement, which may be obtained from the Public Reference
section of the Commission at the address set forth above.
Statements contained in this Prospectus regarding the contents of
any contract or other document are not necessarily complete, and
in each instance, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such
reference.
INCORPORATION BY REFERENCE
The following documents, which have been filed by the
Company with the Securities and Exchange Commission, are hereby
incorporated by reference into this Prospectus except as
superseded and modified herein:
1. The Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996.
2. The Company's Quarterly Report on Form 10-QSB for
the fiscal quarter ended March 31, 1996, June 30, 1996,
and September 30, 1996, as amended.
3. The Company's Current Reports on Form 8-K's dated
January 24, 1996, February 6, 1996, April 19, 1996,
April 26, 1996 and July 24, 1996.
Statements contained in the foregoing documents incorporated
by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that statements contained
herein modify or replace such statements. Any such statement so
modified or superseded shall not be deemed, except as so modified
or replaced, to constitute a part of this Prospectus. The Company
is not providing a copy of the latest Annual Report to
prospective purchasers to accompany this Prospectus.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13 (c), 14 and 15(d) of the Securities and
Exchange Act of 1934, prior to the termination of the Offering or
the filing of a post-effective amendment which indicates that all
securities offered have been sold or which indicates all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Prospectus and shall be a part
hereof from the date of such filing.
The Company will provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus
is delivered, upon the written or oral request of any such
person, a copy of any document described above (other than
exhibits unless such exhibits are specifically incorporated by
reference into the information that this Prospectus
incorporates). Requests for such copies should be directed to
First Entertainment, Inc., 1380 Lawrence Street, Suite 1400,
Denver, Colorado 80204, Attention: Secretary (telephone number
(303) 592-1235).
THE COMPANY
First Entertainment, Inc. (the "Company" or "FTET") was
incorporated under the laws of Colorado on January 17, 1985.
Currently, the Company is a multi-media entertainment
conglomerate, holding controlling interests in five distinct
segments, four active and one inactive. The four active
segments, which are controlled by the parent company, FTET, are
known as "Video," "Radio," "Live Entertainment", and "Retail".
The inactive segment is known as "Film". In November 1995, the
Company determined to discontinue the operations of its
copyrighted properties segment, which it acquired in 1994.
Initially, the Company's business consisted of the production of
pre-recorded travel guides and special interest videos. In 1987,
the Company entered the radio broadcasting business by acquiring
Quality Communications, Inc, a Wyoming corporation pursuant to
which the Company operates the radio segment of its business. In
1992, the Company acquired a controlling interest in First Films,
Inc. ("FFI"), a publicly held Colorado corporation, under which
its film and live entertainment operations are undertaken. In
December 1996, the Company commenced operations of selling
infomercial products in free standing unmanned kiosks in major
retail malls including U.S. Military bases. This segment is
known as the "retail" segment.
RISK FACTORS
The securities offered hereby represent a speculative
investment and involve a high degree of risk of a loss of part or
all of the investment. Therefore, prospective investors should
read this entire Prospectus and carefully consider, among others,
the following risk factors in addition to the other information
set forth elsewhere in this Prospectus prior to making an
investment.
RISKS OF THE OFFERING
History of Losses.
During the period from inception (January 17, 1985) to
December 31, 1996, the Company incurred operating losses in each
fiscal year. Cumulative net losses for that period amount to
approximately $11,830,000. As of December 31, 1996, the Company
had a stockholders' equity of approximately $1,143,000, had an
excess of current liabilities over current assets of
approximately $1,261,000 and, in some cases, has been unable to
meet its obligations as they become due. The independent
certified public accountants' report on the financial statements
of the Company contain an explanatory paragraph, which, in
general, indicates that the Company has suffered recurring losses
from operations, has a working capital deficiency and has
defaulted on a substantial portion of its debt. These conditions
raise substantial doubt about its ability to continue as a going
concern. Management's plans include obtaining additional
financing, and/or extending its existing debt obligations, and/or
obtaining additional equity capital and ultimately achieving
profitable operations. The financial statements do not include
any adjustments that might result from these uncertainties.
"Best Efforts-No Minimum" Distribution
The Shares offered hereby are offered on a "Best Efforts-No
Minimum" only basis by the Selling Shareholders, and no
individual or firm is committed to purchase or take down any of
the Shares so offered; there is no assurance that any portion of
the Shares so offered will be sold. Such proceeds will be
utilized immediately regardless of how much may be raised in this
offering. The funds will be transmitted to the Selling
Shareholders and the Shares will thereupon be issued and no
refund will be made to investors thereafter. See "PLAN OF
DISTRIBUTION."
Limited Public Market
Historically, there has been a limited public market for the
Common Shares of the Company. This situation has not changed
with the listing of the Company on the NASDAQ. There can be no
assurance that a larger, liquid market will ever develop or that
if developed, it will be sustained. Individuals may not be able
to liquidate their investment on favorable terms at the time they
desire to do so.
Potential Future Sales Pursuant To Rule 144 By Existing
Shareholders
At February 28, 1997, there were 5,799,713 shares issued and
outstanding. As most of these shares of Common Stock held by
the Company's present shareholders have not been registered under
the Securities Act of 1933, as amended (the "Act") but are, under
certain circumstances, available for public sale pursuant to Rule
144, promulgated under the Act. Approximately 95% of these
restricted shares have passed the date upon which such restricted
shares may be sold in reliance upon Rule 144. Generally, under
Rule 144, a person (or persons whose shares are aggregated) who
has satisfied a one year holding period may, under certain
circumstances, sell within any three month period a number of
shares which does not exceed the greater of one percent (1%) of
the then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule
144(k) also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has not
been an affiliate of the Company for at least 90 days and who has
satisfied a two year holding period. The possibility of sales
under Rule 144 may adversely affect the market price of the
Company's securities. However, there can be no guarantee what the
precise effect, if any, will be as a result of the registration
of these Common Shares.
