<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 2, 1999
REGISTRATION NO. 333-75733
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
NEW FRONTIER MEDIA, INC.
(Name of registrant as specified in its charter)
<TABLE>
<S> <C>
COLORADO 84-1084061
(State or jurisdiction of incorporation or (IRS Employer Identification No.)
organization)
5435 Airport Blvd, Suite 100 MICHAEL WEINER
Boulder, CO 80301 5435 Airport Blvd, Suite 100
(303) 444-0900 Boulder, CO 80301
Facsimile No.: (303) 444-0734 (303) 444-0900
(Address, including zip code, and telephone number, (Address, including zip code, and telephone number,
including area code, of registrant's principal including area code, of agent for service)
executive offices)
</TABLE>
------------------------------
Copy to:
Hank Gracin, Esq.
Lehman & Eilen
50 Charles Lindbergh Boulevard, Suite 505
Uniondale, New York 11553
(516) 222-0888 Facsimile (516) 222-0948
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE
SECURITIES TO THE PUBLIC: As soon as practicable after the effective date of
this registration statement.
If 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 plan, please check the following box: /X/
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box: / /
------------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO OFFERING PRICE OFFERING REGISTRATION
REGISTERED BE REGISTERED PER SHARE(1) PRICE(1) FEE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.0001 per
share........................... 2,610,000 $3.969 $10,359,090 $3,055.93(2)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee. The
Proposed Maximum Aggregate Offering Price was calculated pursuant to Rule
457(c) under the Securities Act of 1933, as amended, on the basis of the
closing price reported in the NASDAQ SmallCap Market system on April 5,
1999.
(2) Previously Paid.
------------------------------
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the commission, acting pursuant to said
Section 8(a), may determine.
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- --------------------------------------------------------------------------------
Pursuant to Rule 429 of the Securities Act of 1933, the
prospectus included in this registration statement also relates to certain
unsold securities of the Registrant registered under registration statement No.
333-35337.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND THE SELLING STOCKHOLDERS ARE NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION DATED AUGUST 2, 1999
PROSPECTUS
NEW FRONTIER MEDIA, INC.
2,610,000 SHARES OF COMMON STOCK
------------------------------
The 2,610,000 shares of common stock are being offered by
the selling stockholders. The common stock currently trades on the NASDAQ
SmallCap Market under the symbol "NOOF". On July 30, 1999, the last sale price
of the common stock as reported on NASDAQ was $8 5/16 per share.
The common stock may be sold by the selling stockholders
directly or through underwriters, dealers or agents in market transactions or
privately negotiated transactions.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
This investment involves a high degree of risk. Consider
carefully the risk factors beginning on page 5 in this prospectus.
The date of this prospectus is , 1999
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information contained
elsewhere in this prospectus. It is not complete and may not contain all of the
information that is important to you. To understand this offering fully, you
should read the entire prospectus carefully, including the risk factors and
financial statements.
NEW FRONTIER MEDIA, INC.
Offices: 5435 Airport Blvd, Suite 100,
Boulder, Colorado 80301
Telephone number (303) 444-0900
Facsimile number (303) 444-0734
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered by Selling
Stockholders................................. 2,610,000 shares.
Common Stock to be offered by the Company.... 0 shares
Common Stock Outstanding Before Offering
(1).......................................... 12,539,517 shares
Common Stock Outstanding After Offering...... 12,539,517 shares
Use of Proceeds.............................. All of the shares offered by this prospectus
are being offered by the selling
stockholders. New Frontier Media will not
receive any proceeds from these sales of its
stock.
</TABLE>
- ---------------------
(1) Based on shares outstanding as of July 30, 1999.
RECENT EVENTS
On July 27, 1999, New Frontier Media announced that it had
executed a definitive license agreement to acquire exclusive electronic rights
to Metro Global Media, Inc.'s 3,000 title adult film and video library and
multi-million still image archive for a period of seven years with renewal
provisions. In addition, New Frontier Media entered into a multi-year production
agreement with Metro Global Media, Inc. which calls for the development of an
additional 400 new adult feature titles over the next five years.
Under the agreement, New Frontier Media will issue 500,000
restricted shares of its common stock to Metro in exchange for distribution
rights to its 3,000 adult film and video library and its multi-million still
image archive. Metro will also receive cash consideration for the production of
over 400 new titles and the exclusive electronic distribution rights to those
titles.
The licensing agreement provides New Frontier Media the
right to utilize Metro's adult film and video library for all formats of
electronic delivery, including dial-up internet, broadband internet,
video-on-demand, subscription and pay television, and other video delivery
mechanisms.
In a June 2, 1999 complaint filed in District Court in
Boulder, Colorado (Case No. 99CV913), Scott Wussow, our former chief financial
officer, seeks to enforce an alleged oral agreement to increase his salary,
bonus and car allowance, and issue to him warrants to purchase up to
300,000 shares of our common stock, following the Company's public offering of
February 1998. We dispute that there was any promise or agreement, oral or
otherwise, made to or with Mr. Wussow to increase his compensation. We intend to
vigorously defend against Mr. Wussow's claim. In the event we do not prevail in
this case, we estimate our total potential liability to be less than $200,000.
RISK FACTORS
This prospectus and the documents incorporated in this
prospectus by reference may contain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. These forward-looking statements are based on current expectations,
estimates and
3
<PAGE>
projections about our industry, management's beliefs and assumptions made by
management. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict.
Accordingly, actual results may differ materially from those
expressed or forecasted in any such forward-looking statements. Such risks and
uncertainties include those risk factors and such other uncertainties noted in
the prospectus and in the documents incorporated herein by reference. New
Frontier assumes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
NEW FRONTIER MEDIA HAS INCURRED LOSSES FROM INCEPTION AND MAY NEVER GENERATE
SUBSTANTIAL PROFITS, IF ANY AT ALL.
We were organized in July, 1995 and have incurred losses
from inception. We may never generate substantial profits, if any at all. We
incurred a net loss of $7,581,124, or $1.04 per share, on revenues of $9,452,432
for the fiscal year ended March 31, 1999 and a net loss of $3,258,343, or $.73
per share, on revenues of $712,581 for the fiscal year ended March 31, 1998. As
of March 31, 1999 we had an accumulated deficit of $10,278,197. Our ability to
operate profitably is dependent upon successful execution of our business plan.
LIMITS ON OUR ACCESS TO DISTRIBUTION CHANNELS COULD CAUSE US TO LOSE SUBSCRIBER
REVENUES AND ADVERSELY AFFECT OUR OPERATING PERFORMANCE.
Our satellite uplink providers' services are critical to us.
If our satellite uplink providers fail to provide the services contracted for
with them, our satellite programming operations would in all likelihood be
suspended, resulting in a loss of substantial revenues to the Company. If our
satellite uplink providers improperly manage their uplink facilities, we could
experience signal disruptions and other quality problems that, if not
immediately addressed, could cause us to lose subscribers and subscriber
revenues.
Our continued access to satellite transponders is critical
to us. Our satellite programming operations require continued access to
satellite transponders to transmit programming to our subscribers. We also use
satellite transponders to transmit programming to cable operators. Material
limitations to satellite transponder capacity could materially adversely affect
our operating performance. Access to transponders may be restricted or denied
if:
* we or the satellite owner is indicted or otherwise
charged as a defendant in a criminal proceeding;
* the FCC issues an order initiating a proceeding to
revoke the satellite owner's authorization to operate the satellite;
* the satellite owner is ordered by a court or
governmental authority to deny us access to the transponder;
* we are deemed by a governmental authority to have
violated any obscenity law; or
* our satellite transponder provider determines that
the content of our programming is harmful to its name or business.
In addition to the above, the access of our networks to
transponders may be restricted or denied if a governmental authority commences
an investigation concerning the content of the transmissions.
Our ability to convince cable operators to carry our
programming is critical to us. The primary way for us to expand our cable
subscriber base is to convince additional cable operators to carry our
programming. We can give no assurance, however, that our efforts to increase our
base of cable subscribers will be successful.
4
<PAGE>
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH OUR PRIMARY COMPETITOR, WHO HAS
SIGNIFICANTLY GREATER RESOURCES THAN US, WE WILL NOT BE ABLE TO INCREASE
SUBSCRIBER REVENUES OR GENERATE PROFITS.
Our ability to increase subscriber revenues and operate
profitably, is directly related to our ability to compete effectively with
Playboy, our principal competitor. Playboy has significantly greater financial,
sales, marketing and other resources to devote to the development, promotion and
sale of its cable programming products, as well as a longer operating history
and broader name recognition, than we do. We compete with Playboy as to the
editing standards of its programming, network performance in terms of subscriber
buy rates and the license fees that we offer to cable and DBS system providers.
IF WE ARE UNABLE TO COMPETE EFFECTIVELY WITH OTHER FORMS OF ADULT AND NON-ADULT
ENTERTAINMENT, WE WILL ALSO NOT BE ABLE TO INCREASE SUBSCRIBER REVENUES OR
GENERATE PROFITS.
