As filed with the Securities and
Exchange Commission, July 19, 1996.
Securities Act File No. 333-______
Exchange Act File No. 0-18034
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
INDENET, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 68-0158367
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
1640 North Gower Street
Los Angeles, California 90028
(213) 466-6388
(Address, including Zip Code, and Telephone Number,
including Area Code, of Registrant's Principal Executive Offices)
_____________________
RICHARD J. PARENT, Chief Financial Officer
INDENET, INC.
1640 North Gower Street
Los Angeles, California 90028
(213) 466-6388
(Name, Address, including Zip Code, and Telephone
Number, including Area Code, of Agent for Service)
____________________
Copies of Communications to:
Roger V. Davidson, Esq.
Cohen Brame & Smith
Professional Corporation
1700 Lincoln Street, Suite 1800
Denver, Colorado 80203
(303) 837-8800
Approximate date of commencement of proposed sale to public:
As soon as practicable after the registration statement becomes
effective
__________________________
If the only securities being registered on this Form are
being offered pursuant to dividend or interest investment 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]
Title of each Class of Common Stock, $0.001 par value
Securities being Registered
Amount being 937,561 Shs.
Registered
Proposed $ 3.12 (1)(2)
Maximum Offering
Price Per Share
Proposed Maximum $ 2,925,191
Aggregate Offering
Price
Amount of $ 1,008.69
Registration Fee
Total. . . . . . . . $1,008.69
(1) Closing price on the Nasdaq Stock Market on July 12, 1996.
(2) Estimated solely for the purpose of determining the
registration fee and calculated pursuant to Rule 457(a). No
separate registration fee is required for the warrants
pursuant to Rule 457(g).
(3) This registration statement covers an additional
indeterminate number of shares of common stock which may be
issued in accordance with Rule 416.
_____________________
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.
PROSPECTUS
SELLING SHAREHOLDER OFFERING
IndeNet, Inc.
$.001 Par Value Common Stock
The Company has registered for offer and sale, on behalf of
certain of its security holders, a total of 937,561 shares.
Of these shares, 720,894 shares are reserved for issuance upon
the conversion of a $2,500,000 promissory note in the name of
GFL Performance Fund Ltd. ("GFL"). The conversion rights include principal
and any accrued interest and the conversion ratio is based on 82% of the
closing bid price of INDE's shares on Nasdaq for the five days
preceding the day notice of conversion is given (subject to
certain adjustments). The Company has agreed to indemnify GFL
against certain liabilities, including certain liabilities under
the Securities Act of 1933, and, to the extent any
indemnification by an indemnifying party is prohibited or limited
by law, the Company has agreed to make the maximum contribution
with respect to any amounts for which it would otherwise be
liable under such indemnification provision to the fullest extent
permitted by law. (See: "Plan of Distribution".) The Company is
also registering 216,667 shares of common stock underlying the
right to convert 216,667 shares of issued and outstanding Series
B Preferred Stock owned by InterEquity Capital Partners, L.P.
("InterEquity"). These shares may be converted at the option of
InterEquity anytime after July 1, 1997 or at the option of the
Company during any period when this registration statement is
effective, all dividends are current, and the stock has traded at
or above $5 on Nasdaq on the date notice of conversion is given.
The shares offered hereby are being sold for the accounts of
these certain shareholders (the "Selling Shareholders") and the
Company will not receive any proceeds from the sale of shares by
the Selling Shareholders. The Common Stock is traded on the
Nasdaq Stock Market ("Nasdaq") under the trading symbol "INDE".
The reported closing price on Nasdaq on July 18, 1996 was $3.12
per share.
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 PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THERE ARE CERTAIN RISKS INVOLVED WITH THE OWNERSHIP OF THE
COMPANY'S SECURITIES, INCLUDING RISKS RELATED TO ITS BUSINESS AND
THE MARKETS FOR ITS SECURITIES. (SEE "RISK FACTORS".)
The Company, pursuant to agreements with the Selling
Shareholders, has agreed to pay substantially all of the expenses
of any offering and sale hereunder (not including commissions and
discounts of underwriters, dealers, or agents), estimated to be
$8,000.
The Securities will be sold directly, through agents,
underwriters, or dealers as designated from time to time, or
through a combination of such methods on terms to be determined
at the time of sale, at market prices obtainable at the time of
sale or otherwise in privately negotiated transactions at prices
determined by negotiation.
The date of this Prospectus is July 19, 1996.
No dealer, salesman, or other person has been authorized to
give any information or to make any representation other than
those contained in or incorporated by reference to this
Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company, the Selling Shareholders, or any underwriter,
dealer, or agent. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of
the Company since the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy
the securities offered hereby by anyone in any jurisdiction in
which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to
do so or to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and in accordance therewith files reports, proxy statements
and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information concerning the Company may be inspected and copied at
the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; at
the Commission's Regional Office at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, Thirteenth Floor, New York, New York 10048. Copies of
such material can also be obtained upon written request addressed
to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition,
such material can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street,
Washington, DC 20006.