BUSINESS RISKS
Intense Competition.
Competition is intense in each segment of the entertainment
industry in which the Company engages. Many of the organizations
with which the Company will be in competition have far greater
financial and creative resources and larger staffs than the
Company. In addition, many of such organizations have proven
operating histories, which the Company lacks. See BUSINESS--
Competition.
Negotiation of Rights to Literary Properties and Other Risks.
The negotiation of acquisition, production financing,
production, distribution and sub-distribution agreements can be a
critical factor in the Company's business. There can be no
assurance of the success of any such negotiations. It is
possible that any or all of the projects packaged by the Company
could fail to receive any commitment for production financing,
production or distribution.
Even when funds are obtained for the production of a
particular project, its actual production may be delayed because
of various events beyond the control of the company such as labor
problems, delays in supplies, props or costumes, equipment
breakdowns, weather delay and other circumstances. The Company
intends to seek insurance in order to reduce its exposure to such
risks, but the company's success in obtaining insurance against
all such contingencies is unlikely and additional financing may
be required under such circumstances. In the absence of a
completion bond, and in the event that such financing is not
available, or substitute artists, screenwriters or producers
cannot be engaged, the project may have to be abandoned. If, on
the other hand, a delayed project can be produced, it might be
completed only at a substantially higher cost to the Company.
Speculative Nature of the Company's Business.
Profits, if any, from the businesses in which the Company
engages are dependent on widespread public acceptance of, and
interest in, each creative project undertaken by the Company's
various segments. Audience appeal depends upon factors which
cannot be ascertained reliably in advance and over which the
Company may have no control, including, among other things,
unpredictable critical reviews, positioning in the market and
changeable public taste. Due to factors such as the
unpredictability of audience appeal, many of the Company's
completed projects may fail to generate sufficient revenues to
recover their costs of acquisition, development, production and
distribution. The Company may not recoup all or any portion of
its investment in a particular project, and there can be no
assurance that any project will yield profits to the Company.
Success Dependent on Management.
Success of the Company depends on the continued active
participation of A.B. Goldberg, the Company's President. There is
no employment agreement with him, and the Company has not
obtained any "key-man" insurance from which it would benefit in
the event of his death. However, the Company intends in the
future to negotiate an employment agreement with him. The loss of
the services of Mr. Goldberg would adversely affect the continued
development of the Company's business.
BUSINESS
General
First Entertainment, Inc. (the "Company" or "FTET") was
incorporated under the laws of Colorado on January 17, 1985.
Currently, the Company is a multi-media entertainment company,
holding controlling interests in five distinct segments, four
active and one inactive. The four active segments, which are
controlled by the parent company, FTET, are known as "Video,"
"Radio," "Live Entertainment," and "Retail". The inactive
segment is known as "Film". In November 1995, the Company
determined to discontinue the operations of its copyrighted
properties segment, which it acquired in 1994. Initially, the
Company's business consisted of the production of pre-recorded
travel guides and special interest videos. In 1987, the Company
entered the radio broadcasting business by acquiring Quality
Communications, Inc., a Wyoming corporation pursuant to which the
Company operates the radio segment of its business. In 1992, the
Company acquired a controlling interest in First Films, Inc.
("FFI"), a publicly held Colorado corporation, under which its
film and live entertainment operations are undertaken. In
December 1996, the Company commenced operations of selling
infomercial products in free standing unmanned kiosks in major
retail malls including U.S. Military bases. This segment is
known as the "retail" segment.
Video
Initially, the Company entered the pre-recorded
videocassette product market through the design, production and
distribution of pre-recorded videocassette travel guides and
later expanded into production and distribution of special
interest videocassette productions. In June 1986, the Company
entered into a trademark licensing agreement with Rand McNally,
providing the Company the right to use the Rand McNally name
worldwide for its Video Trip product.
In 1993, the Company negotiated the termination of its
relationship with Rand McNally. In July 1993, the Company
entered into a new agreement, entitling it to use the KODAK
trademark of Eastman Kodak Company for video through its
exclusive U.S. distributor, Woodknapp and Company, Inc. This
agreement allowed Woodknapp and Company, Inc. to become the
exclusive domestic distributor for the Company's Video Trip
product and allowed the Company to receive sponsorship assistance
from Eastman Kodak Company. This agreement allowed the Company
to pass through some of the costs of packaging, marketing and
distribution to Woodknapp, who is one of the largest distributors
of special interest video in the United States. The Company bore
the expense of editing the Rand McNally trademarks from the
programs. This editing was completed in December 1993 and
shortly thereafter, Woodknapp released, domestically, the first
of five release groups created from the Video Trip library. In
January 1995, the Company was informed that Woodknapp and
Company, Inc. had ceased operations and would not be able to
honor its contract as the Company's exclusive U.S. distributor of
Video Trips. The Company feels that because of cash flow
problems of Woodknapp they were not able to effectively market
their Video Trips in 1994.
In 1995, the Company signed a three year distribution
agreement with Fox Lorber, whereby Fox Lorber would test the
distribution of 12 video trip titles in North America. Fox
Lorber has the right to acquire the remaining 28 video trip
titles and extend the term of the agreement from three years to
seven years with an additional advance royalty payment of
$58,000. During 1996, the Company sold all its foreign
distribution rights to Fox Lorber for $50,000.
Radio
In October 1987, the Company entered the radio broadcasting
business through the acquisition of Quality Communications, Inc.
("Quality Communications"), a Wyoming corporation. At that time,
Quality Communications owned and operated three radio stations,
which serve markets in Northeast Wyoming and central Iowa. In
August 1989, the Company sold two radio stations in Boone, Iowa.
The Company, through Quality Communications, operates a radio
station, 100.7, The Fox, located in Gillette, Wyoming.
