<PAGE>
As filed with the Securities and Exchange Commission on February 16, 1999
File No. 333-51373
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
KALEIDOSCOPE MEDIA GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 93-0957030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
244 West 54th Street
New York, New York 10019
(212)757-0700
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
HENRY SIEGEL, Chief Executive Officer
244 West 54th Street
New York, New York 10019
(212)757-0700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copies to:
MICHAEL D. DiGIOVANNA, Esq.
PARKER DURYEE ROSOFF & HAFT
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
Approximate date of proposed sale to the public: From time to time after the
effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
<PAGE>
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
Title of Each Class of Amount to be Proposed Proposed Maximum Amount of
Securities to be Registered (1) Maximum Aggregate Offering Registration
Registered Offering Price Price Fee
Per Share
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par 12,570,539 shs $0.32 $4,022,572 $804.51
value $.001 per share
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon the average of the bid and asked prices
of the Common Stock on the OTC Bulletin Board on February 12, 1999.
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.
<PAGE>
Subject to Completion, February 16, 1999
12,570,539 shares
KALEIDOSCOPE MEDIA GROUP, INC.
Common Stock
This Prospectus relates to 12,570,539 shares of Common Stock, par value
$0.001 per share (the "Common Stock"), of Kaleidoscope Media Group, Inc. (the
"Company"), which shares are being offered for sale by the persons named herein
under the caption "Selling Stockholders" (the "Selling Stockholders"). Such
shares of Common Stock are all currently issued and outstanding. The Company
will not receive any of the proceeds from the sale of shares by the Selling
Stockholders. See "Selling Stockholders."
See "Risk Factors" commencing on page 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The Company has agreed to pay all expenses of registration in
connection with this offering but will not receive any of the proceeds from the
sale of the Shares being offered hereby. The Selling Stockholders will pay all
brokerage commissions and other similar expenses incurred by them in this
offering. The aggregate proceeds to the Selling Stockholders from the sale of
the Shares will be the purchase price of the Shares sold, less the aggregate
brokerage commissions and underwriters' discounts, if any, and other expenses of
issuance and distribution not borne by the Company.
The Common Stock being offered hereby by the Selling Stockholders has
not been registered for sale under the securities laws of any state or
jurisdiction as of the date of this Prospectus. Brokers or dealers effecting
transactions in the Common Stock should confirm the registration thereof under
the securities law of the state in which such transactions occur, or the
existence of any exemption from registration.
The Common Stock is quoted on the OTC Bulletin Board. On February 12,
1999 the closing bid price of the Common Stock was $0.32 per share.
The date of this Prospectus is February , 1999
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information.............................................. 2
Incorporation of Certain Documents by Reference.................... 3
The Company........................................................ 5
Risk Factors....................................................... 6
Selling Stockholders............................................... 10
Plan of Distribution............................................... 11
Description of Securities.......................................... 12
Legal Matters...................................................... 14
Experts ........................................................... 14
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). In accordance
therewith, the Company files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission at 7 World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material may be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, the Commission maintains a Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information of issuers that file electronically with the
Commission. The Company has filed with the Commission a Registration Statement
on Form S-3 under the Securities Act, with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which can be obtained from the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by
the Company with the Commission (File No. 0-17591) under the Exchange Act:
(a) The Company's Annual Report on Form 10-KSB for its fiscal year
ended December 31, 1997.
(b) The Company's Quarterly Report on Form 10QSB for the final year
ended March 31, 1998.
(c) The Company's Quarterly Report on Form 10QSB for the fiscal quarter
ended June 30, 1998.
(d) The Company's Quarterly Report on Form 10QSB for the fiscal quarter
ended September 30, 1998.
(e) The Company's Report on Form 8-K filed with the Securities and
Exchange Commission on February 13, 1998.
(f) The Company's Report on Form 8-K filed with the Securities and
Exchange Commission on March 5, 1998.