Our ability to increase subscriber revenues and operate
profitably, is also related to our ability to compete effectively with other
forms of adult and non-adult entertainment. The Company faces competition in the
adult entertainment industry from other providers of adult programming, adult
video rentals and sales, newspapers and magazines aimed at adult consumers,
adult oriented telephone chat lines, and adult oriented Internet services. To a
lesser extent, we also face general competition from other forms of non-adult
entertainment, including sporting and cultural events, other television
networks, feature films and other programming.
IF WE ARE NOT BE ABLE TO RETAIN OUR KEY EXECUTIVES OUR OPERATING PERFORMANCE
COULD BE ADVERSELY AFFECTED.
As a small company with approximately 45 employees, our
success depends upon the contributions of our executive officers and our other
key technical personnel. The loss of the services of any of our executive
officers or other key personnel could have a significant adverse effect on our
business and operating results. We cannot assure that New Frontier Media will be
successful in attracting and retaining these personnel. It may also be more
difficult for us to attract and recruit new personnel due to the adult nature of
our business.
OUR INABILITY TO IDENTIFY, FUND THE INVESTMENT IN, AND COMMERCIALLY EXPLOIT NEW
TECHNOLOGY COULD HAVE AN ADVERSE IMPACT ON OUR FINANCIAL CONDITION.
We are engaged in a business that has experienced tremendous
technological change over the past two years. As a result, we face all the risks
inherent in businesses that are subject to rapid technological advancement, such
as the possibility that a technology that we have invested in may become
obsolete. In that event, we may be required to invest in new technology. Our
inability to identify, fund the investment in, and commercially exploit such new
technology could have an adverse impact on our financial condition. Our ability
to implement our business plan and to achieve the results projected by
management will be dependent upon management's ability to predict technological
advances and implement strategies to take advantage of such changes.
GOVERNMENT REGULATION OF CABLE SYSTEM OPERATORS COULD ADVERSELY AFFECT OUR
OPERATING PERFORMANCE.
Telecommunications Act of 1996. The Telecommunications Act
of 1996 appears to have slowed growth in cable access for domestic pay
television businesses. For example, Federal Communications Commission
regulation, including the "going-forward rules," provides cable operators with
incentives to add basic services. Competition for channel space has increased as
cable operators have utilized available channel space to comply with
"must-carry" provisions, mandated retransmission consent agreements and "leased
access" provisions. In addition, we believe that growth will continue to be slow
in the next two to three years as the cable television industry responds to the
FCC's rules and subsequent modifications. We cannot assure you that the growth
will not slow further in the future.
Section 505 of the Telecommunications Act. Section 505 of
the Telecommunications Act effectively requires each cable system that offers
adult programming either to:
5
<PAGE>
* install additional blocking technology in each
household to prevent any momentary fragments of our content from accidentally
becoming available to non-subscribing cable customers or
* restrict the period during which adult programming is
transmitted to the hours between 10:00 p.m. and 6:00 a.m.
Although a United States District Court has unanimously
declared this law unconstitutional and blocked its implementation, the decision
has been appealed and accepted for review by the U.S. Supreme Court. The results
of our operations could be adversely affected if Section 505 is found
constitutional in a reversal of the court decision or if cable operators
restrict the hours of transmission of our programming until all appeals have
been exhausted.
NEGATIVE PUBLICITY, LAWSUITS OR BOYCOTTS BY OPPONENTS OF ADULT CONTENT COULD
ADVERSELY AFFECT OUR OPERATING PERFORMANCE AND DISCOURAGE INVESTORS FROM
INVESTING IN OUR PUBLICLY TRADED SECURITIES.
We could become a target of negative publicity, lawsuits or
boycotts by one or more advocacy groups who oppose the distribution of "adult
entertainment." These groups have mounted negative publicity campaigns, filed
lawsuits and encouraged boycotts against companies whose businesses involve
adult entertainment. The costs of defending against any such negative publicity,
lawsuits or boycotts could be significant, could hurt our finances and could
discourage investors from investing in our publicly traded securities. To date,
we have not been a target of any of these advocacy groups. As a leading provider
of adult entertainment, we can not assure you that we may not become a target in
the future.
IF WE ARE UNABLE TO OBTAIN ADDITIONAL FUNDS IN A TIMELY MANNER OR ON ACCEPTABLE
TERMS, WE MAY HAVE TO CURTAIL OR SUSPEND THE PLANNED EXPANSION AND MARKETING
EFFORT, WHICH COULD HAVE A SIGNIFICANT EFFECT ON OUR BUSINESS RELATIONSHIPS,
FINANCIAL RESULTS AND PROSPECTS, WHICH IN TURN COULD LEAD TO OVERALL LOWER
REVENUE.
If we are unable to obtain additional funds in a timely
manner or on acceptable terms, we may have to curtail or, as a last resort,
suspend the planned expansion of our playout facility and the planned marketing
effort for TeN and Pleasure, which could have a significant adverse effect on
our business relationships, financial results and prospects, which in turn could
lead to lower overall revenues. For example, any reduction in our marketing
effort for TeN and Pleasure is likely to adversely affect our business
relationships with those cable operators who have chosen to discontinue
Playboy's programming in favor of ours if the lack of marketing efforts on our
part results in such operators losing subscriber revenues. We anticipate that
our capital resources will be sufficient to satisfy our capital requirements for
our current operations for the next 12 months. We will need, however, additional
funds to upgrade and expand our playout facility to incorporate the Extasy
Networks at our Boulder, Colorado facility and to aggressively market TeN and
our new Pleasure channel to increase carriage among the MSO community. We expect
to receive as much as $9.75 million through the exercise of our 1,500,000
publicly traded warrants, which are currently excercisable at $6.50, which is
below current market levels. In the event that we do not receive at least $5.0
million through the exercise of our public warrants, we will need to raise
additional funds.
BECAUSE WE ARE INVOLVED IN THE ADULT PROGRAMMING BUSINESS, IT MAY BE MORE
DIFFICULT FOR IT TO RAISE MONEY OR ATTRACT MARKET SUPPORT FOR OUR STOCK.
Some investors, investment banking entities, market makers,
lenders and others in the investment community may decide not to provide
financing to us, or to participate in our public market or other activities due
to the nature of our business, which, in turn, may hurt the value of our stock,
and our ability to attract market support.
6
<PAGE>
BECAUSE IT MAY BE DIFFICULT TO EFFECT A CHANGE IN CONTROL OF NEW FRONTIER MEDIA
WITHOUT CURRENT MANAGEMENT'S CONSENT, A POTENTIAL SUITOR WHO OTHERWISE MIGHT BE
WILLING TO PAY A PREMIUM FOR ACQUIRING OUR COMPANY MAY DECIDE NOT TO ATTEMPT AN
ACQUISITION OF NEW FRONTIER MEDIA.
Issuance of a shareholder rights plan in the form of a
preferred stock could have the effect of delaying, deferring or preventing a
change in control of New Frontier Media. Potential suitors who otherwise might
be willing to pay a premium to acquire New Frontier Media may decide not to try
to acquire us because it may be difficult to effect a change in control of New
Frontier Media without current management's consent. New Frontier Media's board
of directors has the authority to issue up to 5,000,000 shares of preferred
stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of such stock without further shareholder
approval. The rights of the holders of common stock will be subjected to, and
may also be adversely affected by, the rights of the holders of any preferred
stock that may be issued in the future.
FUTURE SALES OF COMMON STOCK MAY CAUSE THE MARKET PRICE OF THE COMMON STOCK TO
DROP.
Future sales of shares of common stock by New Frontier Media
and/or its stockholders could cause the market price of the common stock to
drop. There are currently 5,377,433 restricted shares and 7,162,084 shares of
common stock which are freely tradable or eligible to have the restrictive
legend removed pursuant to Rule 144(k) promulgated under the Securities Act. Of
the 5,377,433 restricted shares, 1,988,800 of such shares are currently eligible
for resale under Rule 144. Sales of substantial amounts of common stock in the
public market, or the perception that such sales may occur, could have a
significant adverse effect on the market price of the common stock.
WE ARE SUBJECT TO A COUNTER-CLAIM FOR UNSPECIFIED DAMAGES IN A SUIT WITH A
FORMER FINANCIAL ADVISOR AND IF WE DO NOT PREVAIL IN THIS LAWSUIT WE COULD
SUFFER A MATERIAL FINANCIAL LOSS.
On October 3, 1997, we filed a complaint in District Court
in Boulder, Colorado (Case No. 97 CV 1428) against Sands Brothers & Co. Ltd.
alleging breach by Sands Brothers of the terms of a financial consulting
agreement with us. We also alleged fraud in the inducement, and are seeking
return of our initial payment of $25,000 to Sands Brothers and rescission of the
agreement. Sands Brothers has filed an answer and counter-claim to our complaint
seeking unspecified damages, and we have filed an answer to Sands Brothers
counter-claim. If we do not prevail in this lawsuit we could suffer a material
financial loss. We intend to vigorously pursue our claim against, and defend the
counter-claim from, Sands Brothers.