In November 1993, the Company changed the music format of
the radio station formerly known as KGWY, or Y-100, from a top-40
station to a format known as the "Heart of Rock". In February,
1995 the format was changed again to contemporary country. The
changes have had a positive effect on its market share and gross
revenues. Independent market surveys show the radio station has
approximately 44% of the market in Gillette, Wyoming. In 1996,
the radio station started promoting concerts using up and coming
country and western singers. The radio station was a venue to
promote the concerts and add an additional source of revenue for
the radio station.
Live Entertainment
FFI owned and operated two comedy clubs, one located in
Denver, Colorado and one in Tampa, Florida. The Tampa, Florida,
club was closed on January 29, 1995 due to less than expected
attendance.
The goal of this division is to produce first-rate shows in
the theater environment. Revenues are generated through both
ticket sales at the door and beverage and food sales at tables.
Clubs are open to the public only for shows, which last from 1 to
2 hours each, and number as many as three per night. Non-show
times are devoted to preparing and producing a show that changes
completely each week, and to promoting and marketing the
nightclub.
FFI acquired 100 percent of the outstanding stock of Comedy
Works, Inc., a Colorado corporation, on September 13, 1990 in an
exchange for 200,000,000 shares of common stock. Comedy Works
was incorporated in 1982 and has operated from its Larimer
Square, Denver, Colorado location since that time. Comedy Works
Larimer Square typically has ten shows per week and has averaged
over 2,000 customers per week for the past fifteen years.
Retail
In December, 1996 the Company commenced operations of its
retail segment. The segment consists of selling the most common
and most popular infomercial products in free standing un-manned
kiosks in retail outlets throughout the United States. The
Company intends to expand operations to include manned kiosks in
major retail malls. Each manned kiosks will be approximately 250
square feet and will have approximately 35 to 50 of the top
selling infomercial products. The Company opened its first four
locations in December, 1996, in Pearl Harbor, Andrews Air Force
Base and Bolling Air Force Base in Washington, D.C. and Leichmere
s in Cambridge, Massachusetts. The Company intends to complete a
private placement of up to $800,000 in 1997 to fund the planned
expansion of manned kiosks in major retail malls throughout the
United States. The Company operates the kiosks under the name
"The Best of As Seen on TV" ("ASOTV").
Other Business Development
Balzac
In April 1996, the Company acquired certain assets from
Balzac, Inc., a private company which manufactures and
distributes toys, including a product line of toy balls. The
assets and rights acquired consisted of the following: inventory
of Balzac toys, the exclusive license of Balzac for Australia and
various other rights.
The exclusive license agreement for Australia was acquired
for $800,000 payable within five years based upon a formula of
60% of net profits from the sale of Balzac products in Australia.
The inventory and various other rights were acquired by issuing
1,100,000 shares of the Company's restricted common stock valued
at $1.2 million. In addition, the Company granted certain stock
options to Balzac to purchase shares of common stock of the
Company.
During 1996, a dispute arose between the Company and Balzac
where Balzac asserted a violation of the Purchase Agreement.
Balzac seized the inventory valued at $1 million, which was
collateral on the fixed obligation due under the Australian
Licensing Agreement, to satisfy the $800,000 obligation under the
Licensing Agreement. The Company asserted that Balzac had no
right under the Purchase Agreement or License Agreement to seize
the inventory and apply the proceeds against the note obligation
under the License Agreement.
In April 1997, Balzac and the Company entered into an
agreement whereby Balzac will buy back the Australian Licensing
Agreement for $800,000 and will repay the Company $200,000 which
was the difference between the value of the seized inventory and
the obligation under the licensing agreement. The $1,000,000
will be repaid over forty months at 8% per annum.
Image Marketing Group
On September 6, 1994, the Company acquired an 84 percent
interest in Image Marketing Group, Inc. ("Image"). The Company
issued 248,297 shares of its restricted common stock in exchange
for 1,986,374 issued and outstanding shares of Image. In
addition, the Company issued 231,976 shares of its Class B
preferred stock in exchange for all the issued and outstanding
preferred stock of Image and approximately $420,000 of related
party debt.
Image had a substantial amount of working capital invested
in inventory items that were not selling, therefore it was unable
to recover its investment in inventory or reinvest in new images
from the sale of existing inventory. FTET invested approximately
$700,000 in Image in an effort to generate sales through
introduction of new images to customers. Image was unable to
generate enough sales or liquidate its inventory to generate
working capital to support continued operations. Since 1993,
Image has had losses from operations and at the time it was
acquired by the Company was in need of working capital to finance
inventory growth. Even with a working capital infusion of
approximately $700,000, Image continued to incur losses as a
result of declining sales. In November, 1995 it was determined
that additional working capital would not be advanced to Image
and that the Company would terminate operations and seek a buyer
for Image. The discontinuance of operations of Image resulted in
a loss of approximately $2.2 million for the year ended December
31, 1995 of which $1.6 million represents the write down of
assets to their net realizable value.
On April 24, 1996 The Company and Harvey Rosenberg, a former
officer and director of the Company entered into a Purchase
Agreement for the sale of Image. Mr. Rosenberg purchased the
Company s 1,986,376 shares of Image for $1,000 resulting in a
gain of approximately $414,000. At the time of the disposition
of Image, Image had liabilities in excess of assets.
The results of operations of Image for the year ended
December 31,1996 and 1995 are disclosed in the accompanying
statements of operations as discontinued operations.
Indian Licensing
In February 1995, the Company signed a series of agreements
giving it certain licensing and merchandising rights for the
Indian Motor Company, which required the approval of the
bankruptcy court. These rights were never approved by the
Bankruptcy Court.
In January, 1996 A.B. Goldberg, Harvey Rosenberg, a former
director and several other unrelated parties were named as
defendants in a law suit filed by Sterling Consulting
Corporation, Receiver for Indian Motorcycle Manufacturing, Inc.