All documents filed by the Company with the Commission pursuant to
Sections 13, 14 and 15(d) of the Exchange Act subsequent hereto, but prior to
the termination of this offering, shall be deemed to be incorporated herein by
reference and to be a part hereof from their respective dates of filing. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written and oral request of any such
person, a copy of any or all of the documents referred to above which have been
incorporated into this Prospectus by reference (other than the exhibits to such
documents). Requests for such copies should be directed to:
Irving Greenman, Chief Financial Officer
Kaleidoscope Media Group. Inc.
244 West 54th Street
New York, New York 10019
Telephone Number: (212) 757-0700
3
<PAGE>
THE COMPANY
General
The Company is a diversified entertainment and sports programming
company that operates through subsidiaries. The Company's is primarily engaged
in the business of developing, producing and distributing (domestically and
internationally) entertainment properties and exploiting the related licensing
and merchandising opportunities. It also provides consulting services in the
development of specialty television programming and is involved in the
acquisition and distribution of entertainment library properties.
In March 1998 the Company released in Europe a new made-for-television
movie "Merlin: The Magic Begins" based on that legendary character. The title
role has been cast with Jason Connery (son of Sean Connery) and Deborah Moore
(daughter of Roger Moore). The 2 hour motion picture aired in the United States
in the Fall of 1998 and cleared 80 markets covering approximately 78% of the
United States television households.
In May 1998, the Company acquired the North American TV rights to two
syndicated miniseries starring "Baywatch" star David Hasselhoff: "Shaka Zula-The
Citadel", a four hour mini-series which begins filming in 1999, and "The Diamond
Hunter"slated for delivery in late 1999 or early 2000.
The Company recently acquired the rights to a new children's television
property and toy line entitled "Micronauts based on the popular 1970's Marvel
comic book and toy line of the same name." The Company expects the television
property to be introduced in the Fall of 1999 as a two-hour movie and/or a five
half-hour mini-series. The Company also expects that the toy line will begin
limited distribution in the Fall of 1999 and worldwide distribution in the year
2000.
The Company has acquired the rights to distribute, beginning in the
Fall of 1999, a new weekly half hour syndicated TV series called "FAO Schwarz's
Extraordinary Kids". The series, which is sponsored by the specialty toy
retailer FAO Schwarz, recognizes children ages 9-14 who have made outstanding
contributions to their communities through public service and other
extraordinary deeds and talents.
The Company has also acquired the rights to distribute, in the Summer
or Fall of 1999, a two hour animated movie on the life of baseball star Sammy
Sosa which tells the story of Mr. Sosa's life from his childhood in the
Dominican Republic to his becoming Major League Baseball's home-run record
breaking National League Most Valuable Player for the 1998 season.
In December 1998, the Company, through an ongoing relationship with
Brilliant Digital Inc. acquired the broadcast rights to, "Gravity Angels", for
distribution in the Winter of 1999. "Gravity Angels" is a new video property
based on a popular CD ROM application and will be the first animated multi-path
movie to move from CD ROM to broadcast television.
4
<PAGE>
In December, 1998, the Company signed a letter of intent with Odyssey
Picture Corporation (a Nasdaq-OTC Company, "Odyssey") to explore the possibility
of merging the two companies. There can be no assurance such merger will be
consummated.
The principal executive offices of the Company are located at 244 West
54th Street, New York, New York 10019 and its telephone number is (212)
757-0700.
Recent Securities Developments
In October 1998 the Company issued 600,000 shares of Common Stock to
Robert Lancelotti at a purchase price of $.167 per share, and an additional
400,000 shares of Common Stock to Mr. Lancelotti in January 1999 at a purchase
price of $.10 per share.
As of December 1998, the Company entered into a Settlement
Agreement in conjunction with claims made by several groups of investors.
Pursuant to the Agreement the Company issued warrants to purchase shares of
the Company's Common Stock at $.10 per share. The shares underlying these
warrants are being registered in this Offering.