The Company has filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration
Statement which may be inspected and copied in the manner and at
the sources described above. With respect to each such
agreement, instrument, or other document filed as an exhibit to
the Registration Statement, reference is made to the exhibit for
a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission pursuant to the Exchange Act (file number 0-18034) are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-KSB for the year
ended March 31, 1996.
(2) The Company's Registration Statement on Form 8-A filed
October 12, 1989 (File No. 0-18034), as amended.
Any statement contained herein or in a document incorporated
or deemed to be incorporated herein by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained in any subsequently filed
document (which is deemed to be incorporated by reference herein)
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to
whom a copy of this Prospectus is delivered, on the written or
oral request of such person, a copy of any or all of the
documents incorporated herein by reference (other than exhibits
thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus
incorporates). Written or telephone requests for such copies
should be directed to the Company's principal office: IndeNet,
Inc., 1640 North Gower Street, Los Angeles, California 90028,
(213) 466-6388.
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the
detailed information and financial statements found elsewhere in
the Prospectus, the March 31, 1996 Form 10-KSB, as well as the
other documents referred to herein under "Incorporation of
Certain Documents by Reference." As used in this Prospectus, the
term "the Company" refers to IndeNet, Inc. and its subsidiaries,
unless otherwise stated or indicated by the context.
The Company
IndeNet, Inc. was originally founded as a Colorado
corporation on April 4, 1988 and was re-organized under the laws
of the State of Delaware on July 17, 1995. The Company's
operations service the media and communications industries.
Effective October 31, 1993, the Registrant sold all of its
operating assets. Management's intent was to transition into a
new line of business utilizing the proceeds from the sale.
Completion of the asset sale resulted in a company with
approximately $5.8 million in cash and notes receivable,
liabilities of approximately $1.5 million, and shareholders'
equity of $4.3 million. At December 31, 1994, the Registrant's
asset base consisted primarily of cash and promissory notes
relating to the aforementioned sale of its operating assets.
Effective February 3, 1995, the Company acquired Mediatech, Inc.,
which became the principal operating subsidiary of the Company.
On November 27, 1995, the Company acquired 66.67% of
Channelmatic, Inc. ("Channelmatic") and on February 7, 1996 it
completed the acquisition of Starcom Television Services, Inc.
("Starcom"). On May 16, 1996, the Company acquired Cable
Computerized Management Systems, Inc. ("CCMS") through a merger
and on May 24, 1996, the Company acquired Enterprise Systems
Group Limited ("Enterprise") through a Stock Purchase Agreement.
The Company continues to seek other business combinations.
The Offering
Common Shares Outstanding Prior to,
the Offering and the Conversion of the
GFL Notes and InterEquity Preferred . . . . . . . . . .12,693,423
Common Shares Underlying Promissory Note
Conversion--up to. . . . . . . . . . . . . . .937,561
Nasdaq Stock Market Symbol . . . . . . . . . . . INDE
RISK FACTORS
Prior to making an investment decision, prospective investors
should carefully consider, together with the other information
contained in this Offering Circular, the following factors:
1. Market Acceptance and Operations of The IndeNet. An
important element in the Company's plan to provide a complete
range of broadcast network services to advertisers, programmers
and television stations, and in the Company's ability to remain
competitive in its existing advertising and programming delivery
businesses, will depend in significant part upon the success of
The IndeNet. In order for the television broadcast stations and
cable operators to be able to receive and use advertisements or
programming that is distributed digitally via The IndeNet, the
stations and cable operators need to install the Company's
SpotServers. The Company is currently deploying its satellite
network by installing at television stations the equipment
necessary to receive and use the digital transmissions. Since
the announcement of its intent to create The IndeNet in April
1996, the Company has delivered over 100 SpotServers to
television stations. The Company is installing the SpotServers
at no cost to the stations. The Company hopes to install
approximately 400 SpotServers by the end of 1996 and believes
that approximately 350 to 400 SpotServers need to be installed
before The IndeNet can be viable. To date, the Company has not
received commitments for the installation of the remaining
SpotServers, and no assurance can be given that the deployment of
400 SpotServers can be achieved by the end of 1996, if at all.
While management believes that television broadcasters will
migrate from the existing analog video delivery systems to new
digital delivery technologies as such technologies become
standardized and widely accepted, to date the use of these
digital technologies is not widespread among end-users due in
part to inertia on the part of decision-makers at television
broadcasters to change systems and concern regarding additional
associated costs, quality and reliability. There can be no
assurance that the Company will be successful in overcoming these
concerns of television broadcasters. If the Company's digital
satellite network does not achieve the minimum degree of market
acceptance, there could be a material adverse impact on the
Company's business, financial condition and results of
operations. In addition, failure to implement The IndeNet would
result in the loss of a material portion of the equipment costs
and other start- up exercises borne by the Company in connection
with the deployment of the satellite network. Although the
Company has operated The IndeNet on a test basis at several
television stations, the entire digital network satellite system
has not yet been fully tested and may, therefore, require
additional modifications or technological alterations.