WE HAVE BEEN SUED BY A PROSPECTIVE INVESTOR SEEKING TO ENFORCE AN ALLEGED
AGREEMENT TO CONVEY A 70% EQUITY INTEREST IN NEW FRONTIER MEDIA AND IF WE DO NOT
PREVAIL IN THIS LAWSUIT WE COULD SUFFER A MATERIAL FINANCIAL LOSS.
In a January 25, 1999 amended complaint in District Court in
Boulder, Colorado, (Case No. 99CV30), J.P. Lipson seeks to enforce an alleged
agreement by New Frontier Media to convey to Lipson a 70% equity interest in New
Frontier Media. Lipson is also seeking large and/or unspecified damages. If we
do not prevail in this lawsuit, we could suffer a material financial loss. We
dispute that there exists a binding and enforceable agreement to transfer any
equity interest in New Frontier Media to Lipson and filed on February 10, 1999 a
motion for partial summary judgement directed to this issue. To date the Court
has neither ruled on nor set our motion for a hearing. We will continue to
vigorously defend against Lipson's claims.
THE YEAR 2000 PROBLEM COULD CAUSE US TO SUFFER BUSINESS INTERRUPTIONS, OR
SHUTDOWN, REPUTATIONAL HARM OR LEGAL LIABILITY, AND AS A RESULT, MATERIAL
FINANCIAL LOSS.
We recognize that we, like all other businesses, are at risk
if key suppliers in utilities, communications, transportation, banking and
government are not ready for the year 2000. We also are at risk if the cable or
dbs operators with whom we do business are not ready for the year 2000. It is
also possible that our computer software applications, internal accounting,
customer billing and other
7
<PAGE>
business systems, working either alone or in conjunction with those of third
parties who do business with us, will not accept input of, store, manipulate and
output dates in the year 2000 or after without error. If any of this were to
happen, we may suffer business interruptions or shutdown, reputational harm or
legal liability and, as a result, material financial loss.
SHAREHOLDERS MAY NOT BE ABLE TO RE-SELL THEIR STOCK OR MAY HAVE TO SELL AT
PRICES SUBSTANTIALLY LOWER THAN THE PRICE THEY PAID FOR IT.
The trading price for the common stock has been highly
volatile and could continue to be subject to significant fluctuations in
response to variations in our quarterly operating results, general conditions in
the adult entertainment industry or the general economy, and other factors. In
addition, the stock market is subject to price and volume fluctuations affecting
the market price for public companies generally, or within broad industry
groups, which fluctuations may be unrelated to the operating results or other
circumstances of a particular company. Such fluctuations may adversely affect
the liquidity of the common stock, as well as the price that holders may achieve
for their shares upon any future sale.
INDEMNIFICATION
Our Bylaws require us, to the fullest extent permitted or required by Colorado
law, to:
* indemnify our directors against any and all
liabilities and
* advance any and all reasonable expenses incurred in
any proceeding to which any such director is a party or in which such director
is deposed or called to testify as a witness because he or she is or was a
director of New Frontier Media.
Generally, Colorado statutory law permits indemnification of
a director upon a determination that he or she acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The right to indemnification granted in our Bylaws is not exclusive of any other
rights to indemnification against liabilities or the advancement of expenses
which a director may be entitled to under any written agreement, Board
resolution, vote of stockholders, Colorado law or otherwise.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant under 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.
SELECTED FINANCIAL AND OPERATING DATA
The following selected financial and operating data should
be read in conjunction with New Frontier Media's consolidated financial
statements and the notes to these statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in New
Frontier Media's Annual Report on Form 10-KSB for the Twelve Months Ended March
31, 1999 and March 31, 1998. The balance sheet data and statement of operations
data as of and for the years ended March 31, 1999 and 1998 are derived from the
consolidated financial statements of New Frontier Media, incorporated by
reference herein, that have been audited by Spicer, Jeffries & Co., independent
accountants.
8
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
<S> <C> <C>
1999 1998
----------- -----------
STATEMENT OF OPERATIONS DATA:
Revenues, net........................................... $ 9,452,432 $ 712,581
Cost of Sales........................................... 8,800,203 1,041,925
----------- -----------
Gross profit (loss)..................................... 652,229 (329,344)
Total operating expenses............ 7,708,346 1,310,642
----------- -----------
Total other income (expenses)....... (208,061) (159,454)
----------- -----------
Loss from Discontinued Operations....................... (7,264,178) (1,799,440)
Discontinued operations................................. (316,946) (1,458,903)
----------- -----------
Net loss................................................ (7,581,124) $(3,258,343)
----------- -----------
----------- -----------
Basic net loss per share from continuing operations..... ($ 1.00) $ (.40)
----------- -----------
----------- -----------
Basic net loss per share from discontinued operations... ($ .04) $ (.33)
----------- -----------
----------- -----------
Basic net loss per share................................ (1.04) $ (0.73)
----------- -----------
----------- -----------
Diluted net loss per share.............................. (1.04) $ (0.73)
----------- -----------
----------- -----------
Weighted-average shares outstanding..................... 7,288,453 4,460,744
----------- -----------
----------- -----------
BALANCE SHEET DATA:
Working Capital (Deficit)............................... $ 266,301 $ 1,013,736
Total assets............................................ 16,402,571 10,747,949
Long-term debt, net of current portion.................. 474,430 6,716
Stockholders' equity.................................... 10,289,031 8,447,752
</TABLE>
MARKET PRICE OF COMMON STOCK
Prior to February 11, 1998, a limited public market for New
Frontier Media common stock existed on the NASDAQ Bulletin Board under the
symbol NOOF. Commencing on February 11, 1998, our common stock and units were
quoted on the Nasdaq SmallCap Market under the symbols NOOF and NOOFU,
respectively. As of the close of business on May 18, 1998, we split the units
into their component parts, consisting of one share of common stock and one
redeemable common stock purchase warrant. Commencing on May 19, 1998, our
warrants were quoted on the Nasdaq SmallCap Market under the symbol NOOFW. On
July 30, 1999, the last sale price for our common stock as reported on NASDAQ
was $8 5/8 per share.
The following table sets forth the high and low closing
prices for the Common Stock as reported on NASDAQ for each quarter since
September 30, 1997 for the periods indicated. Such information reflects inter
dealer prices without retail mark-up, mark down or commissions and may not
represent actual transactions.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
------------------------------------------------------- --------- ---------
<S> <C> <C>
September 30, 1997..................................... 5 1/2 5
December 31, 1997...................................... 5 3/4 4 3/4
March 31, 1998......................................... 5 1/4 2 7/8
June 30, 1998.......................................... 4 1/4 2 3/4
September 30, 1998..................................... 3 11/16 19/32
December 31, 1998...................................... 1 5/8 13/16
March 31, 1999......................................... 5 3/8 14/16
</TABLE>
We have not paid any dividends on our common stock. We
currently intend to retain any earnings for use in our business, and do not
anticipate paying cash dividends in the foreseeable future.
As of July 31, 1999, there were approximately 340 record
holders of our common stock.
9
<PAGE>
WHERE YOU CAN GET MORE INFORMATION
At your request, we will provide you, without charge, a copy
of any exhibits to our registration statement incorporated by reference in this
prospectus. If you want more information, write or call us at:
New Frontier Media, Inc.
5435 Airport Blvd, Suite 100
Boulder, Colorado 80301
Telephone number: (303) 444-0900
Toll Free number: 1-888-875-0632
Facsimile number: (303) 444-0734
Our fiscal year ends on March 31. We furnish our
shareholders annual reports containing audited financial statements and other
appropriate reports. In addition, we are a reporting company and file annual,
quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy any reports, statements or other information we file
at the SEC's public reference room in Washington D.C. You can request copies of
these documents, upon payment of a duplicating fee, by writing to the SEC.
Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. Our SEC filings are also available to the public
on the SEC Internet site at http:\\www.sec.gov.
The SEC allows us to "incorporate by reference" the
information we file with them, which means that we can disclose important
information to you by referring you to these documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below, which we have already filed with the SEC, and any future filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the selling shareholders sell all of the securities offered by
this prospectus.
<TABLE>
<CAPTION>
New Frontier Sec Filings (File No. 0-23697) Period
----------------------------------------------------------------- ----------------
<S> <C>
Year ended
Annual Report on Form 10KSB/A March 31, 1999
</TABLE>
This prospectus is part of a registration statement we filed
with the SEC.
You should rely on the information incorporated by reference
or provided in this prospectus. We have not authorized anyone to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus or the documents incorporated by reference is
accurate as of any date other than the date on the front of this prospectus or
those documents.