In December 1998 the Company issued warrants to purchase 1,000,000
shares of the Company's Common Stock to an investor. The proceeds from the
exercise of these warrants shall be used by the Company to pay indebtedness. In
January 1999 the Company issued warrants to purchase 2,000,000 shares of the
Company's Common Stock. The proceeds from the exercise of these warrants will
be used to pay indebtedness.
Additionally, in February 1999 the Company sold 2,725,000 shares to
several investors for $.10 per share.
5
<PAGE>
RISK FACTORS
Each prospective investor should carefully consider the following risk
factors, as well as all other information set forth elsewhere in this Prospectus
and the documents incorporated by reference.
This Prospectus and the documents incorporated by reference contain
certain forward-looking statements. Actual results could differ materially from
those projected in the forward-looking statements as a result of the factors set
forth below and elsewhere in this Prospectus and the documents incorporated by
reference, including, but not limited to, (i) general economic conditions; (ii)
competitive market influence; (iii) audience appeal and cultural reviews of its
television programs; and (iv) the ability to identify, acquire the rights to,
and to develop quality properties.
Risk Factors Relating to the Company
Reduction in Revenues. Net revenues for the Third Quarter 1998 totaled
$1,517,156 compared with net revenues of $1,732,300 for the Third Quarter of
1997. Gross profits also decreased by $137,280 to $552,327 for the Third Quarter
1998 from $415,047 for the Third Quarter 1997. The Company does not anticipate
substantial improvement in the near future.
Unpredictability of Business. Broadcast media and the entertainment and
sports industries are highly speculative and historically have involved a
substantial degree of risk. Audience appeal and profitability depend upon
factors which cannot be ascertained reliably in advance and over which the
Company may have no or very limited control, including, among other things, the
unpredictability of critical reviews and changing public tastes. There is no
reliable predictor of an entertainment or sports program's popularity, even a
production involving highly experienced and respected talent may not be
successful. As a result, the ultimate profitability to the Company of properties
and ventures in which it has, or may acquire, an interest cannot be assured and
will depend upon many factors including those over which the Company will have
little or no control.
Dependence on New Products. The Company's growth will be dependent on
its ability to identify, acquire the rights to, and develop quality properties
which can be produced and sold at acceptable profit margins. It will also be
dependent on the Company's ability to negotiate in its production contracts the
necessary rights to oversee and generate revenue from the development,
production, distribution and sale of ancillary products related to such
projects. There can be no assurance that the Company will be successful in
identifying, acquiring the rights to, and developing quality properties that
will be successfully produced, distributed and marketed to the public. There
also can be no assurances that in its production contracts, the Company will be
able to negotiate and maintain the rights to such produced project in orders to
generate revenue from the sale of ancillary products. A failure to identify,
acquire and develop new properties for production, distribution and marketing to
the public or a failure to retain sufficient rights to generate revenue from the
sale of ancillary products would have an adverse impact on the Company's future
performance.
6
<PAGE>
Possible Loss of Project Development Costs. Although the Company has
participated in creating and producing many projects, the Company has had to
forego retaining substantial equity and control of distribution rights in return
for the total funding of its productions. To increase equity positions in
projects, the Company, prior to production, will be required to make larger
financial commitments for acquisition of film rights in various properties and
to bear the risk of loss of the cost of these film rights if the acquired or
developed property is not sold or produced. There can be no assurances, however,
that the Company will be able to recover all development costs or maintain
significant equity positions or distribution rights in these productions.
Need for Additional Financing and Financing Arrangements. In order to
realize its objectives, the Company may have a need for additional capital in
the future. If so, the Company intends to seek such capital through public or
private borrowing or equity financings. Any additional equity financings may be
dilutive to stockholders, and debt financing, if available, may involve
restrictions on dividends. Adequate funds, whether obtained through financial
markets or other arrangements with corporate partners or other sources, may not
be available when needed or on terms acceptable to the Company. Insufficient
funds may require the Company to delay, scale back or eliminate some or all of
its development projects, with an adverse effect on the Company's future
performance.