The Company filed a counter claim against the Receiver in July,
1996. In September 1996, the Company and the Receiver commenced
settlement negotiations whereby all parties would resolve their
dispute. In February, 1997 the Company and the Receiver agreed
to the terms of a settlement. The proposed Settlement Agreement
calls for the Company to relinquish all rights or claims to the
Indian Motorcycle Trademark or the use of the Trademark and any
licensing rights. In addition, all claims by the Receiver and
the Company shall be released and the Company shall pay to the
Receiver approximately $114,000. All rights acquired from Scott
Kajiya and Jamie Ruiz for the use of the Indian Motorcycle
Trademark in Japan are also assigned to the Receiver.
The transactions described above relating to Indian
Licensing have been rescinded in the accompanying financial
statements effective from the date the transactions were entered
into as if the transactions did not occur.
Letters of Intent
In January, 1997, a non-binding letter of intent was signed
with Enternet Corporation, an international marketer of
infomercial products. Enternet has successfully combined
international wholesaling as well as the franchising of its
retail kiosk concept under the name "TV to You". In addition,
Enternet operates the most prominent "As Seen on TV" internet
shopping site under the name "As On TV", offering a complete
array of infomercial products. This potential acquisition fits
in well with the development of "The Best of As Seen on TV" in
retail locations in the United States, combined with Enternet
International expertise and an internet web site. The Company
would issue 300,000 shares of common stock of the Company and
100,000 shares of ASOTV for 60% of Enternet. Consummation of the
acquisition is subject to a number of conditions including the
negotiation of definitive agreements, completion of due diligence
and approval by the Board of Directors of both companies. Due to
the contingencies involved, the Company is unable to predict if
or when the transaction will be consummated.
In March, 1997, a non-binding letter of intent was signed
with ONLINE Casino s, Inc. ("ONLINE") regarding the potential
acquisition of ONLINE, which consists of a fully licensed
operating gaming casino in the Caribbean, along with an internet
gaming license and internet gaming software that controls all
aspects of the system. The purchase price of ONLINE is estimated
to be $26 million consisting of debt and equity financing.
Consummation of the acquisition is subject to a number of
conditions including the negotiation of definitive agreements,
completion of due diligence and approval by the Directors of both
Companies. Due to the contingencies involved, the Company is
unable to predict if or when the transaction will be consummated.
Competition
Video
The production and marketing of pre-recorded video cassettes
is a highly competitive business. The Company vies with many
companies and individuals that have substantial experience in
acquiring, producing and distributing such products. Most have
resources substantially greater than those of the Company. These
competitors include both large and small independent production
companies, television and film studios, and others. The Company
knows of numerous other videocassette travel guide series
(including International Video Network's Video Visits,
Travelview, Laura McKenzie's Travel Guide and Fodor's Travel
Video); however, the Company believes that the Kodak name and the
quality of its programs set it apart from its competitors.
Radio
FM100.7, "The Fox" competes with seven other signals
available in the area. Two of these radio signals originate from
Gillette, Wyoming. The Company presently enjoys the largest
share of the market, estimated to be 44 percent.
Live Entertainment
Competition is intense in the comedy and music night club
entertainment industries. On a national level, the Company
competes for entertainers with companies that are better
capitalized, highly visible and have longer operating histories
and larger staffs in their respective locations. None of the
national comedy clubs have locations in Denver, Colorado. Comedy
Works Larimer Square has been in business in Denver, Colorado for
15 years and the Company believes it to be the highest revenue-
producing comedy club in the area. The Company believes that
Comedy Works Larimer Square provides higher-quality acts than its
local competitors, reflected in the fact that it charges
approximately twice the admission price of its local competitors.
The two main competitors of Comedy Works Larimer Square are both
individually-owned and located in shopping centers in the
suburbs, while Comedy Works is located in the downtown Denver
area.
Retail
There are several companies that sell infomercial products
in retail locations, none of which have a national presence.
Other companies are more experienced and are better capitalized
but the Company believes it will distinguish itself from
competition by offering only the best and most popular
infomercial products and by having a better, more up-scale
presentation of its products.
Licenses
The Federal Communications Commission (FCC) issues radio
broadcasters a license to operate within their assigned frequency
for seven years. These licenses, upon application, are renewable
for additional seven year periods. The FCC issued KGWY its
original license on October 1, 1983, to operate at a frequency of
100.7 MHz, 24 hours a day, at 100,000 watts of effective radiated
power. It was subsequently reissued in October of 1990. It will
be up for renewal again on October 1, 1997. During the renewal
process the public has an opportunity to express its opinion of
how well the particular station is servicing its broadcast area.
Extreme public negativity during this period can hold up the
reissuance process. In addition, frequent violations of FCC
rules and regulations can be cause for the denial of the
station's license renewal.
The FCC allots a certain number of frequencies for each
broadcast area, based upon community need, population factors and
the determination of the economic viability of another station in
the designated region. Currently there are no other licenses
available in the Gillette area. It is possible to request that
the FCC reconsider opening up further frequencies through its
rule making body, but this can be a time consuming process. All
sales of stations and subsequent transfers of licenses must be
approved by the FCC.
Seasonality
Video
Although revenues are spread over the entire calendar year,
historically the third quarter generally reflects the highest
revenues for each year due to increase in wholesale buying for
the holiday season.
Radio
Although revenues are spread over the entire calendar year,
the first quarter generally reflects the lowest and the fourth
quarter generally reflects the highest revenues for each year.
The increase in retail advertising each fall in preparation for
the holiday season, combined with political advertising, tends to
increase fourth quarter revenues.
Retail
Historically retail is the strongest in the October through
December months. The Company projects a decline in sales during
January through March and July through September with the second
and fourth quarters showing the stronger sales.