REGISTRATION RIGHTS
In connection with our private placement of 2,610,000 shares
of common stock on March 5, 1999 and pursuant to the terms of sixteen (16)
subscription agreements dated as of March 5, 1999, by and between New Frontier
Media and each of the selling stockholders, we are obligated to use our best
efforts to cause this registration statement to become effective by August 5,
1999. We are further obligated to register and qualify the registerable shares
under such state securities laws as the selling stockholders may reasonably
request. We will bear the reasonable expenses of the registration and
qualification of the shares under the Securities Act and state securities laws
other than any underwriting discounts and commissions and the expenses of
counsel for the selling stockholders.
If the registration statement is not effective by August 5,
1999, then New Frontier Media must make payments to the selling stockholders in
such amounts and at such times as are determined pursuant to Section 5(b)(iii)
of the subscription agreements, which states that the amount to be paid by us to
the selling stockholders shall be equal to five (5%) percent per month of the
purchase price paid by the selling stockholders for the common stock. Thus, if
the registration statement is not effective by
10
<PAGE>
August 5, 1999, then for the period from August 5, 1999 to September 5, 1999, we
must pay to the selling stockholders a penalty of $261,000. If the registration
statement still is not effective on September 5, 1999, then for the period from
September 5, 1999 to October 5, 1999, we must pay to the selling stockholders an
additional penalty of $261,000, and so on.
USE OF PROCEEDS FROM SALE OF COMMON STOCK
None of the proceeds from the sale of the common stock
registered under this prospectus will accrue to New Frontier.
Through private placement, New Frontier has obtained
$5,220,000 of financing from the sale of 2,610,000 shares of common stock at a
price of $2.00 per share, exclusive of fees and other expenses related to this
sale.
We have used $1,518,872 of the proceeds to repay $1,485,000
principal amount of short-term indebtedness incurred to finance our business
operations, of which $700,000 did not bear interest, $700,000 bore interest at
20% per annum and $85,000 bore interest at 8.5%. The balance of the proceeds of
the sale of the common stock was used to pay for monthly transponder, uplinking
and call center expenses, payroll, annual fees for satellite activation access,
receiver/decoder equipment purchases, content licensing fees, legal and
professional fees, as well as other working capital expenditures.
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
The selling stockholders whose shares of common stock are
being registered hereunder are: Robertson Stephens Diversified Cash Fund, Anglo
Irish Bank Corp. plc, Alderwood Securities Limited, Cheltenham Securities Ltd.,
Boston Securities Australia Limited, Hathaway Partners Investment L.P., Special
Situations Private Equity Fund L.P., Talisman Capital Opportunity Fund Ltd.,
Talisman Capital Inc., Zeke, L.P., August C. Schultes and Mark S. Alsentzer, as
tenants in common, Ben Hasten, Mark Hess, and Raymond Martine.
Robertson Stephens is a Massachusetts corporation with a
principal place of business at 555 California Street, Suite 2600, San Francisco,
California 94104.
Anglo Irish is an Irish corporation with a principal place
of business at 18/21 St. Stephens Grove, Dublin 2, Ireland.
Alderwood is a British Virgin Islands corporation with a
principal place of business at c/24 Bd. Princess Charlotte, Monaco.
Cheltenham is an English corporation with a principal place
of business at Westhead House, Wigan Road Lathom, Ormskire Lancashire L406JN
England.
Boston is an Australian corporation with a principal place
of business at 400 Upper Toyan Drive, Kentfield, Australia 94924.
Hathaway is a Connecticut corporation with a principal place
of business at 119 Rowayton Avenue, Rowayton, Connecticut 06853.
Special Situations is a New York limited partnership with a
principal place of business at 153 East 53rd Street, New York, New York 10022.
Talisman is a British Virgin Islands corporation with a
principal place of business at 16101 La Grande Drive, Suite 100, Little Rock,
Arkansas 72223.
TCI is a British Virgin Islands corporation with a principal
place of business at 16101 La Grande Drive, Suite 100, Little Rock, Arkansas
72223.
Zeke is a Delaware corporation with a principal place of
business at 1235 Westgates Drive, Borogn, Pennsylvania 19312.
11
<PAGE>
Schultes and Alsentzer are individuals with an address at
101 Jessup Road, Thorofare, New Jersey 08086.
Hasten is an individual with an address at 366 Elm Street,
Denver, Colorado 80220.
Hess is an individual with an address at 4311 Down Point
Lane, Windermere, Florida 34786.
Martine is an individual with an address at 8 Kensington
Court Place, London W85BT England.
No Selling Stockholder has any affiliation with New Frontier
Media or its officers, directors, promoters or principal shareholders.
Neither Anglo Irish, Alderwood, Cheltenham, Boston nor
Martine has a domestic agent for service of process. It may be difficult for
United States investors to effect service within the United States upon Martine
or Anglo Irish, Alderwood, Cheltenham and/or Boston and their respective
officers and directors, or to realize in the United States upon judgments
rendered against Martine or Anglo Irish, Alderwood, Cheltenham and/or Boston and
their respective officers and directors by courts of the United States
predicated upon civil liabilities under the Securities Act of 1933 ("Securities
Act") or state securities law.
New Frontier has agreed to register the public offering of
the selling stockholders' shares of common stock under the Securities Act and to
pay all expenses in connection with such registration, other than brokerage
commissions and discounts in connection with the sale of the common stock and
the expenses of counsel.
The following table sets forth the names of the selling
stockholders, the number of shares of common stock owned beneficially by each of
the selling stockholders as of March 31, 1999, the number of shares which may be
offered for resale pursuant to this prospectus and the number of shares of
common stock owned beneficially by each of the selling stockholders after the
offering.
The information included below is based upon information
provided by the selling stockholders. Because the selling stockholders may offer
all, some or none of their common stock, no definitive estimate as to the number
of shares that will be held by the selling stockholders after such offering can
be provided and the following table has been prepared on the assumption that all
shares of common stock offered under this prospectus will be sold.
12
<PAGE>
<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK SHARES OF COMMON STOCK
BENEFICIALLY COMMON BENEFICIALLY
OWNED PRIOR TO STOCK BEING OWNED AFTER
NAME OF SELLING STOCKHOLDER (1) OFFERING(2) OFFERED OFFERING(3) PERCENT (4)
- ------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Robertson Stephens Diversified
Cash Fund.............. 500,000 500,000 0 0%
Anglo Irish Bank Corp. plc..... 20,000 20,000 0 0
Alderwood Securities Limited... 650,000 650,000 0 0
Cheltenham Securities Ltd...... 25,000 25,000 0 0
Boston Securities Australia
Limited................ 25,000 25,000 0 0
Hathaway Partners Investment
L.P.................... 50,000 50,000 0 0
Special Situations Private
Equity Fund L.P........ 300,000 300,000 0 0
Talisman Capital Opportunity
Fund Ltd............... 225,000 225,000 0 0
Talisman Capital Inc........... 25,000 25,000 0 0
Zeke, L.P...................... 200,000 200,000 0 0
August C. Schultes and Mark S.
Alsentzer.............. 500,000 500,000 0 0
Ben Hasten..................... 25,000 25,000 0 0
Mark Hess...................... 25,000 25,000 0 0
Raymond Martine................ 40,000 40,000 0 0
---------- ---------- -- --
Total.......................... 2,610,000 2,610,000 0 0
</TABLE>
- ------------------------------------------------------------------------
(1) Each of the parties listed has sole voting and investment power with
respect to all shares of common stock indicated.
(2) Beneficial ownership is calculated in accordance with Rule 13d-3(d)
under the Exchange Act.
(3) Assumes the sale of all shares offered by this prospectus.
(4) Based upon 12,539,517 shares outstanding.
The selling stockholders' shares of common stock may be
offered and sold as market conditions permit, provided that a registration
statement covering the shares is effective at the time of such offer and/or
sale. Under Section 10(a)(3) of the Securities Act of 1933, when a prospectus is
used more than nine months after the effective date of the registration
statement, the information contained therein must be as of a date not more than
16 months prior to its use.
The selling stockholders' shares of common stock may be
offered and sold in the over-the-counter market, or otherwise, at prices and
terms then prevailing or at prices related to the then-current market price, or
in privately negotiated transactions. The selling stockholders' shares of common
stock may be sold by one or more of the following methods:
* a block trade in which a broker or dealer so engaged
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
* purchases by a broker or dealer as principal and
resale by such broker or dealer for its accounts pursuant to this prospectus;
* ordinary brokerage transactions and transactions in which the broker
solicits purchases; and
* transactions between sellers and purchasers without a broker or dealer.
In effecting sales, brokers or dealers engaged by selling
stockholders may arrange for other brokers or dealers to participate. These
brokers or dealers may receive commissions or discounts from selling
stockholders in amounts to be negotiated. These brokers and dealers and any
other participating
13
<PAGE>
brokers and dealers may be deemed to be "underwriters" within the meaning of the
Securities Act, in connection with these sales.
