SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Definitive Proxy Statement
/X/ Definitive Additional Materials*
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
NEW FRONTIER MEDIA, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
Stock, par value $.0001 per share
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
* The Registrant disclaims that these materials in fact constitute proxy
solicitation materials.
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[LOGO]
NEW FRONTIER MEDIA, INC.
5435 AIRPORT BLVD., SUITE 100
BOULDER, COLORADO 80301
(303) 444-0632
October 13, 1999
To Our Shareholders:
As you know from the Company's proxy materials that have been sent to you,
at the upcoming October 27, 1999 annual meeting, the Company's shareholders will
consider ratification of two transactions, in addition to electing directors and
considering other matters.
As described in the proxy materials previously provided to you, these
transactions involved the issuance and sale of securities authorized by the
Board of Directors at prices less than market value and each exceeding 20% of
the outstanding shares prior to the issuance and sale. The two transactions were
approved by the Board of Directors and did not require shareholder approval
under Colorado law. In addition, the holders of a majority of the Company's
outstanding shares indicated in writing that they would have approved the
transactions if their proxies had been solicited.
Shareholder ratification now is being sought because a Nasdaq Listing
Qualification Panel has determined that the two transactions were effected
without compliance with Nasdaq rules requiring shareholder approval in advance
of the transactions. The Nasdaq Panel has indicated that such ratification will
not cure or remedy the violation of the rule.
The two transactions were authorized by the Board of Directors, upon the
advice of outside securities counsel, as part of a plan to increase the net
tangible assets, by converting debt to equity, and to increase liquidity to
provide necessary working capital, in the best interests of the Company and all
its shareholders, during a period after it had received notice that the Nasdaq
staff had determined that the Company failed to comply with the net tangible
assets/market capitalization/net income requirements for continued listing of
its shares of common stock on the Nasdaq SmallCap Market and the hearing
requested by the Company to demonstrate that it satisfied all applicable
criteria for continued listing.
In one transaction, between December 1998 and February 1999, the holders of
$1,750,000 in convertible debentures issued in June 1998 converted all of the
debentures into more than 20% of the outstanding shares prior to the conversion
at a conversion price less than the market price. The conversion reduced
liabilities, eliminated interest expense and increased net tangible assets. In
the other transaction, in March 1999, the Company issued more than 20% of the
outstanding shares prior to the issuance in a $5,200,000 private offering. The
issuance increased liquidity, provided necessary working capital and increased
net tangible assets.
On July 7, 1999, the Nasdaq Listing Panel issued its decision in favor of
the Company continuing its listing on the Nasdaq SmallCap Market. The Panel,
however, "was of the opinion that after-the-fact ratification is an inadequate
remedy" to a violation of the shareholder approval requirement of the Nasdaq
corporate governance rules. By letter dated August 20, 1999, the Company has
been informed that the Nasdaq Listing and Hearing and Review Council has called
for review of the Panel's decision to determine "whether the Panel's decision
. . . was appropriate given that the Panel found that the Company had twice
violated the shareholder approval requirement and that the Company had not
remedied the violations." On October 5, 1999, the Company made a written
submission urging the Council to affirm the Panel's determination to continue
the listing of the Company's shares.
<PAGE>
In a further effort to demonstrate the Company's commitment to future
compliance with applicable Nasdaq listing requirements, the Company's Board of
Directors has formed a special committee of its independent directors, called
the Nasdaq Compliance Committee. This Committee will review all future corporate
transactions to assure their compliance with Nasdaq listing requirements. For
assistance in this regard, the Committee has retained Harvey L. Pitt, former
General Counsel of the Securities and Exchange Commission, and now a partner at
the law firm of Fried, Frank, Harris, Shriver & Jacobson in Washington, D.C. In
addition, the Company has resolved to consult with the staff of the Nasdaq Stock
Market, Inc. in the event that the Company proposes to act contrary to the
advice of the Special Committee's legal counsel on any of these matters.
The Company and the Special Committee are committed to ensuring that
shareholders are fully informed about these developments and to addressing any
related shareholder concerns. If you have questions or concerns relating to the
Company's failure to obtain formal shareholder approval of the transactions
described above, we encourage you to contact us at our toll free number,
1-888-494-4515, which has been established solely for this purpose.
Sincerely,
New Frontier Media, Inc.
Nasdaq Compliance Committee
/s/ Koung Y. Wong
Koung Y. Wong
/s/ Edward J. Bonn
Edward J. Bonn