Live Entertainment
The Company has found that its highest-revenue months are
from July 15 to October 15 of each year. From approximately May
15 to July 15 of each year, business is typically down 30 percent
below average, primarily because customers prefer outdoor
activities at that time of year. During the holiday season,
management has found a slight increase due to once-a-year
customers, on vacation or hosting visiting friends or relatives.
Employees
First Entertainment, Inc.
Currently, FTET, the Holding Company, employs one executive
and one administrative person. The Holding Company contracts the
accounting and administrative function to a company owned by the
former president and to other independent consultants.
Video
The Company does not have any video employees, but rather
relies upon its distribution for video sales.
Radio
The Company employs approximately five full-time employees
and eight part-time employees. Of the full-time employees, they
are engaged mainly in the administrative radio operations and
sales. The part-time employees are engaged in the on-air
activities as on-air personalities.
Live Entertainment
This division has three full-time employees and
approximately 20 part-time employees. Full-time employees are
management staff and part-time employees are waitresses,
bartenders, and door personnel.
Retail
Currently, this division has one full-time employee.
Legal Proceedings
The Company knows of no litigation pending, threatened, or
contemplated, or unsatisfied judgments against it, or any
proceedings of which the Company or any of its subsidiaries is a
party, except as specified below. The Company knows of no legal
actions pending or threatened, or judgment entered against any of
its officers or directors or any of its subsidiaries in their
capacities as such, except as specified below.
In January, 1996 the Company, AB Goldberg, Harvey Rosenberg
and several other related and unrelated third parties were named
as defendants in a lawsuit filed by Sterling Consulting
Corporation as Receiver for Indian Motorcycle Manufacturing,
Inc.("IMMI") The Complaint alleges interference by defendants in
the business of IMMI, conflicts of interest of AB Goldberg,
breach of fiduciary duty, unjust enrichment, and bankruptcy
fraud.
In July 1996, The Company filed suit against the Receiver
alleging intentional interference of contracted relationships and
breach of licensing agreements. In September 1996, the Company
and the Receiver commenced settlement negotiations whereby all
parties would resolve their disputes. In February 1997, the
Company agreed to terms of a Settlement Agreement with the
Receiver whereby the Company would relinquish all rights to the
Indian Motorcycle Trademark and pay the Receiver approximately
$114,000. (See Item 1, Other Business Developments herein)
In March 1997, the Company commenced legal proceedings
against Image Marketing Group, Inc. and Harvey Rosenberg, Burt
Katz and Michael Katz, individually, for collection of
approximately $700,000 in advances to Image Marketing.
In addition, the Company has commenced legal proceedings
against HK Retail Concepts for breech of contract. The claims
are for unspecified damages at this time.
ACQUISITIONS AND MERGERS
Since inception the Company has engaged in a series of
mergers and acquisitions resulting in its present corporate
structure and operating subsidiaries. Currently, the Company has
the following transactions to report:
Power Media
In July, 1996, the Company issued 770,000 shares of its
restricted common stock, valued at $408,100, in exchange for
18,000 of the 25,000 then issued and outstanding shares of Power
Media Communications International, Inc. (Power Media), or 72%
ownership. Power Media was a substantially dormant company that
had developed the concept of selling infomercial products in
kiosks primarily located in retail malls.
In November 1996, a new entity was formed called "The Best
Of As Seen on TV", Inc. ("ASOTV") for the purpose of acquiring
all of the issued and outstanding common stock of Power Media and
to provide original incorporators with ownership in ASOTV. The
original incorporators of ASOTV were issued 464,000 shares of
ASOTV for par value ($.001 per share), which included 220,800
shares issued to NMG, LLP, an entity owned by the wife of the
president of the Company. ASOTV then issued 1,015,000 shares of
common stock to the Company for their 18,000 shares of Power
Media and issued 324,500 shares to an unrelated party for the
remaining 7,000 shares of Power Media. In addition, ASOTV
received a stock subscription from the previous owner of the
7,000 shares of Power Media to purchase approximately 325,000
shares of common stock of ASOTV for $150,000, of which $100,000
was received in 1996. As a result of the above transactions,
ASOTV owned 100% of Power Media and the Company owned
approximately 56 percent of ASOTV as of December 31, 1996.
Polton
On May 10, 1994, the Company acquired approximately 80% of
the issued and outstanding common stock of the Polton Corporation
("Polton") by issuing 75,000 shares of the Company's restricted
common stock valued at $318,000. In addition, the Company
advanced Polton $200,000 for working capital. Polton is
primarily engaged in the manufacturing and distribution of
compact discs and cassettes for Warner Music labels.
Shortly after the consummation of the Polton acquisition a
dispute arose between the Company and Polton whereby Polton
refused to provide financial information to the Company necessary
to report the consolidated results of operations since the date
of acquisition.
In November, 1995, the Company reached an agreement with Mr.
Gary Firth, president of Polton, and Polton whereby Mr. Firth
would return the 75,000 shares of the Company's common stock and
repay $100,000 of the $200,000 advanced as working capital. The
agreement resulted in a write down of the note receivable of
$100,000 which has been reflected in the accompanying
consolidated statement of operations in selling, general and
administrative expenses during 1995.
DETERMINATION OF OFFERING PRICE
The public price of the Shares are based upon the trading
price of the Common Shares as determined by the market from time
to time. All sales of Shares will at the then-current market bid
price. Except that the Shares are being sold at the trading
price, such price, or prices, as the case may be, otherwise bears
no relationship to the Company's assets, book value, net worth,
earnings, actual results of operations or any other established
investment criteria. Further, except to the extent of the
historical trading price of the Common Shares, the sale prices of
the Shares should not be considered an indication of the actual
or potential value of the Company's securities See "RISK FACTORS"
and "DESCRIPTION OF SECURITIES."