DESCRIPTION OF SECURITIES
As of the date of this prospectus, there are approximately
340 holders of record of New Frontier Media's common stock. We are currently
authorized to issue 50,000,000 shares of our common stock, par value $.0001 per
share, and 5,000,000 shares of its preferred stock, par value $.10 per share. As
of the date of this prospectus, New Frontier Media has 12,539,517 shares of its
common stock, and no shares of its preferred stock, issued and outstanding.
There are also options and warrants to purchase an additional 5,702,166 shares
of our common stock issued and outstanding.
COMMON STOCK
Each holder of shares of common stock is entitled to one
vote per share on all matters to be voted on by shareholders. The holders of
common stock are entitled to receive dividends, if any, as may be declared from
time to time by the board of directors out of funds legally available therefor
and, in the event of liquidation, dissolution or winding-up of New Frontier
Media, to share ratably in all assets available for distribution, subject to the
rights of the holders of any preferred stock as described below.
Upon the liquidation, dissolution or winding up of New
Frontier Media, the holders of shares of common stock would be entitled to share
pro rata in the distribution of all of New Frontier Media's assets remaining
available for distribution after satisfaction of all its liabilities and the
payment of the liquidation preference of any outstanding preferred stock. The
holders of common stock have no preemptive or conversion rights. All shares of
common stock outstanding as of the date of this prospectus are fully paid and
are not subject to further calls or assessments by the company. There are no
redemption or sinking fund provisions applicable to the common stock.
PREFERRED STOCK
Our Articles of Incorporation, as amended, authorize the
issuance of up to 5,000,000 shares of preferred stock. The board of directors is
authorized, without further shareholder action, to issue such shares in one or
more series, and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rates, conversion rights, voting rights, terms of
redemption, redemption prices, amounts payable upon liquidation and the number
of shares constituting any series or the designation of such series. If such
preferred stock is issued, it will rank senior to our common stock in respect of
rights to receive dividends and to participate in distributions or payments in
the event of an liquidation, dissolution or winding up of New Frontier Media.
The issuance of preferred stock may have the effect of delaying, deferring,
discouraging or preventing a third party from acquiring a majority of the
outstanding voting stock of New Frontier Media or other change in control of New
Frontier Media without further action by the shareholders, and may adversely
affect the voting and other rights of the holders of the common stock, including
the loss of voting control to others. The board of directors does not at present
intend to seek shareholder approval prior to issuing any such preferred stock,
unless required to do so by law.
DIVIDEND POLICY
We have not paid any cash or other dividends on our common
stock since our inception and do not anticipate paying any such dividends in the
foreseeable future. We intend to retain any earnings for use in our operations
and to finance the expansion of its business.
LEGAL MATTERS
The legality of the Shares offered hereby has been passed
upon for us by Thorburn, Sakol & Throne of Denver, Colorado.
14
<PAGE>
EXPERTS
The financial statements of New Frontier Media as of March
31, 1999 and 1998 and for the years ended March 31, 1999 and 1998, incorporated
by reference in this Prospectus from the Annual Report, have been incorporated
herein in reliance on the report of Spicer, Jeffries & Co., independent
certified public accountants, given on the authority of said firm as experts in
accounting and auditing.
15
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................................................. 3
The Offering....................................................... 3
Recent Events...................................................... 3
Risk Factors....................................................... 3
Indemnification.................................................... 8
Selected Financial and Operating Data.............................. 8
Market Price of Common Stock....................................... 9
Where You Can Get More Information................................. 10
Registration Rights................................................ 10
Use of Proceeds from Sale of Common Stock.......................... 11
Selling Stockholders and Plan of Distribution...................... 11
Description of Securities.......................................... 14
Dividend Policy.................................................... 14
Legal Matters...................................................... 14
Experts............................................................ 15
</TABLE>
<PAGE>
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Filing fee under the Securities Act of 1933........................ $ 3,055.93
Blue Sky qualification fees and expenses (1)....................... 1,000
Printing and engraving (1)......................................... 1,000
Legal Fees (1)..................................................... 25,000
Accounting Fees (1)................................................ 3,000
Miscellaneous (1).................................................. 1,944.07
Total.......................................... $ 35,000
</TABLE>
- ----------------------
(1) Estimates
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(I) ARTICLE 3, SECTION 3.17 OF THE COMPANY'S FIRST AMENDED
AND RESTATED BYLAWS PROVIDES AS FOLLOWS:
"SECTION 3.17
LIMITATIONS ON LIABILITY
To the fullest extent permitted by the Colorado Business
Corporation Act as the same exists or may hereafter be amended, a director of
the corporation shall not be liable to the corporation or its stockholders for
monetary damages for any action taken or any failure to take any action as a
director. Notwithstanding the foregoing, a director will have liability for
monetary damages for a breach or failure which involves: (i) a violation of
criminal law; (ii) a transaction from which the director derived an improper
personal benefit, either directly or indirectly; (iii) distributions in
violation of the Colorado Business Corporation Act or the Articles of the
corporation (but only to the extent provided by law); (iv) willful misconduct or
disregard for the best interests of the corporation concerning any acts or
omissions concerning any proceeding other than in the right of the corporation
or a shareholder; or (v) reckless, malicious or wanton acts or omissions
concerning any proceeding other than in the right of the corporation or of a
shareholder. No repeal, amendment or modification of this Article, whether
direct or indirect, shall eliminate or reduce its effect with respect to any act
or omission of a director of the corporation occurring prior to such repeal,
amendment or modification."
(ii) Article 3, Section 3.18 of the Company's First Amended
and Restated Bylaws provides as follows:
"SECTION 3.18
INDEMNIFICATION
Subject to and in accordance with the Colorado Business
Corporation Act, and except as may be expressly limited by the Articles of
Incorporation and any amendments thereto, the corporation shall indemnify any
person:
(i) made a party to any proceeding (other than an action
by, or in the right of, the corporation) by reason of the fact that he is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the corporation's request, as a director, officer, employee or
agent or another corporation, or other enterprise; or
(ii) who was or is a party to any proceeding by or in the
right of the corporation, to procure a judgement in its favor by reason of
the fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise. This indemnification shall be
mandatory in all circumstances in which indemnification is permitted by law.
The corporation may maintain indemnification insurance
regardless of its power to indemnify under the Colorado Business Corporation
Act.
II-1
<PAGE>
The corporation may make any other or further
indemnification or advancement of expenses of any of the directors, officers,
employees or agents under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and to action in another capacity while holding such office, except an
indemnification against material criminal or unlawful misconduct as set forth by
statute, or as to any transaction wherein the director derived an improper
personal benefit.
Except to the extent reimbursement shall be mandatory in
accordance herewith, the corporation shall have the right to refuse
indemnification, in whole or in part, in any instance in which the person to
whom indemnification would otherwise have been applicable, if he or she
unreasonably refused to permit the corporation, at its own expense and through
counsel of its own choosing, to defend him or her in the action, or unreasonably
refused to cooperate in the defense of such action."
ITEM 16. EXHIBITSTHE EXHIBITS ATTACHED HERETO ARE AS FOLLOWS:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------------------------------
<C> <S>
3.01 --Articles of Incorporation of Company, with Amendment*
3.02 --First Amended Bylaws of Company*
4.01 --Form of Common Stock Certificate*
5.01 --Opinion of Thorburn, Sakol & Throne, counsel to the Company, concerning the
legality of the securities being registered*****
10.01 --Asset Purchase Agreement Among the Company, CSB, Fifth Dimension
Communications (Barbados) Inc., and Merlin Sierra, Inc.*
10.02 --Asset Purchase Agreement Among the Company, CSB, and 1043133 Ontario Inc.*
10.03 --Asset Purchase Agreement Among the Company, CSB, and 1248663 Ontario Inc.*
10.04 --Revocable Line of Credit Agreement*
10.05 --Promissory Note*
10.06 --Call Center Interim Service Agreement between the Company and 1248663
Ontario Inc.*
10.07 --Settlement and Stock and Warrant Transfer Agreement, dated June 16, 1998, by
and among the Company, BIG, Quarto Holdings, Inc., New Frontier Media,
Inc., Mark Kreloff, Michael Weiner, Andrew Brandt and Scott Wussow**
10.08 --Form of Securities Purchase Agreement, dated March 5, 1999, by and between
the Company and each of the Selling Stockholders.****
10.09 --Employment Agreement, dated December 22, 1998, by and between the Company
and Mark Kreloff.****
10.10 --Employment Agreement, dated December 22, 1998, by and between the Company
and Michael Weiner.****
10.11 --Office Lease Agreement, dated August 12, 1998, for premises at 5435 Airport
Boulevard, Boulder CO.***
10.12 --Content License Agreement with Pleasure Productions LLC*****
21.01 --Subsidiaries of the Company***
23.01 --Consent of Spicer, Jefferies & Co.*****
23.02 --Consent of Thorburn, Sakol & Throne, counsel to the Company (included in
their opinion filed as Exhibit 5.01).*****
27.01 --Financial Data Schedule.***
</TABLE>
- ------------------------------------------------------------------------
* Incorporated by reference to the Company's Registration Statement on Form
SB-2 (File No. 333-35337)
** Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1998.
II-2
<PAGE>
*** Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1999.
**** Previously Filed.
***** Filed with this Registration Statement.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(a) That insofar as indemnification for liabilities arising
under the 1933 Act may be permitted to directors, officers and controlling
persons of the Company, 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 1933 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 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 of whether such
indemnification by it is against public policy as expressed in the 1933 Act, and
will be governed by the final adjudication of such issue.