The Company's satellite-based spot delivery services will be
dependent upon the continued availability of functional satellite
transponder capacity. There are a limited number of domestic
communications satellites available for the transmission of
television advertising and programming. The Company has entered
into an agreement with Hughes Network Systems, Inc., doing
business as DirectPCTM ("Hughes"), pursuant to which Hughes has
agreed to broadcast the Company's digital transmissions. The
agreement expires in September 1998. Should the Hughes
transponder become unavailable, the Company would be required to
lease another transponder or purchase transponder space from
others on an as- needed basis. The unavailability of or
interruption in transponder access could have a material adverse
effect on the Company.
2. Short Operating History; Operating Losses. Prior to the
acquisition of Mediatech in February 1995, IndeNet had no
operating business or revenue. From February 1995 through
November 1995, Mediatech was IndeNet's sole business and sole
source of revenue. Since November 27, 1995, IndeNet has acquired
four other subsidiaries. Although all of the subsidiaries that
IndeNet now owns are established companies with lengthy operating
histories (other than Starcom, each of the other four
subsidiaries has been operating for more than 10 years), IndeNet
has no history in operating these companies.
IndeNet has experienced net losses during each of its last two
fiscal years. In addition, even after giving effect to all of
the five acquisitions as if all such acquisitions had been
consummated on April 1, 1995, the Company would have had a net
loss of $3,025,000 for the fiscal year ended March 31, 1996. The
Company does not expect to achieve profitability during the
current fiscal year ending March 31, 1997. Although certain of
the Company's subsidiaries have operated profitably on a
stand-alone basis, the ability of the Company as a whole to
achieve profitability after the current fiscal year will be
dependent upon numerous factors, including the operations of the
Company's various subsidiaries, the Company's ability to
integrate the operations of its various businesses, and the
ability to deploy and operate The IndeNet, the Company's digital
broadcast network. In addition, as a result of the acquisitions
of its subsidiaries, on a pro forma basis at March 31, 1996, the
Company had approximately $35.4 million of goodwill on its
balance sheet, which will be amortized over 20 years and will
result in annual charges against earnings, if any, of
approximately $1.8 million per year. Future acquisitions by the
Company will likely further increase the amount of goodwill that
the Company will have to take as a charge against any future
earnings. There can be no assurance that the value of such
goodwill will ever be realized by the Company or that the Company
will achieve profitability in any future period.
3. Risks Associated with Possible Future Acquisitions. A
major element of the Company's business strategy is to acquire
additional companies in order to (i) acquire support services in
the television industry that the Company does not currently
provide and (ii) increase the Company's market share for its
existing television service businesses. The Company's ability to
meet its goal of becoming the leading provider of a complete,
integrated range of television advertising support services is
dependent to a large extent upon its continuing ability to
identify and consummate acquisitions of additional companies.
Although the Company is currently considering several potential
acquisition candidates, the Company has not entered into any
agreements or understandings regarding any such acquisitions, and
there can be no assurance that the Company will be able to
complete any future acquisitions. In addition, no assurance can
be given that any future acquisitions will enhance the
consolidated financial position or operational performance of the
Company.
The consideration to be paid by the Company for any potential
future acquisitions may involve cash, notes and/or a significant
number of shares of Common Stock, depending on the size of the
acquisition. Although the Company will endeavor to evaluate the
risks inherent in any particular acquisition, there can be no
assurance that the Company will properly ascertain all such
risks. The Company will have virtually unrestricted flexibility
in identifying and selecting prospective acquisition candidates
and in establishing the terms of any such future acquisitions.
The Company does not intend to seek stockholder approval for any
acquisitions unless required by applicable law or regulations,
and stockholders will most likely not have an opportunity to
consider or approve the transactions.
4. Competition. Competition in each of the Company's
businesses is highly competitive. Each of the Company's
subsidiaries competes in its business with numerous competitors
and potential competitors, many of whom are substantially larger
in size and have greater financial, technical, marketing,
customer service and other resources available than the Company.
Certain of the Company's competitors and potential competitors
have technological capabilities or other resources that would
allow them to develop alternative products or provide alternative
services which could compete directly with the Company's products
and services.
Although no competitors of the Company currently provide
digital delivery of video content via satellite, a number of
other companies have announced their intentions to establish
digital satellite delivery systems that would compete with The
IndeNet. In particular, Cycle-Sat, Inc., a leading distributor
of broadcast quality advertising to television stations that
currently operates a proprietary analog satellite distribution
network, has announced that it is converting its analog satellite
network to a digital network. Cycle-Sat, Inc. has stated that
it anticipates that the conversion of its analog network to an
operational, large-scale digital satellite network will be
completed by early calendar year 1997. In addition, Digital
Generation Systems, Inc., a major providers of electronic
distribution services for radio stations, has also announced that
it intends to expand its existing operations into the television
advertising market and that it also intends to establish and
operate a digital satellite distributions network. The proposed
Digital Generation digital satellite network, including the use
of Hughes' satellite equipment and system and the equipment to be
installed at television stations, is substantially the same as
The IndeNet. Digital Generation recently announced that 250
television stations have joined Digital Generation's proposed
digital satellite system.