SELLING SHAREHOLDERS
The following Selling Shareholders are registering their
shares for sale to the public in connection with this
distribution:
<TABLE>
<S> <C> <C>
Name Relationship to Company Amount of Securities
Prior to Offering
Creative
Business
Services, Inc. Consultant 60,000(2)
Charles
Bonniwell Shareholder 30,000(2)
Frank
D"Alessio Shareholder 150,000(2)
Michael
Payne Shareholder 120,000(2)
Monty R.
Lamirato, P.C. Consultant 10,000(2)
Cindy Jones Officer 20,000(1)
Michael Berry Employee 15,000(2)
Wende Curtis Employee 15,000(2)
Nicholas
Catalano Director 10,000(1)
M&M Investment Warrantholder 100,000(2)
(1) These individuals have the right, by ownership or option, to
the number of shares indicated and are affiliates, as that term
is used under Rule 405 the Securities Act of 1933, as amended. As
a result, their shares are control securities which must be sold
pursuant to a reoffer prospectus and are otherwise subject to the
limitations of Rule 144(e). That is, each person may not reoffer
or resell, whether individually or acting in concert with other
persons, more than one percent of the issued and outstanding
shares of the Company in any consecutive three month period. At
the present time, one percent would equal approximately 57,000
shares.
(2) Each individual plans to sell all shares owned by such
person which can be sold pursuant to this Form S-3 Registration
Statement.
PLAN OF DISTRIBUTION
The Selling Shareholders are offering their Shares at the
then-current market bid price of the Shares for the period of the
effectiveness of this Prospectus for sale on a "best efforts
basis," to the public. Broker-dealers may be utilized by the
Selling Shareholders to sell some or all of the Shares and, if
so, will be paid the ordinary and customary commissions for such
sales. At the present time, there are no firm arrangements with
any broker-dealers for sales of the Shares. See "DESCRIPTION OF
SECURITIES" and "SELLING SHAREHOLDERS."
The Selling Shareholders intend to sell all of their Shares
registered hereunder and will immediately utilize the proceeds of
the offering as and when raised and regardless of how many Shares
are ultimately sold. The Company will receive no proceeds
whatsoever from the sale of the Shares.
Securities To Be Outstanding After The Offering
As of the date of this Prospectus, 5,799,713 Shares of the
Company's $.008 par value Common Stock were issued and
outstanding, along with a total of 10,689 shares of Class A
Preferred Stock and a total of 125,000 shares of Class C
Preferred Stock. The Selling Shareholders are selling previously
issued Shares. Therefore, upon the sale of the maximum number of
Shares in of this Offering, the same number of Shares will be
outstanding.
Use of Proceeds
The Selling Shareholders will utilize any and all of
proceeds of this Offering which are not paid for commissions to
licensed broker-dealers. The Company will receive no portion
whatsoever of the proceeds of this Offering.
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 6,250,000 shares of
Common Stock, par value $.008 per share. Immediately prior to
this Offering, 5,799,713 shares of Common Stock were outstanding.
The holders of Common Stock have one vote per share on all
matters (including election of Directors) without provision for
cumulative voting. Thus, holders of more than 50% of the shares
voting for the election of directors can elect all of the
directors, if they choose to do so. The Common Stock is not
redeemable and has no conversion or preemptive rights.
The Common Stock currently outstanding is validly issued,
fully paid and non-assessable. In the event of liquidation of
the Company, the holders of Common Stock will share equally in
any balance of the Company's assets available for distribution to
them after satisfaction of creditors and the holders of the
Company's senior securities. The Company may pay dividends, in
cash or in securities or other property when and as declared by
the Board of Directors from funds legally available therefor, but
has paid no cash dividends on its Common Stock.
Preferred Stock
The Company is authorized to issue 5,000,000 shares of
Preferred Stock, $0.001 par value. As of the date of this
Prospectus, 10,689 shares of Class A Preferred Stock and a total
of 125,000 shares of Class C Preferred Stock are issued and
outstanding. In addition, the Company has authorized a Class B
Preferred Stock, although at the date of this Prospectus, no
shares have been issued or are outstanding.
Generally , the Preferred Stock may be issued in series from
time to time with such designation, rights, preferences and
limitations as the Board of Directors of the Company may
determine by resolution. The rights, preferences and limitations
of separate series of Preferred Stock may differ with respect to
such matters as may be determined by the Board of Directors,
including, without limitation, the rate of dividends, method and
nature of payment of dividends, terms of redemption, amounts
payable on liquidation, sinking fund provisions (if any),
conversion rights (if any), and voting rights. The potential
exists, therefore, that preferred stock might be issued which
would grant dividend preferences and liquidation preferences to
preferred shareholders over common shareholders. Unless the
nature of a particular transaction and applicable statutes
require such approval, the Board of Directors has the authority
to issue these shares without shareholder approval. The issuance
of Preferred Stock may have the affect of delaying or preventing
a change in control of the Company without any further action by
shareholders. Except as disclosed herein, there are no present
plans to issue any such shares.
A total of 3,000,000 shares have been classified as Class A
Preferred Stock. This Stock has annual cumulative dividends of 7%
per annum, was redeemable by the Company not later than November
18, 1996, and is convertible into common shares on a four-for-one
basis. This Stock also carries a liquidation preference superior
to all other equity of the Company.
A total of 1,000,000 shares have been classified as Class B
Preferred Stock. This Stock has annual cumulative dividends of 6%
per annum, if and when declared, is redeemable by the Company
into common shares at a rate of $12.00 per share.
A total of 1,000,000 shares have been classified as Class C
Preferred Stock. This Stock has no dividend provision, is
convertible by the Company into common shares at a conversion
price of Class C Preferred Stock equal to the average previous
thirty day bid price of the Common Shares on the date of
conversion.
Dividend Policy
The Company has never declared nor paid dividends on its
Common Stock. At the present time, the Company has an
accumulated deficit which precludes it from paying dividends.