(b) That, subject to the terms and conditions of Section 13
(a) of the Securities Exchange Act of 1934, it will file with the Securities and
Exchange Commission such supplementary and periodic information, documents and
reports as may be prescribed by any rule or regulation of the Commission
heretofore or hereafter duly adopted pursuant to authority conferred in that
section.
(c) That any post-effective amendment filed will comply with
the applicable form, rules and regulations of the Commission in effect at the
time such post-effective amendment is filed.
(d) 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 1933 Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; and
(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.
(e) That, for the purpose of determining any liability under
the 1933 Act, 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.
(f) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of this offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the 1933 Act, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
the requirements of filing on Form S-3 and has caused this Amendment No. 2 to
its Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Boulder, Colorado on August 2, 1999.
NEW FRONTIER MEDIA, INC.
By: /s/ Mark H. Kreloff
_______________________________________________
Mark H. Kreloff
President
Pursuant to the requirements of the 1933 Act, as amended,
this Registration Statement has been signed below by the following persons on
the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------- ----------------------
<C> <S> <C>
/s/ MARK H. KRELOFF Chairman, Chief Executive August 2, 1999
- ---------------------------------------- Officer and
Mark H. Kreloff President
/s/ MICHAEL WEINER Executive Vice President, August 2, 1999
- ---------------------------------------- Secretary, Treasurer
Michael Weiner and Director
/s/ KARYN MILLER Chief Financial Officer August 2, 1999
- ---------------------------------------- (Principal
Karyn Miller Accounting Officer)
/s/ KOUNG Y. WONG Director August 2, 1999
- ----------------------------------------
Koung Y. Wong
/s/ EDWARD J. BONN Director August 2, 1999
- ----------------------------------------
Edward J. Bonn
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------------------------------
<C> <S>
3.01 --Articles of Incorporation of Company, with Amendment*
3.02 --First Amended Bylaws of Company*
4.01 --Form of Common Stock Certificate*
5.01 --Opinion of Thorburn, Sakol & Throne, counsel to the Company, concerning the
legality of the securities being registered*****
10.01 --Asset Purchase Agreement Among the Company, CSB, Fifth Dimension
Communications (Barbados) Inc., and Merlin Sierra, Inc.*
10.02 --Asset Purchase Agreement Among the Company, CSB, and 1043133 Ontario Inc.*
10.03 --Asset Purchase Agreement Among the Company, CSB, and 1248663 Ontario Inc.*
10.04 --Revocable Line of Credit Agreement*
10.05 --Promissory Note*
10.06 --Call Center Interim Service Agreement between the Company and 1248663
Ontario Inc.*
10.07 --Settlement and Stock and Warrant Transfer Agreement, dated June 16, 1998, by
and among the Company, BIG, Quarto Holdings, Inc., New Frontier Media,
Inc., Mark Kreloff, Michael Weiner, Andrew Brandt and Scott Wussow**
10.08 --Form of Securities Purchase Agreement, dated March 5, 1999, by and between
the Company and each of the Selling Stockholders.****
10.09 --Employment Agreement, dated December 22, 1998, by and between the Company
and Mark Kreloff.****
10.10 --Employment Agreement, dated December 22, 1998, by and between the Company
and Michael Weiner.****
10.11 --Office Lease Agreement, dated August 12, 1998, for premises at 5435 Airport
Boulevard, Boulder, CO.***
10.12 --Content License Agreement with Pleasure Productions LLC*****
21.01 --Subsidiaries of the Company**
23.01 --Consent of Spicer, Jefferies & Co.*****
23.02 --Consent of Thorburn, Sakol & Throne, counsel to the Company (included in
their opinion filed as Exhibit 5.01).*****
27.01 --Financial Data Schedule.***
</TABLE>
- ------------------------------------------------------------------------
* Incorporated by reference to the Company's Registration Statement on Form
SB-2 (File No. 333-35337)
** Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1998.
*** Incorporated by reference to the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1999.
**** Previously Filed.
***** Filed with this Registration Statement.
II-5
EXHIBIT 5.1
THORBURN, SAKOL & THRONE
AN ASSOCIATION OF PROFESSIONAL CORPORATIONS
ATTORNEYS AND COUNSELLORS AT LAW
255 CANYON BOULEVARD AT CLOUD CREEK
SUITE 100
BOULDER, COLORADO 80302-4920
TELEPHONE (303) 449-1873
TELEFAX (303) 447-9840
August 2, 1999
Board of Directors
New Frontier Media, Inc.
5435 Airport Blvd., Suite 100
Boulder, CO 80301
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, this letter relates to the Registration
Statement on Form S-3 filed by New Frontier Media, Inc. (the "Company") with the
Securities and Exchange Commission on April 6, 1999, as amended (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 2,610,000 shares of common stock (herein,
the "Shares").
In so acting, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the proceedings taken
by the Company in connection with the issuance of the Shares, the Registration
Statement and such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives, as we have deemed relevant or necessary as
a basis for the opinions hereinafter set forth.
In such examination, we have assumed without independent
verification, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon representations of the Company in the Registration Statement,
certificates or comparable documents of officers of the Company and of public
officials.
Based on the foregoing, and subject to the qualifications
stated herein, as of the date hereof, it is our opinion that such Shares have
been validly issued and are fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Thorburn, Sakol & Throne
Thorburn, Sakol & Throne
EXHIBIT 10.12
LICENSE AGREEMENT
This License Agreement ("Agreement") is entered into as of the 12th day
of February, 1999, by and between COLORADO SATELLITE BROADCASTING, INC., 27357
Valley Center Road, Valley Center, California 92082 (hereinafter referred to as
"CSB" or "Licensee") and PLEASURE LICENSING LLC, 59 Lake Drive, P.O. Box 946,
Hightstown, New Jersey 08520 (hereinafter referred to as "Licensor").
CSB owns and operates networks for exhibition of audio visual material
over all forms of cable or satellite television, including basic cable
television, pay and subscription television, pay-per-view and satellite
transmission. Additionally, CSB is in the process of developing networks for
exhibition or transmission over various forms of Internet or so-called Worldwide
Web for access by television or personal computers.
Licensor is and for many years has been in the business of producing
and distributing motion pictures intended primarily for the adult market.
Licensor currently owns the rights granted hereunder with respect to an
inventory of approximately 4,000 motion pictures which have been acquired and/or
produced by Licensor, or its affiliate companies.
It is the intention of the parties to enter into this Agreement
relating to all Catalog Pictures and New Releases (as defined below). The
Catalog Pictures and New Pictures are collectively referred to as the Pictures.
Reference to Licensor in this Agreement shall include Licensor and Pleasure
Productions(R), Plum ProductionsTM, Western VisualsTM, Outlaw ProductionsTM,
ABV VideoTM and HIP Video(R). The term "Internet", as used herein, shall refer
to information transmitted via a global computer network which is accessed via
Internet Protocol (IP) codes and viewed by an Internet browser.
IN CONSIDERATION of the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 As used in this Agreement, certain capitalized terms shall have the
meaning as specifically set forth in Addendum "A" which is incorporated herein
by this reference.
2. GRANT OF RIGHTS
Subject to the terms and conditions hereof, and as set forth below, as
to each and every Picture, Licensor hereby grants to CSB the right and license
under copyright to broadcast, exhibit and/or display any and all versions of the
Pictures over any form of cable or satellite television and/or by way of any
form of Internet transmission, whether known or hereafter discovered.
<PAGE>
CSB is hereby granted the following rights, the exclusivity or
non-exclusivity thereof to be determined as set forth in Section 6 below:
2.1. The right to distribute and publish the Pictures using all forms
of satellite, cable or Internet transmission to television sets, computer
monitors or other devices intended to receive and exhibit audio visual images,
whether now known or hereafter discovered, including any and all forms of
pay-television and pay per view television, including CATV or cable television,
any form of pay television, pay-over-the-air television system, closed circuit
system, satellite master antenna television system, DBS system (including,
without limitation, KU-Band), hotel/motel system, and any and all other Pay
Television system which exhibit motion pictures as part of a Pay or Pay-Per-View
Service. Such systems include, without limitation, hotels, motels, inns, lodges,
hospitals, nursing homes, convalescent homes, military bases, prisons, ships,
oil rigs, dormitories and the like carrying a Pay or Pay Per View Service via
satellite, cable or Internet transmission.