The Company from time to time has obtained additional financing from
the sale of its securities and may do so in the future. The Company has also
issued warrants in connection with loans and advances to it and may do so in the
future. Finally, the Company is contemplating forming one or more limited
liability corporations to finance its projects. See, Recent Securities
Developments.
Competition. Competition in the television production industry and
multimedia industries is intense since there are numerous suppliers of product.
In the television production business the Company will compete for the
acquisition of artistic properties and the services of creative and technical
personnel with major entertainment companies that are engaged in the television
production business. The Company will also be competing for available production
financing and favorable television arrangements, and for the public's interest
in, and acceptance of, its creative products. As the Company attempts to expand
its product base, it expects to face greater competition from larger, better
financed and more experienced entities.
Labor Considerations in the Entertainment Industry. The cost of
producing and distributing entertainment programming has increased substantially
in recent years due to, among other things, the increasing demands of creative
talent and industry-wide collective bargaining agreements. Most scriptwriters,
performers, directors and technical personnel involved in the Company's
productions are members of guilds or unions that bargain collectively on an
industry-wide basis from time to time. Action by these guilds or other unions
can significantly disrupt production and have a material adverse effect on the
Company.
7
<PAGE>
Protection of Propriety Rights. Although the Company plans to take what
management believes are appropriate and reasonable measures to secure, protect
and maintain or obtain agreements to secure protect and maintain, copyright and
other protections for all of its properties under the laws of applicable
jurisdictions, no assurance can be given that it will be successful in
implementing these actions or that others will not infringe upon the Company's
proprietary rights, in which event, the Company may not have sufficient
resources to enforce or defend these rights.
Regulation of Television and Motion Picture Industry. United States
television stations and networks, as well as foreign governments, impose
restrictions on the content of its programs. The Code and Ratings Administration
of the Motion Picture Association of America, an industry trade association,
decides ratings for age group suitability for domestic theatrical distribution
of its programs. Although it is unlikely that any of the Company's present
productions would fail to meet the criteria established for domestic and foreign
broadcast, to the extent that the Company's projects do not comply with such
standards and practices, they may be required to be edited before exhibition on
applicable television stations, networks and in foreign territories.
Retention of Key Personnel. The Company's operations are dependent upon
the services of Henry Siegel and Paul Siegel. The loss of Henry Siegel or Paul
Siegel could have a material adverse effect on the Company's business. The
Company's success also depends upon its ability to attract and retain
highly-skilled management and other personnel. Competition for such personnel is
intense, and the inability to attract and retain additional qualified employees
or the loss of current key employees could materially and adversely affect the
Company's business, operating results and financial condition.
Preferred Stock. The Company's Certificate of Incorporation authorizes
the issuance of 15,000,000 shares of Preferred Stock with designation, rights
and preferences determined from time to time by its Board of Directors.
Accordingly, the Company's Board of Directors is empowered, without stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights that could adversely affect the voting power or other
rights of the holders of the Common Stock. In the event of issuance, the
Preferred Stock could be used, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company.
Risks Relating to this Offering
Volatility of Common Stock. There has been volatility in the market
price of securities of entertainment companies. Future announcements concerning
the Company or its competitors, including variations in financial results,
changes in general market conditions, governmental regulations or other
developments may have a significant impact on the market price of the Company's
Common Stock and could cause the market price of the Company's Common Stock to
fluctuate significantly. In addition, broad market fluctuations and general
economic or political
8
<PAGE>
conditions may adversely affect the market price of each of the Company's
securities, regardless of the Company's actual performance.
No Assurance of Active Market. The Common Stock is quoted on the OTC
Bulletin Board and traded on the Frankfurt and Berlin Stock Exchanges. There can
be no assurance that an active market in the Common Stock will develop. In the
absence of an active public trading market, an investor may be unable to
liquidate his or her investment.
Nonpayment of Dividends. The Company has never declared or paid a cash
dividend on its Common Stock and does not expect to pay cash dividends in the
foreseeable future.