Nevertheless, it is the present intention of the Company not to
pay dividends in the foreseeable future; but rather to retain its
earnings, if any, to finance its growth, and to increase its
capital base.
LEGAL MATTERS
David Wagner & Associates, P.C., Englewood, Colorado,
Attorneys at Law, has rendered its opinion that the Shares
offered pursuant to this Prospectus will, when issued as
described in this Prospectus, be duly authorized, validly issued,
fully paid and non-assessable shares of the Company.
TRANSFER AGENT
The transfer agent for the Company's Common Stock is
American Securities Transfer, Incorporated, 988 Quail Street,
Suite 101, Lakewood, Colorado 80215. The telephone number is
(303) 234-5300.
ANNUAL REPORTS
The Company furnishes to Shareholders, after the close of
each fiscal year, an annual report which contains financial
statements examined by independent public accountants. In
addition, the Company furnishes to Shareholders unaudited
quarterly reports.
EXPERTS
The financial statements incorporated by reference into this
Prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods
set forth in their report, which contains an explanatory
paragraph regarding the Company's ability to continue as a going
concern, incorporated herein by reference, and are incorporated
herein in reliance upon such report, given upon the authority of
said firm as experts in auditng and accounting.
No dealer, salesman or other person is authorized to give
any information or to make any representation other than those
contained in this Prospectus, and if given or made such
information or representation must not be relied upon as having
been authorized by the Company. This Prospectus does not
constitute an offer to sell any security other than the
securities offered by this Prospectus or an offer to sell or a
solicitation of an offer to buy the securities in any
jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery
of this Prospectus nor any sale hereunder shall under any
circumstance create any implication that there has been no change
in the affairs of the Company since the date hereof. Any
material change to the offer will be reflected by an amendment or
supplement to the Registration Statement, of which this
Prospectus is a part.
TABLE OF CONTENTS
Item
AVAILABLE INFORMATION
INCORPORATION BY
REFERENCE
THE COMPANY
RISK FACTORS
BUSINESS
DETERMINATION OF
OFFERING PRICE
SELLING SHAREHOLDERS
PLAN OF DISTRIBUTION
DESCRIPTION OF SECURITIES
LEGAL MATTERS
TRANSFER AGENT
ANNUAL REPORTS
Until August 3 , 1997 (90 days after the date of this
Prospectus), all dealers effecting transactions in the securities
offered hereby, whether or not participating in this
distribution, may be required to deliver a current Prospectus.
This is in addition to the obligation of dealers to deliver a
current Prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.
FIRST ENTERTAINMENT, INC.
PROSPECTUS
May 5, 1997
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Other expenses in connection with the registration of the
securities hereunder which will be paid by the Company will be
substantially as follows:
</TABLE>
<TABLE>
<S> <C>
Amount Payable
Item by Company
S.E.C. Registration Fees. . . . . . . . . . . $ 170.00
Accounting Fees and Expenses $ 2,000.00*
State Securities Laws (Blue Sky)
Fees and Expenses $ 1,000.00*
Printing and Engraving $ 1,000.00*
Legal Fees . . . . . . . . . . . . . . . . .$ 3,000.00*
Miscellaneous. . . . . . . . . . . . . . . . $ 830.00*
TOTAL $ 8,000.00
</TABLE>
*Represents an estimate for the purpose of this filing.
Item 15. Indemnification of Directors and Officers.
The Company's Articles of Incorporation authorize the Board
of Directors, on behalf of the Company and without shareholder
action, to exercise all of the Company's powers of
indemnification to the maximum extent permitted under the
applicable statute. Title 7 of the Colorado Revised Statutes,
1986 Replacement Volume ("CRS"), as amended, permits the Company
to indemnify its directors, officers, employees, fiduciaries, and
agents as follows:
Section 7-109-102 of CRS permits a corporation to indemnify
such persons for reasonable expenses in defending against
liability incurred in any legal proceeding if:
(a) The person conducted himself or herself in good faith;
(b) The person reasonably believed:
(1) In the case of conduct in an official capacity
with the corporation, that his or her conduct was in the
corporation's best interests; and
(2) In all other cases, that his or her conduct was at
least not opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person
had no reasonable cause to believe that his or her conduct was
unlawful.
A corporation may not indemnify such person under this Section 7-
109-102 of CRS:
(a) In connection with a proceeding by or in the right of
the corporation in which such person was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that
such person derived an improper benefit, whether or not involving
action in an official capacity, in which proceeding such person
was adjudged liable on the basis that he or she derived an
improper personal benefit.
Unless limited by the Articles of Incorporation, and there
are not such limitations with respect to the Company, Section 7-
109-103 of CRS requires that the corporation shall indemnify such
a person against reasonable expenses who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to
which the person was a party because of his status with the
corporation.
Under Section 7-109-104 of CRS, the corporation may pay
reasonable fees in advance of final disposition of the proceeding
if:
(a) Such person furnishes to the corporation a written
affirmation of the such person's good faith belief that he or she
has met the Standard of Conduct described in Section 7-109-102 of
CRS;
(b) Such person furnishes the corporation a written
undertaking, executed personally or on person's behalf, to repay
the advance if it is ultimately determined that he or she did not
meet the Standard of Conduct in Section 7-109-102 of CRS; and
(c) A determination is made that the facts then known to
those making the determination would not preclude
indemnification.
Under Section 7-109-106 of CRS, a corporation may not
indemnify such person, including advanced payments, unless
authorized in the specific case after a determination has been
made that indemnification of such person is permissible in the
circumstances because he met the Standard of Conduct under
Section 7-109-102 of CRS and such person has made the specific
affirmation and undertaking required under the statute. The
required determinations are to be made by a majority vote of a
quorum of the Board of Directors, utilizing only directors who
are not parties to the proceeding. If a quorum cannot be
obtained, the determination can be made by a majority vote of a
committee of the Board, which consists of at least two directors
who are not parties to the proceeding. If neither a quorum of
the Board nor a committee of the Board can be established, then
the determination can be made either by the Shareholders or by
independent legal counsel selected by majority vote of the Board
of Directors.