2.2. The method of exhibition of motion pictures and other programs
over television receivers where consumers purchase the right to view such motion
pictures or other programs on a fee-per-exhibition basis, in: (i)
non-residential institutions (including, without limitation, hotel or motel
rooms or hospital rooms or in other non-common or non-public areas of other
institutions, with transmission via either satellite, cable or internet) is
referred to as "Non-Residential Pay-Per-View", and (ii) homes is referred to as
"Residential Pay-Per-View." The term "Pay-Per-View" when used herein shall
include both Residential Pay-Per-View and Non-Residential Pay-Per-View.
2.3. The rights to distribute and publish the Pictures via a "narrow
band" Internet service (i.e., below 56k "dial up" modem connections) and via a
"broadband" Internet service (i.e., 56k or above "dial up" modem connections)
and all forms of internet transmission whether now known or hereafter discovered
(herein the AInternet Rights").
2.4. The Television, Pay-Per-View and Internet Rights granted hereunder
include the rights to exhibit, broadcast, display and radio simulcast, all or
any portions of the Picture(s), including excerpts therefrom, and to
subdistribute such rights to a joint venture or a majority owned subsidiary, in
all versions in and throughout the Territory.
2.5. The right to make such edits, changes, alterations and
modifications in the Pictures, including changing the title of any Picture, as
CSB, determines in its sole discretion, is appropriate or necessary for time
restrictions, to comply with any applicable censorship requirements, to create
new versions to accommodate CSB's marketing plans or to take advantage of new
opportunities to market and exploit new and different versions of adult motion
pictures in and throughout the Territory in the media licensed to CSB hereunder.
The parties acknowledged that Licensor will deliver to CSB, if and as requested,
masters of all existing versions of the Picture(s) plus any and all existing
outtakes or cover shots, wrap-arounds, director's cuts, interviews, productions
stills, artwork, etc., as may be available, all in accordance with CSB's
delivery requirements as set forth in the addenda attached hereto. In all
events, such available masters shall include at least a fully-edited so-called
XXX version and a fully-edited so-called soft or cable version, if such version
has been produced. In the event new versions are created by Licensor after
delivery to CSB of XXX and Cable versions, including any versions into any
foreign language, Licensor agrees to immediately furnish CSB with masters of
such new or dubbed versions in accordance with the delivery specifications set
forth in the addenda attached hereto.
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<PAGE>
2.6. The rights granted to CSB hereunder shall include the right to
create new and different versions of the Pictures for exhibition via satellite,
cable or the Internet, as contemplated above. Such derivative versions may
constitute separately copyrightable derivative works of Licensor and may include
material from any XXX versions, cable versions, outtakes and cover shots
furnished by Licensor, as well as additional material owned by CSB. Such
versions shall include so-called XX versions to conform to the current standards
of Ten Channel, one of CSB's affiliated systems. Such new versions shall be
delivered to Licensor only upon the termination of CSB=s rights to such Pictures
under this License Agreement, and Licensor shall pay CSB one dollar ($1.00) for
each such picture. Other than the license rights set forth herein, CSB shall
have no rights to the derivative works so produced.
2.7. The right to translate and dub the title and soundtrack of any and
all versions of the Pictures in any languages, and to distribute such dubbed
versions throughout the Territory.
2.8. The right to copy, in any form or medium which CSB determines
appropriate, the Pictures and to distribute such copies in the normal course of
CSB's satellite, cable or Internet business, such copies may be used for example
as screening cassettes, duplicate masters furnished to one or more television,
Pay-Per-View or Internet systems or copies to be used as promotional or
marketing materials in connection with CSB's business activities or those of its
licensees. Such copies may not be sold by CSB to the public as a separate
standalone product, such as a VHS cassette or DVD disc.
2.9 The right to advertise and publicize the Pictures, their exhibition
and/or any exploitation of the Pictures contemplated hereunder. This right shall
include the right to use all or any portion of the Pictures in any medium or by
any means to advertise or publicize any of CSB=s business activities.
Hereinafter, all of the rights granted under this Section may be
referred to collectively as the "Rights."
3. TERM
3.1. This Agreement shall have a term of five (5) years commencing on
the date of delivery of the first Picture to CSB pursuant thereto. Thereafter,
the Agreement may be renewed for a term of five (5) additional years upon such
terms and conditions as the parties hereto shall mutually agree.
3.2. Notwithstanding the provisions of paragraph 3.1 hereof, as to New
Releases, such Rights shall continue for a term of five (5) years commencing
upon the earlier of the date of the first exhibition of the Picture by or ninety
(90) days after delivery of each such New Release to CSB.
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<PAGE>
4. TERRITORY
The territory in which Licensor may exercise each and all of the rights
granted herein shall be the territory of North, Central and South America
("Territory"). CSB's rights may be exercised in any country in and throughout
the Territory, including their respective territories and possessions.
5. DELIVERY OF PICTURES TO CSB
5.1. Licensor currently owns the rights granted herein with respect to
an inventory of approximately 4,000 motion pictures which have been produced
and/or acquired by Licensor or affiliated companies. A list of certain of those
motion pictures setting forth their titles is set forth on Exhibit A hereto, and
a list of the remaining titles (including the recently acquired catalog of
Western Visuals pictures) shall be provided to CSB within thirty (30) days of
the date hereof. For convenience, these motion pictures are referred to herein
as "Catalog Pictures."
Licensor agrees to deliver such screening cassettes, or other material
as may be requested by CSB, to permit CSB to evaluate the Catalog Pictures. CSB
shall have the right to select as many Catalog Pictures as it can reasonably
exploit in the Territory.
5.2. Commencing in April 1999, Licensor further agrees to deliver to
CSB as Pictures hereunder, three (3) new motion pictures hereafter produced by
Licensor or its affiliated companies ("New Releases") per month throughout the
Term hereof, and CSB agrees to accept a minimum of three (3) such New Releases.
New Releases submitted each month shall consist of one "A Film" (a Production
shot entirely on 35mm film with a budget over $60,000); one "B Film" (a High End
Video-Budgeted over $30,000); and one "C Film" (a Low End Video-Budgeted over
$20,000).
Upon receipt of delivery materials relating to each Picture hereunder,
including each New Release, CSB shall have a period of 30 days within which to
evaluate all such materials and determine whether they are acceptable to CSB.
CSB shall have the absolute right to reject any films submitted for technical
reasons or for reasons related to CSB=s editing standards. If CSB's rejection is
for technical reasons, CSB shall notify Licensor of the technical defects in the
material delivered and Licensor will remedy any and all such defects, at no cost
to CSB, within ten (10) days of such notice. If CSB's rejection is for reasons
related to its editing standards, Licensor will replace the rejected Picture(s)
within thirty (30) days after Licensor receives notice of such rejection, with
another Picture(s) in the same category as that of the Picture rejected.
6. EXCLUSIVITY
Except with respect to the pre-existing rights of third parties to the
Catalog Pictures and for any and all rights relating to the Internet, each and
all of the Rights granted to CSB hereunder shall be exclusive to CSB in the
United States during the Term and Licensor agrees to take all action necessary
to ensure that CSB is accorded the right to exploit such Rights without
interference from any third party. It is acknowledged and agreed that all rights
in territories outside of the United States shall be non-exclusive.
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<PAGE>
7. PAYMENT BY CSB
In full consideration of all of the Rights granted hereunder and each
of the terms and conditions of this Agreement, and conditioned upon Licensor's
full and faithful performance of all obligations to be performed hereunder, CSB
agrees to pay Licensor as follows:
7.1. CSB agrees to deliver to Licensor a total of 700,000 shares (the
"Catalog Shares") of common stock of New Frontier Media, Inc., the parent
company of CSB, and to issue to Licensor five (5) year warrants to purchase an
additional 700,000 shares (the "Warrant Shares") of common stock of New Frontier
Media, Inc., in the form attached hereto. CSB and New Frontier further agree
that the resale of $200,000 worth of the Catalog Shares and all of the Warrant
Shares shall be registered with the Securities and Exchange Commission on or
before December 31, 1999 and the registration statement for such shares shall
remain continuously effective until Licensor no longer owns any Catalog Shares
or Warrant Shares.
7.2. With respect to each New Release delivered to CSB hereunder and
accepted by CSB, CSB shall pay Licensor the following amounts:
7.2.1. With respect to each "A Film", the sum of $20,000.00 cash
7.2.2. With respect to each "B Film", the sum of $10,000.00 cash; and
7.2.3. With respect to each "C Film", the sum of $5,000.00 cash.
All such payments for "A Films" shall be payable as follows: 25%
within ten (10) days after delivery of all required delivery materials,
including materials relating to both the cable version and XXX version of the
Picture; 37.5% shall be payable within sixty (60) days after the first
Exhibition of the Picture by or at the authorization of CSB; and 37.5% shall be
payable within ninety (90) days after the first Exhibition of the Picture by or
at the authorization of CSB.
All such payments for "B Films" or "C Films" shall be payable as
follows: 25% within ten (10) days after delivery of all required delivery
materials, including materials relating to both the cable version and XXX
version of the Picture; and 75% shall be payable within sixty (60) days after
the first Exhibition of the Picture by or at the authorization of CSB.