Dilutive Effect of Options, Warrants and Convertible Securities. As of
the date hereof, there were options and warrants outstanding to purchase an
aggregate of 4,518,866 shares of Common Stock, with exercise prices ranging from
$.25 to $1.10 per share and which will expire on various dates through January
1, 2002. If the outstanding options and warrants are exercised, the percentage
of capital stock then held by the existing stockholders will be reduced.
Furthermore, the outstanding options and warrants can be expected to be
exercised at a time when the Company would be able to obtain funds from the sale
of Common Stock or other securities at a price higher than the exercise prices
thereof.
SELLING STOCKHOLDERS
The following table sets forth certain information as of February 1,
1999 with respect to the Selling Stockholders. The number of Shares that may
actually be sold by the Selling Stockholders will be determined by the Selling
Stockholders, which may depend upon a number of factors, including, among other
things, the market price of the Common Stock.
<TABLE>
<CAPTION>
Number of Shares of Number of Shares Shares of Common Stock
Common Stock Owned of Common Stock Owned After Sale of
Name of Stockholder Before Offering (1)(4) Being Offered All Shares (2)(4)
- ------------------- ----------------------- ---------------- ----------------------
<S> <C> <C> <C>
Brae Limited 350,000 700,000(3) -0-
Staffin Limited 650,000 1,310,000(3) -0-
Rowlett Enterprises 800,000 800,000(3) -0-
Southern Provinces 800,000 800,000(3) -0-
Coastal Provinces 800,000 800,000(3) -0-
NewCard, Inc. 800,000 800,000(3) -0-
Newco. Management 800,000 800,000(3) -0-
Rothesay Limited 285,539 285,539(3) -0-
Chesterton Trading 500,000 500,000(3) -0-
Robert Lancelotti 1,000,000 1,000,000 -0-
Carol Sitte 1,000,000 1,000,000 -0-
Millpart Limited 1,000,000 1,000,000(3) -0-
Byron R. Lerner 100,000 100,000 -0-
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C> <C>
Darrell C. Lerner 40,000 40,000 -0-
Conviro Associates 500,000 500,000 -0-
R&A Cervasio 100,000 100,000 -0-
S&J Aiello 125,000 125,000 -0-
B&F Marano 100,000 100,000 -0-
Gloria Samuels 250,000 250,000 -0-
James Faro 10,000 10,000 -0-
Frank Massro 5,000 5,000 -0-
Timothy Deignan 5,000 5,000 -0-
Eric Tjaden 20,000 20,000 -0-
James Tubbs 10,000 10,000 -0-
Eunyung Eudie Yang 10,000 10,000 -0-
Richard Volpe 360,000 360,000
Lino Ricciardi 100,000 100,000 -0-
Donald J. Schliefer 100,000 100,000 -0-
Artur Gomes 100,000 100,000 -0-
Oranzio Bencivenni 100,000 100,000 -0-
Henry Siegel 350,000 350,000
Paul Siegel 350,000 350,000
Luigi Andreotti 50,000 50,000 -0-
---------- ----------
Total 12,570,539 12,570,539
</TABLE>
- ----------
* Less than one percent.
(1) Represents those shares of Common Stock held by the Selling
Stockholders, if any, together with those shares that such Selling
Stockholders have the right to acquire within 60 days from the date of
this Prospectus.
(2) Assumes all of the Shares being offered will be sold. Because the
Selling Stockholders may sell all, some or none of the Shares that he,
she or it holds, and because the offering contemplated by this
Prospectus is not now a "firm commitment" underwritten offering, the
actual number of Shares that will be held by the Selling Stockholders
upon or prior to termination of this offering may vary. See "Plan of
Distribution."
(3) Represents the number of shares issuable upon the exercise of Warrants.
(4) Does not include unrestricted shares held by unaffiliated shareholders,
the amount of such shares varies from time to time as the holders
purchase and sell such shares periodically.