The Company currently competes in the market for the
distribution of video and audio advertising spots to television
stations. The principal competitive factors affecting this
market are production quality, customer service, price,
timeliness and accuracy of delivery. The Company competes with a
variety of duplication and delivery companies that have
long-standing customer relationships, resulting in significant
customer loyalty. Moreover, other companies have announced their
intention to enter into this market. In addition,
telecommunications providers or cable television operators could
enter the market as competitors with lower delivery costs. As a
result, the Company may face additional price competition which
may affect the Company's operating margins. There can be no
assurance that the Company will be able to compete successfully
against current and future competitors based on these and other
factors. The Company expects that an increasingly competitive
environment could lead to a loss of market share or price
reductions, resulting in reduced unit profit margins, all of
which may have a material adverse effect on the Company's
business, financial condition and results of operations.
5. Risks Associated with Technology. The Company's future
success and its ability to remain competitive will depend in
significant part upon the technological quality of its products
and processes relative to those of its competitors and its
ability both to develop new and enhanced products and services
and to introduce such products and processes at competitive
prices and in a timely and cost-effective manner. All of the
Company's current operations are subject to rapid technological
changes due primarily to the computerization and digitalization
of the television services industry and to the technological
changes occurring in the broadcast industry. No assurance can be
given that the Company will be able to develop new and enhanced
products and services at competitive prices and in a timely
manner.
The markets for the Company's hardware and software products
are characterized by evolving industry standards rapid
technological advances resulting in short product life cycles,
price reductions, significant price/performance improvements and
frequent new products introductions. The Company's future
success in the television services business will depend at least
in part upon its ability to continually enhance its existing
automated program playback systems and to enhance its traffic and
billing, revenue management and other program management software
products, and to develop and introduce new hardware and software
products and features that meet changing customer requirements
and emerging industry standards on a timely basis. There can be
no assurance that one or more of the Company's products will not
be rendered noncompetitive or obsolete by technological advances
or changing customer preferences. The Company has from time to
time experienced delays in introducing new products and product
enhancements, and there can be no assurance the Company will not
experience difficulties that could delay or prevent the
successful development, introduction and marketing of new
products or product enhancements in the future. The Company will
be required to continue to invest in research and development to
attempt to maintain and enhance in its existing technologies and
products, and there can be no assurance that it will have the
funds available to do so. Furthermore, new or enhanced products
offered by the Company may contain defects when they are first
introduced or released. There can be no assurance that, despite
the Company's quality control testing, defects will not be found
in new products and product enhancements after commencement of
commercial shipments resulting in delays in or loss of market
acceptance.
6. Future Operation. The Company believes the television
services industry is undergoing dramatic changes due to rapidly
evolving technologies and changing market demands. In the
opinion of the Company, these changes include the conversion of
existing analog systems to digital systems, the increased demand
for higher quality video deliveries, the demand for more
efficient integrated management functions, and improved delivery
times. The Company is attempting to anticipate the future needs
of the industry by developing products and services, including
the deployment of The IndeNet to meet these anticipated needs.
In addition, the Company's plan is to acquire existing companies
in this industry and to convert or integrate such companies'
existing operations and products to meet this anticipated demand.
No assurance can be given that the Company has correctly
predicted the future needs of the industry or that its new
products or services will meet the evolving needs of the
industry. Furthermore, no assurance can be given that the
Company will be able to acquire the companies that it believes
are necessary to meet the anticipated need for integrated
services. If the changes in the television services industry do
not occur as anticipated by the Company or at such time as
anticipated by the Company, the Company's future success would be
materially and adversely affected.
7. Ability to Manage Growth; Integrate Operations. The
Company has recently experienced a period of rapid growth through
the acquisition of its subsidiaries, which growth has resulted in
new and increased responsibilities for management personnel and
has placed and continues to place increasing demands on the
Company's management, operational and financial systems and
resources. In order to achieve the synergies that the Company
believes can result from its recent acquisitions, the Company
intends to consolidate or coordinate certain operations of its
subsidiaries. However, the assimilation and integration of the
various businesses of the subsidiaries may be hampered because
the subsidiaries are located in various states and countries and
operate in different, albeit similar, businesses. To accommodate
this recent growth and to effectively manage future growth, the
Company will be required to continue to implement and improve its
operational, financial and management information systems, and to
train and manage its work force. There can be no assurance that
the Company will be able to successfully integrate the operations
of its various subsidiaries to provide a complete and continuous
range of services to the television advertising industry or that
such integration will result in improved products, services or
performance. Furthermore, there can be no assurance that the
Company's personnel, systems, procedures and controls will be
adequate to support the Company's future operations. Any failure
to integrate, implement and improve the Company's operational,
financial and management systems could have a material adverse
effect on the Company's business, financial condition and results
of operations.