The corporation is required by Section 7-109-110 of CRS to
notify the shareholders in writing of any indemnification of a
director with or before notice of the next shareholders' meeting.
Under Section 7-109-105 of CRS, such person may apply to any
court of competent jurisdiction for a determination that such
person is entitled under the statute to be indemnified from
reasonable expenses.
Under Section 7-107(1)(c) of CRS, a corporation may also
indemnify and advance expenses to an officer, employee,
fiduciary, or agent who is not a director to a greater extent
than the foregoing indemnification provisions, if not
inconsistent with public policy, and if provided for in the
corporation's bylaw, general or specific action of the Board of
Directors, or shareholders, or contract.
Section 7-109-108 of CRS permits the corporation to purchase
and maintain insurance to pay for any indemnification of
reasonable expenses as discussed herein.
The indemnification discussed herein shall not be deemed
exclusive of any other rights to which those indemnified may be
entitled under the Articles of Incorporation, any Bylaw,
agreement, vote of shareholders, or disinterested directors, or
otherwise, and any procedure provided for by any of the
foregoing, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of heirs,
executors, and administrators of such a person.
Insofar as indemnification for liabilities under the Securi-
ties 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 expense 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.
Item 16. Exhibits.
The following is a complete list of Exhibits as part of the
Registration Statement. Exhibit numbers correspond to the
numbers in the Exhibit Table of Item 601(a) of Regulation S-K,
which are incorporated herein:
Exhibit No.
5.0 Opinion of Issuer's Counsel re: Legality
24.1 Consent of Issuer's Counsel
24.2 Consent of Independent Public Accountant
Item 17. Undertakings.
A. To Deliver Certificates.
The undersigned registrant hereby undertakes to provide
certificates in such denominations and registered in such names
to permit prompt delivery to each purchaser.
B. Indemnification
Insofar as indemnification for liabilities 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.
C. Rule 415 Offering.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement: (i) to include any prospectus required by Section 10
(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the formation set forth in the
registration statement; (iii) to include any material information
with respect to the plan of distribution not previously disclosed
in the
registration statement or any material change to such information
in the registration statement;
(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
bonafide 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.
D. Incorporation of Subsequent Exchange Act Documents.
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.
E. Incorporated Annual and Quarterly Reports.
The undersigned registrant hereby undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom
the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person
to whom the prospectus is sent or given, the latest quarterly
report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
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 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 Denver, State of Colorado on the 5th day of May, 1997.
FIRST ENTERTAINMENT, INC.
By: ///Signed///
A.B. Goldberg
Principal Executive and
Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
A MAJORITY OF THE BOARD OF DIRECTORS
Dated: 5/5/97 By: ///Signed///
Burton Katz
Director
Dated: 5/5/97 By: ///Signed///
A.B. Goldberg
Director
Dated: 5/5/97 By: ///Signed///
Theodore Jacobs
Director
Dated: 5/5/97 By: ///Signed///
Nicholas Catalano
Director
Exhibits
Exhibit No.
5.0 Opinion of Issuer's Counsel re: Legality
24.1 Consent of Issuer's Counsel
24.2 Consent of Independent Public Accountant
Exhibit 5.0
Opinion of Issuer's Counsel re: Legality
DAVID WAGNER & ASSOCIATES, P.C.
Attorneys and Counsellors at Law
8400 East Prentice Avenue
Penthouse Suite
Englewood, Colorado 80111
Telephone (303) 793-0304
Facsimile (303) 771-4562
May 5, 1997
Board of Directors
First Entertainment, Inc.
1380 Lawrence Street
Suite #1400
Denver, CO 80204
Gentlemen:
We have acted as counsel to First Entertainment, Inc. (the
"Company") in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement")
covering registration under the Securities Act 1933, as amended,
of the subject shares of the Company's common stock, $.008 par
value per share (the "Shares").
Based upon the foregoing, and assuming that Shares will be
issued as set forth in the Registration Statement, at a time when
effective, and that there will be full compliance with all
applicable securities laws involved under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated pursuant to
said Acts, and in those states in which the Shares may be sold,
we are of the opinion that, upon issuance of the Shares according
the Registration Statement and receipt of the consideration to be
paid for the Shares, the Shares will be duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock of
the Company. This opinion does not cover any matters related to
any re-offer or re-sale of the Shares by the beneficiary thereof,
once issued as described in the Registration Statement.
This opinion is not to be used, circulated, quoted or
otherwise referred to for any other purpose without our prior
written consent. This opinion is based on our knowledge of the
law and facts as of the date hereof. We assume no duty to
communicate with the Company in respect to any matter which comes
to our attention hereafter.
Very truly yours,
DAVID WAGNER & ASSOCIATES, P.C.
///Signed///
Exhibit 24.1
Consent of Issuer's Counsel
DAVID WAGNER & ASSOCIATES, P.C.
8400 East Prentice Avenue
Penthouse Suite
Englewood, Colorado 80111
Telephone (303) 793-0304
Facsimile (303) 771-4562
May 5, 1997
We consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the
prospectus which is made a part of the Registration Statement.
Very truly yours,
DAVID WAGNER & ASSOCIATES, P.C.
///Signed///
Exhibit No.
Consent of Independent Public Accountant
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
First Entertainment, Inc.
Denver, Colorado
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of this Registration Statement of
our report dated March 3, 1997, which report contains an
explanatory paragraph relative to a going concern uncertainty,
relating to the consolidated financial statements of First
Entertainment, Inc. appearing in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1996.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
BDO Seidman, LLP
///signed///
Denver, Colorado
May 5, 1997