The Selling Stockholders may have sold, transferred or otherwise
disposed of all or a portion of their Shares since the date on which they
provided the information regarding their Common Stock in transactions exempt
from the registration requirements of the Securities Act. Additional information
concerning the Selling Stockholders may be set forth from time to time in
prospectus supplements to this Prospectus. See "Plan of Distribution.
PLAN OF DISTRIBUTION
Sales of the Shares may be made from time to time by the Selling
Stockholders, or, subject to applicable law, by pledgees, donees, distributees,
transferees or other successors in interest. Such
10
<PAGE>
sales may be made on the over-the-counter market or foreign securities exchange
(any of which may involve crosses and block transactions), in privately
negotiated transactions or otherwise or in a combination of such transactions at
prices and at terms then prevailing or at prices related to the then current
market price, or at privately negotiated prices. In addition, any Shares covered
by this Prospectus which qualify for sale pursuant to Section 4(1) of the
Securities Act or Rule 144 promulgated thereunder may be sold under such
provisions rather than pursuant to this Prospectus. Without limiting the
generality of the foregoing, the Shares may be sold in one or more of the
following types of transactions: (a) a block trade in which the broker-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; (b) purchases
by a broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) an exchange distribution in accordance
with the rules of such exchange; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate in the resales.
In connection with distributions of the Shares or otherwise, the
Selling Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the Shares registered hereunder in the course of hedging the positions they
assume with the Selling Stockholders. The Selling Stockholders may also sell
Shares short and deliver the Shares to close out such short positions. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to the broker-dealer of the Shares
registered hereunder, which the broker-dealer may resell pursuant to this
Prospectus. The Selling Stockholders may also pledge the Shares registered
hereunder to a broker or dealer and upon a default, the broker or dealer may
effect sales of the pledged Shares pursuant to this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders in amounts
to be negotiated in connection with the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act.
Information as to whether underwriters who may be selected by the
Selling Stockholders, or any other broker-dealer, is acting as principal or
agent for the Selling Stockholders, the compensation to be received by
underwriters who may be selected by the Selling Stockholders, or any
broker-dealer, acting as principal or agent for the Selling Stockholders and the
compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
Prospectus (the "Prospectus Supplement"). Any dealer or broker participating in
any distribution of the Shares may be required to deliver a copy of this
Prospectus, including the
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Prospectus Supplement, if any, to any person who purchases any of the Shares
from or through such dealer or broker.
The Company has advised the Selling Stockholders that during such time
as they may be engaged in a distribution of the Shares included herein they are
required to comply with Regulation M promulgated under the Exchange Act. In
general, Regulation M precludes the Selling Stockholders, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. A "distribution" is defined in the
rules as an offering of securities that is distinguished from ordinary trading
activities and depends on the "magnitude of the offering and the presence of
special selling efforts and selling methods." Regulation M also prohibits any
bids or purchases made in order to stabilize the price of a security in
connection with the distribution of that security.
It is anticipated that the Selling Stockholders will offer all of the
Shares for sale. Further, because it is possible that a significant number of
Shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the Common Stock.
DESCRIPTION OF SECURITIES
The following descriptions of the Company's securities are qualified in
all respects by reference to the Certificate of Incorporation and By-laws of the
Company. The Certificate of Incorporation authorizes the Company to issue
100,000,000 shares of Common Stock, $.001 par value, and 15,000,000 shares of
"blank check" Preferred Stock, $.001 par value (the "Preferred Stock").
Common Stock
As of January 31, 1999 there were 44,458,960 shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. Subject
to preferential rights with respect to future outstanding Preferred Stock,
holders of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and satisfaction of preferential rights and have no rights to
convert their Common Stock into any other securities. All shares of Common Stock
have equal, non-cumulative voting rights, and have no preference, exchange,
preemptive or redemption rights.