8. COSTS AND EXPENSES
8.1. Licensor shall be responsible for making all payments which may
become due to any union or guild and to any person or persons who rendered
services in or in connection with the Picture by virtue of the use made of the
Picture hereunder, including, without limitation, all residual, reuse, rerun,
pension and health and welfare fund, and payroll tax payments.
5
<PAGE>
8.2. As between Licensor and CSB, CSB shall be responsible for all
editing costs and making all payments which may be required to be paid on
account of CSB's exercise of its rights hereunder, except to the extent such
payments are the responsibility of Licensor, as set forth in Section 8.1 above.
9. CONFIDENTIALITY
Neither Licensor or CSB shall disclose to any third party (other than
their respective employees, agents or representatives in their capacity as
such), any information with respect to the financial terms and provisions of
this Agreement except: (i) to the extent necessary to comply with law or the
valid order of a court of competent jurisdiction, in which event, the party
making such disclosure shall so notify the other, in writing, within five (5)
days, and shall seek confidential treatment of such information, (ii) as part of
its normal reporting or review procedure to its parent company, its auditors and
its attorneys, provided, however, that such parent company, auditors, and
attorneys agree to be bound by the provisions of this paragraph 9, (iii) in
order to enforce its rights pursuant to this Agreement, and (iv) to any bona
fide prospective purchaser of the stock or assets of such party.
10. REPRESENTATIONS AND WARRANTIES OF CSB
CSB hereby represents and warrants that it has the full power and
authority to enter into this agreement and to fully perform its obligations
under this Agreement, that the Agreement is an enforceable and binding
agreement, and that it does not conflict with any other agreement or obligation
of CSB.
11. REPRESENTATIONS AND WARRANTIES OF THE LICENSOR
Licensor hereby warrants and represents to CSB as follows:
11.1. Licensor owns all appropriate and necessary rights in and to the
Pictures which are the subject hereof to permit CSB to peacefully exercise each
of the Rights granted hereunder without interference from any third party and
without claim that such exercise constitutes a violation of the rights of any
third party. The Licensor guarantees to CSB that each of the Pictures was
produced in compliance with all applicable laws, that all actors and actresses
in the Pictures were over 18 years of age when they rendered their performance,
and that all Documentation, including but not limited to, proper age/consent
documents are maintained on file as required by law and may be inspected by CSB
or its designated agent during normal business hours upon request with 24-hour
notice.
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<PAGE>
11.2. Licensor is the sole owner of all Rights granted to Licensee
hereunder; Licensor has not previously assigned, pledged, or otherwise
encumbered the same; the Pictures do not violate any rights of privacy; the
Pictures are not defamatory; neither the Titles, the Documentation, nor any
parts thereof, nor any materials contained therein or synchronized therewith,
nor the exercise of any right, violated or will violate, or will infringe, any
trademark, trade name, contract, agreement, copyright (whether common law or
statutory), patent, literary, artistic, dramatic, personal, private, civil, or
other property right or right of privacy or any similar law or regulation or
other right whatsoever of, or slanders or libels, any person, firm, corporation,
or association whatsoever. Notwithstanding the foregoing, Licensor makes no
representation or warranties with respect to the laws or regulations of any
state, country or territory outside of the United States and/or the States of
Alabama, Kentucky, Mississippi, Oklahoma, Utah, North Carolina, South Carolina,
Tennessee or West Virginia, or Northern Florida, or any other jurisdiction
hereinafter adopting laws or regulations similar to the laws of such named
states.
12. INDEMNITY
12.1. Each party hereto shall at times defend, indemnify and hold
harmless the other and their parent, subsidiary and affiliated companies,
successors, licensees and assigns and their respective officers, directors,
employees and agents (herein, the "Indemnified Parties"), against and from any
and all claims, damages, liabilities, costs and expenses, including reasonable
counsel fees (collectively "claims") arising out of any breach by such party
(herein, the "Indemnitor") of any representation, warranty, covenant or other
provision hereof . The Indemnified Parties shall notify the Indemnitor in
writing of each such claim, and shall have the right to defend such claims
through counsel of its own choosing.
12.2. The Indemnified Parties shall afford the Indemnitor the
opportunity to participate in any compromise, settlement, litigation or other
resolution of a third party claim, or, in the event the Indemnitor elects not to
defend such claim, the Indemnified Parties may assume the defense of any such
claim or litigation, at Indemnitor=s cost and expense, with counsel of
Indemnified Parties's own choosing. In the event the Indemnitor elects to assume
the defense, the Indemnitor shall afford Indemnified Parties the opportunity to
participate fully in such defense at Indemnified Parties's expense.
12.3. Neither party shall compromise, settle or otherwise resolve any
such claim or litigation without the other party's prior written consent, which
shall not be unreasonably withheld; provided, however, that failure to respond
within five (5) business days following receipt of written notice of such
proposed compromise shall constitute consent to the proposed compromise,
settlement or resolution.
12.4. All representations, warranties and indemnities contained in this
Agreement shall survive an independent investigation made by Indemnified Parties
and the suspension or the termination of this Agreement.
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<PAGE>
13. SEVERABILITY
Subject to this section, if any provision of this Agreement or the
application thereof to any party of circumstance shall, to any extent, be
invalid and/or enforceable, the remainder of this Agreement and the application
of such provision to any other parties or circumstances other than those as to
which it is held invalid and/or unenforceable, shall not be affected thereby,
and each such other term and provision of this Agreement shall be valid and be
enforceable to the fullest extent permitted by law.
14. FURTHER DOCUMENTS
The Licensor and CSB shall promptly execute, acknowledge, and deliver
or promptly procure the executing, acknowledgment and delivery of any and all
further assignments, agreements and instruments which may be deemed reasonably
necessary or expedient to effectuate the purposes of this Agreement.
15. WAIVERS
No waiver by either party of any breach or default under this Agreement
shall be deemed to be a waiver of any proceeding or subsequent breach or
default.
16. NOTICES
All notices or remittances which either party may wish to serve and/or
may be required to serve on the other under this Agreement, shall be in writing
and shall be served by personal delivery thereof or by prepaid certified mail,
return receipt requested, or by prepaid overnight air express delivery,
addressed to the respective parties at their addresses herein above set forth.
17. RELATIONSHIP OF THE PARTIES
Nothing in this Agreement contained shall be deemed to constitute
either of the parties being an agent of the other. Neither party shall hold
itself out contrary to the terms of this Agreement and neither party shall
become liable by reason of any representation, act or omission of the other
contrary to the provisions hereof. Licensor is in all respects acting an
independent contractor.
18. TERMINATION.
This Agreement may be terminated by either party upon written notice to
the other party if such other party shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
as they become due, or any proceeding is commenced by or against such party (or
in the case of CSB, by or against New Frontier Media, Inc.) under any provision
of the U.S. Bankruptcy Code or under other bankruptcy or insolvency law,
including assignment for the benefit of creditors (and in the case of an
involuntary proceeding, such proceeding is not dismissed within 60 days of the
filing thereof).
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<PAGE>
19. ENTIRE AGREEMENT
This Agreement contains the full and complete understanding between the
parties hereto and supersedes all prior understandings, whether within or oral,
pertaining to the subject matter hereof and cannot be modified except by a
written instrument signed by the parties hereto.
20. APPLICABLE LAWS
This Agreement shall be governed by the laws of Colorado and the
federal laws of the United States of America applicable therein.
21. ASSIGNMENT
This Agreement may not be assigned by either party hereto, by operation
of law or otherwise without the express written consent of the other, which
consent shall not be unreasonably withheld, delayed or conditioned.
22. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
23. PARTIES BOUND BY AGREEMENT
This Agreement is binding upon the parties hereto and upon their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first herein above.
LICENSEE: COLORADO SATELLITE BROADCASTING, INC.
/s/ Michael Weiner
--------------------------------------------
By: Michael Weiner, Executive Vice President
LICENSOR: PLEASURE PRODUCTIONS, INC.
/s/ Michael Koretsky
--------------------------------------------
By: Michael Koretsky, President
NEW FRONTIER MEDIA, INC. hereby guarantees
the obligations of its subsidiary, Colorado Satellite
Broadcasting, Inc. hereunder.
NEW FRONTIER MEDIA, INC.
/s/ Michael Weiner
- --------------------------------------
By: Michael Weiner, Executive Vice President
9
EXHIBIT 23.01
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement, Amendment No. 2, on Form S-3 of New Frontier Media, Inc.
and Subsidiaries of our report dated June 9, 1999, accompanying the consolidated
financial statements of New Frontier Media, Inc. and Subsidiaries for the years
ended March 31, 1999 and 1998 which is part of the Annual Report on Form 10-KSB,
and to the reference to us under the heading "Experts" in such registration
statement.
SPICER, JEFFRIES & CO.
Denver, Colorado
August 2, 1999