8. Dependence Upon Revenues of Subsidiaries; Substantial
Indebtedness. Currently IndeNet has no independent source of
revenues and it derives all of the revenues from the operations
of its subsidiaries. At March 31, 1996, as adjusted to give
effect to the acquisition of Enterprise in May 1996 and to the
issuance of a $2,500,000 convertible note in May 1996, IndeNet
had total indebtedness outstanding of approximately
$22.6 million. IndeNet will be required to use any proceeds
that it receives from its subsidiaries to fund its operating
expenses and to pay its obligations under the foregoing
indebtedness, which may leave IndeNet with insufficient funds to
make payments on the Preferred Stock or Notes. Although IndeNet
currently believes that distributions and dividends from its
subsidiaries will be sufficient to pay dividends on the Preferred
Stock as well as to meet its other obligations, there can be no
assurance they will be sufficient.
Claims of the creditors of IndeNet's subsidiaries may have
priority with respect to the assets and earnings of such
subsidiaries over the claims of the creditors of IndeNet.
9. Protection of Patent, Trademarks, Copyrights and Other
Proprietary Information. The Company considers its patents,
trademarks, copyrights, tradenames and know-how to be of value
and important to its business. The Company relies on a
combination of patent, trade secret, copyright and trademark laws
and confidentiality and other arrangements to protect its
proprietary rights. Despite the Company's efforts to protect its
proprietary rights, unauthorized parties may attempt to copy or
obtain and use information that the Company regards as
proprietary. There can be no assurance that the steps taken by
the Company to protect its proprietary information will prevent
misappropriation of such information and such protection may not
preclude competitors from developing products and services
similar to those of the Company.
10. Dependence on Key Personnel. The Company's success
depends to a significant degree upon the continuing contributions
of, and on its ability to attract and retain, qualified
management, sales, operations, marketing and technical personnel.
The competition for qualified personnel is intense, and the loss
of any such persons or the inability to recruit additional key
personnel in a timely manner could adversely affect the Company.
Although the Company has entered into multi-year employment
agreements with its principal executives and with most of the key
officers of its subsidiaries, there can be no assurance that the
Company will be able to continue to attract and retain qualified
management, sales and technical personnel for the development of
its business. The Company does not maintain key man life
insurance on the lives of its key personnel.
11. Effect of Certain Selling Shareholders' Sales. INDE has
on file additional effective registration statements in which it
has registered, for offer and sale, up to 5,249,586 shares of
common stock by selling shareholders, some of whom are or were
officers and directors of INDE. These other selling shareholders
may concurrently elect to sell their shares into the public
market, which could have a depressing or overhanging effect on
the market price for the securities offered by this prospectus.
12. Dividends. No dividends have been paid on the Common
Stock since INDE's inception and none are contemplated at any
time in the foreseeable future.
USE OF PROCEEDS
All of the proceeds to be realized from this offering will be
paid to the Selling Shareholders. The Company will not receive
any of such proceeds.
SELLING SHAREHOLDERS
The following table shows for the Selling Shareholders, (i)
the number of Shares and Shares underlying the Note conversion
privileges beneficially owned by them as of July 12, 1996, (ii)
the number of Shares covered by this Prospectus, and (iii) the
number of Shares to be retained after this offering, if any.
Selling GFL Performance InterEquity
Shareholder Fund Ltd. Capital
Partners, L.P.
Shares of
Common Stock
Owned Prior
to the
Offering Up to 1,820,894(2) 216,667 (3)
Number of
Common Shares
Covered by This
Prospectus Up to 937,561 216,667
Common Shares
Retained
Subsequent to
This Offering(1) - 0 - -0- (3)
_________________
(1) The Selling Shareholder will not own in excess of one (1%)
percent of the Company's outstanding shares subsequent to
the offering when combined with other offerings in which
other securities owned by the Selling Shareholder have been
registered.
None of the Selling Shareholders named herein are, or have
ever been Officers or Directors of the Company.
Information set forth in the tables regarding the securities
owned by each Selling Shareholder is provided to the best
knowledge of the Company based on information furnished to
the Company by the respective Selling Shareholder and/or
available to the Company through its stock transfer records.
(2) Includes 224,795 shares issued and outstanding and up to
1,596,099 shares underlying rights to convert promissory
notes totaling $5.5 million (plus accrued interest) to
stock. The registration statement of which this prospectus
is a part registers the resale of up to 937,561 shares of
this total amount.
(3) Does not include up to 1,100,000 shares owned or issuable by
conversion registered in another registration statement
currently in effect.
PLAN OF DISTRIBUTION
The Common Shares offered hereby may be sold by the Selling
Shareholders or by pledgees, donees, transferees or other
successors-in-interest (including sales after exercise of options
or warrants). Such sales may be made in the over-the-counter
market through the Nasdaq Stock Market, in privately negotiated
transactions, or otherwise, at prices and at terms then
prevailing, at prices related to the then current market prices
or at negotiated prices. The Common Shares may be sold by one or
more of the following methods: (a) a block trade in which the
broker or dealer so engaged will attempt to sell the stock as
agent but may position and resell a portion of the block as
principal in order to consummate the transaction; (b) a purchase
by a broker or dealer as principal, and the resale by such broker
or dealer for its account pursuant to this Prospectus, including
resale to another broker or dealer; or (c) ordinary brokerage
transactions and transactions in which the broker solicits
purchasers. In effecting sales, brokers or dealers engaged by a
Selling Shareholder may arrange for other brokers or dealers to
participate. Any such brokers or dealers will receive
commissions or discounts from a Selling Shareholder in amounts to
be negotiated immediately prior to the sale. Such brokers or
dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended. Any gain realized by such a broker or
dealer on the sale of shares which it purchases as a principal
may be deemed to be compensation to the broker or dealer in
addition to any commission paid to the broker by a Selling
Shareholder.
The securities covered by this Prospectus may in the future
also be sold under Rule 144 instead of under this Prospectus.
Rule 144 provides an exemption from registration for the resale
of securities by persons other than the issuer after the
securities have been held by persons for at least two (2) years
from original issuance, and such securities are sold in strict
compliance with Rule 144 "Manner of Sale" requirements and
maximum number of shares requirements. The Company will not
receive any portion of the proceeds of the securities sold by the
Selling Shareholders, but will receive amounts upon exercise of
Warrants, which funds will be used for working capital. There is
no assurance that the Selling Shareholders will sell any or all
of the Shares offered hereby.
The Selling Shareholders have been advised by the Company that
during the time each is engaged in distribution of the securities
covered by this Prospectus, each must comply with Rules 10b-5 and
10b-6 under the Securities Exchange Act of 1934, as amended, and
pursuant thereto: (i) each must not engage in any stabilization
activity in connection with the Company's securities; (ii) each
must furnish each broker through which securities covered by this
Prospectus may be offered the number of copies of this Prospectus
which are required by each broker; and (iii) each must not bid
for or purchase any securities of the Company or attempt to
induce any person to purchase any of the Company's securities
other than as permitted under the Securities Exchange Act of
1934, as amended. Any Selling Shareholders who may be
"affiliated purchasers" of the Company as defined in Rule 10b-6,
have been further advised that pursuant to Securities Exchange
Act Release 34-23611 (September 11, 1986), they must coordinate
their sales under this Prospectus with each other and the Company
for purposes of Rule 10b-6. The Company has agreed to indemnify
GFL and other selling shareholders against certain liabilities,
including certain liabilities under the Securities Act of 1933,
and, to the extent any indemnification by an indemnifying party
is prohibited or limited by law, the Company has agreed to make
the maximum contribution with respect to extent permitted by law.
LEGAL MATTERS
Certain legal matters with respect to the shares offered
hereby have been passed upon for the Company by Cohen Brame &
Smith, Professional Corporation, Denver, Colorado. Roger V.
Davidson, a shareholder of the firm is a former Director of the
Company.
EXPERTS
The Company's consolidated financial statements incorporated
by reference in 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 incorporated herein by
reference, and are incorporated herein in reliance upon such
report given upon the authority of said firm as experts in
auditing and accounting.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses of the offering, all of which are to be
borne by the Company, are as follows:
Total
Total Registration Fee Under
Securities Act of 1933. . . . . . . . . . $1,008.69
Printing and Engraving. . . . . . . . . . . . 200.00*
Accounting Fees and Expenses . . . . . . . . . 3,000.00*
Legal Fees and Expenses. . . . . . . . . . . 3,000.00*
Blue Sky Fees and Expenses
(including related legal fees). . . . . . . . . 500.00*
Transfer Agent Fees . . . . . . . . . . . . 1,000.00*
Miscellaneous . . . . . . . . . . . . . . 992.10
Total . . . . . . . . . . . . . . .$9,500.00
*Estimated
Item 15. Indemnification of Directors and Officers.
Article X of Company's Certificate of Incorporation provides
that the corporation may indemnify each director, officer, and
any employee or agent of the corporation, his heirs, executors,
and administrators, against expenses reasonably incurred or any
amounts paid by him in connection with any action, suit, or
proceeding to which he may be made a party by reason of his being
or having been a director, officer, employee or agent of the
corporation in the same manner as is provided by the laws of the
State of Delaware as summarized below.
The Delaware General Corporation Law gives each corporation
the power to indemnify against liability any current or former
directors, officers, employees and agents. Del Corp Law Section
145. As provided in section 145, a Director must show that (1)
he conducted himself in good faith, (2) that his conduct was not
opposed to the corporation's best interests, or if acting in his
official capacity, that his conduct was in the corporation's best
interests and (3) that in a criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful. The
Delaware General Corporation Law also gives each corporation the
power to eliminate or limit the personal liability of a Director
to the Corporation or its shareholders for monetary damages for
breach of fiduciary duty as a director unless the breach of
fiduciary duty involves breach of loyalty to the corporation or
its shareholders, acts or omissions involving intentional
misconduct or a knowing violation of law, acts specified in
sections 172 and 174 (improper distribution of assets, dividends
or share repurchase) or any transaction whereby the Director
derived an improper personal benefit. Del Corp Law section
102(b)(7).
Item 16. Exhibits
The following Exhibits are filed as part of this Form S-3
Registration Statement pursuant to Item 601 of Regulation S-B by
incorporation by reference to other filings:
3.1 IndeNet, Inc. Certificate of Incorporation
(Incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form S-3/File No. 333-1205.)
3.2 IndeNet, Inc. Bylaws (Incorporated by reference to
Exhibit 3.2 of the Registration Statement on Form S-
3/File No. 333-1205.)
5.1 Opinion of Cohen Brame & Smith Professional
Corporation
10.1 Mediatech Stock Purchase Agreement (Incorporated by
reference to Exhibit 10.1 of Registration Statement on
Form S-3/File No. 333-1205)
10.2 Channelmatic Stock Purchase Agreement (Incorporated
by reference to Exhibit 10.1 and 10.2 to Form 8-K
dated December 12, 1995.)
10.3 Starcom Stock Exchange Agreement (Incorporated by
reference to Exhibit II to the Form 10-QSB dated
December 31, 1995.)
10.4 Robert Lautz Employment Agreement (Incorporated by
reference to Exhibit 10.4 of Registration Statement on
Form S-3/File No. 333-1205.)
10.5 Registration Rights Agreement (Incorporated by
reference to Exhibit I to the Form 8-K for event
which occurred on February 29, 1996.)
10.6 Note Purchase Agreement (Incorporated by
reference to Exhibit II to the Form 8-K for event
which occurred on February 29, 1996.)
10.7 Cable Computerized Management Systems Agreement and
Plan of Merger (Incorporated by reference to Exhibit 99
to Report on Form 8-K for event dated May 16, 1996.)
10.8 Enterprise System Group Ltd. Share Purchase Agreement
(Incorporated by reference to Exhibit 99 to Report on
Form 8-K for event dated May 24, 1996.)
23.1 Consent of Cohen Brame & Smith, Professional
Corporation (included in Exhibit 5.1 above)
23.2 Consent of BDO Seidman, LLP*
_________________
* Filed herewith.
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company 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 Company of expenses incurred or paid by a director,
officer or controlling person of the Company 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 Company 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.
The undersigned Company hereby undertakes:
(1) 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 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.
(4) That, for the purposes of determining any liability
under the Securities Act of 1933, each filing of the
Company'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 be 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company 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 Form S-3 Registration Statement, to be
signed on its behalf by the undersigned thereunto duly
authorized, in the City of Los Angeles, State of California on
the 19th day of July, 1996.
INDENET, INC.
By: /s/ Robert W. Lautz, Jr.
Robert W. Lautz, Jr., President,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933,
this Form S-3 Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert W. Lautz, Jr. President, Chief July 19, 1996
Robert W. Lautz, Jr. Executive Officer
and Director
/s/ Thomas H. Baur Chief Executive July 19, 1996
Thomas H. Baur Officer of
Mediatech, Inc.
and Director
/s/ Richard J. Parent Chief Financial July 19, 1996
Richard J. Parent Officer and
Secretary
/s/ William A. Kunkel Director July 19, 1996
William A. Kunkel
/s/ Cary S. Fitchey Director July 19, 1996
Carey S. Fitchey
/s/ William D. Killion Director July 19, 1996
William D. Killion
/s/ Andre Blay Director July 19, 1996
Andre Blay
/s/ Graeme R. Jenner Director July 19, 1996
Graeme R. Jenner
/s/ Richard L. Schleufer Director July 19,1996
Richard L. Schleufer
SEC File Nos. 333-_______
0-18034
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
INDENET, INC.
(Name of Company as specified in charter)
INDENET, INC.
("INDE")
FORM S-3 REGISTRATION STATEMENT
The following Exhibits are filed as part of the Company's
Form S-3 Registration Statement pursuant to Item 601 of
Regulation S-B.
Exhibit Number
to Form S-3 Description
3.1 IndeNet, Inc. Certificate of Incorporation
(Incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form S-3/File No. 333-1205.)
3.2 IndeNet, Inc. Bylaws (Incorporated by reference to
Exhibit 3.2 of the Registration Statement on Form S-
3/File No. 333-1205.)
5.1 Opinion of Cohen Brame & Smith Professional
Corporation
10.1 Mediatech Stock Purchase Agreement (Incorporated by
reference to Exhibit 10.1 of Registration Statement on
Form S-3/File No. 333-1205)
10.2 Channelmatic Stock Purchase Agreement (Incorporated
by reference to Exhibit 10.1 and 10.2 to Form 8-K
dated December 12, 1995.)
10.3 Starcom Stock Exchange Agreement (Incorporated by
reference to Exhibit II to the Form 10-QSB dated
December 31, 1995.)
10.4 Robert Lautz Employment Agreement (Incorporated by
reference to Exhibit 10.4 of Registration Statement on
Form S-3/File No. 333-1205.)
10.5 Registration Rights Agreement (Incorporated by
reference to Exhibit I to the Form 8-K for event
which occurred on February 29, 1996.)
10.6 Note Purchase Agreement (Incorporated by
reference to Exhibit II to the Form 8-K for event
which occurred on February 29, 1996.)
10.7 Cable Computerized Management Systems Agreement and
Plan of Merger (Incorporated by reference to Exhibit 99
to Report on Form 8-K for event dated May 16, 1996.)
10.8 Enterprise System Group Ltd. Share Purchase Agreement
(Incorporated by reference to Exhibit 99 to Report on
Form 8-K for event dated May 24, 1996.)
23.1 Consent of Cohen Brame & Smith, Professional
Corporation (included in Exhibit 5.1 above)
23.2 Consent of BDO Seidman, LLP*
_________________
* Filed herewith.
3.1 IndeNet, Inc. Certificate of Incorporation**
3.2 IndeNet, Inc. Bylaws**
4.1 Certificate of Designation of Series A
Preferred Stock*
5.1 Opinion of Cohen Brame & Smith Professional
Corporation**
10.1 Mediatech Stock Purchase Agreement**
10.2 Channelmatic Stock Purchase Agreement Incorporated by
reference to Exhibit 10.1 and 10.2 to Form 8-K dated
December 12, 1995).
10.3 Starcom Stock Exchange Agreement Incorporated
by reference to Exhibit II to the Form 10-QSB
dated December 31, 1995.)
10.4 Robert Lautz Employment Agreement**
10.6 Registration Rights Agreement (Incorporated by
reference to Exhibit I to the Form 8-K for
event which occurred on February 29, 1996.)
10.7 Amended Note Purchase Agreement (Incorporated
by reference to Exhibit II to the Form 8-K
for event which occurred on February 29, 1996.)
10.8 Note Purchase Agreement dated May 30, 1996.
10.9 CCMS Merger Agreement
10.10 Enterprise Stock Purchase Agreement
22 Subsidiaries of the Registrant**
23.1 Consent of Cohen Brame & Smith, Professional
Corporation** (included in Exhibit 5.1 above)
23.2 Consent of BDO Seidman, LLP*
_________________
* Filed herewith.
EXHIBIT 5.1
OPINION OF COHEN BRAME & SMITH PROFESSIONAL CORPORATION
COHEN BRAME & SMITH
Professional Corporation
Attorneys at Law
One Norwest Center Suite 1800
1700 Lincoln Street
Denver, Colorado 80203
July 19, 1996
Robert W. Lautz, Jr., President
IndeNet, Inc.
1640 North Gower Street
Los Angeles, California 90028
RE: Form S-3 Registration Statement relating to shares
of $.001 Par Value Common Stock for Selling
Shareholders
Dear Mr. Lautz:
We have acted as counsel for IndeNet, Inc. ("INDE") in
connection with the Form S-3 Registration Statement to be filed
by INDE with the Securities and Exchange Commission relating to
the shares of INDE $.001 par value Common Stock (the "Common
Stock") being offered for sale by certain selling shareholders.
As such counsel, we have examined and relied upon such records,
documents, certificates and other instruments as in our judgment
are necessary or appropriate to form the basis for the opinions
hereinafter set forth.
Based upon the foregoing, we are of the opinion that:
(i) INDE is a corporation duly incorporated and validly
existing in good standing under the laws of the State of
Delaware.
(ii) The shares of Common Stock being offered, when sold in
accordance with the terms set forth in the Registration
Statement, will be validly issued and outstanding, fully paid and
nonassessable.
We consent to the filing of this opinion as an Exhibit to
the Registration Statement and to the reference to us under the
caption "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Roger V. Davidson
Roger V. Davidson
Cohen Brame & Smith,
Professional Corporation
EXHIBIT 23.2
CONSENT OF BDO SEIDMAN, LLP
COHEN BRAME & SMITH
Professional Corporation
Attorneys at Law
One Norwest Center Suite 1800
1700 Lincoln Street
Denver, Colorado 80203
July 19, 1996
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
IndeNet, Inc.
Los Angeles, CA
We hereby consent to the incorporation by reference in the
Prospectus constituting a part of the Registration Statement on
Form S-3 of our report dated June 18, 1996, relating to the
consolidated financial statements of IndeNet, Inc. appearing in
the Company's Annual Report on Form 10-KSB for the year ended
March 31, 1996.
We also consent to the reference to us under the caption
"Experts" in the Prospectus.
/s/ BDO SEIDMAN, LLP
Los Angeles, CA
July 19, 1996