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<PAGE>
Preferred Stock
As of the date hereof, there were no shares of Preferred Stock
outstanding. The Company's Certificate of Incorporation authorizes the issuance
of the Preferred Stock with designations, rights and preferences determined from
time to time by its Board of Directors. The Preferred Stock may be issued in
series, and the Preferred Stock of each series will have such rights and
preferences as are fixed by the Board of Directors in the resolutions
authorizing the issuance of that particular series. In designating any series of
the Preferred Stock, the Board of Directors may fix the number of shares of the
Preferred Stock constituting that series and fix the dividend rights, dividend
rate, conversion rights, voting rights (which may be greater or lesser than the
voting rights of the Common Stock), rights and terms of redemption (including
any sinking fund provisions) and the liquidation preferences of the series of
the Preferred Stock. It is possible, without any action of the stockholders of
the Company, that the holders of any series of the Preferred Stock, when and if
issued, will have priority claims to dividends and to any distributions upon
liquidation of the Company and that they may have other preferences over the
holders of the Common Stock. The Board of Directors may issue series of the
Preferred Stock without action of the stockholders of the Company.
The issuance of the Preferred Stock may be used as an anti-takeover
device without further action on the part of the stockholders. Furthermore, the
issuance of the Preferred Stock may dilute the voting power of holders of the
Common Stock (such as by issuing Preferred Stock with super-voting rights) and
may render more difficult the removal of current management, even if such
removal may be in the stockholders' best interests. The Company has no current
plans to issue any of the Preferred Stock.
Delaware Law and Certain Charter Provisions
The Company will be subject to Section 203 of the Delaware General
Corporation Law, which prohibits a Delaware corporation from engaging in a wide
range of specified transactions with any interested stockholder, defined to
include, among others, any person or entity who in the previous three years
obtained 15% or more of any class or series of stock entitled to vote in the
election of directors, unless, among other exceptions, the transaction is
approved by (i) the Board of Directors prior to the date the interested
stockholder obtained such status or (ii) the holders of two-thirds of the
outstanding shares of each class or series owned by the interested stockholder.
The Company's Certificate of Incorporation and By-laws contain certain
additional provisions which may have the effect of delaying or preventing a
change in control of the Company. Such provisions include blank check preferred
stock (the terms of which may be fixed by the Board of Directors without
stockholder approval). Accordingly, the Company's Board of Directors is
empowered, without stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of the Common Stock. In the event of
issuance, the Preferred Stock could be used, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control of the
Company.
13
<PAGE>
Transfer and Warrant Agent
The transfer agent for the Common Stock is Holladay Stock Transfer,
Inc.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby will be passed upon for the Company by Parker Duryee Rosoff & Haft, New
York, New York 10017.
EXPERTS
The consolidated financial statements of the Company, included in the
Company's annual report on Form 10-KSB for the fiscal year ended December 31,
1997, which annual report has been incorporated herein by reference, have been
audited by Paneth, Haber & Zimmerman LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the report of said firm given
upon their authority as experts in accounting and auditing.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the Company's estimates of the expenses
to be incurred by it in connection with the Common Stock being offered hereby:
SEC Registration Fee................................... $
Printing expenses......................................
Legal fees and expenses................................
Accounting fees and expenses...........................
Blue Sky expenses......................................
Miscellaneous expenses.................................
TOTAL........................................ $
- ------------
* Estimated
Item 15. Indemnification of Directors and Officers.
Article Sixth of the Certificate of Incorporation of Kaleidoscope Media
Group, Inc. (the "Company") provides that no director shall be liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except with respect to (1) a breach of the director's duty of
loyalty to the Company or its stockholders, (2) acts or omissions not in good
faith which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit.
Article Sixth also provides that the Company shall indemnify, to the fullest
extent permitted by Sections 102(b)(7) and 145 of the Delaware General
Corporation Law, as amended
15
<PAGE>
from time to time, any and all persons whom it shall have power to indemnify
under such sections, including officers of the Company acting in such capacity.
Item 16. Exhibits and Financial Statement Schedules.
4.1 Specimen Certificate representing the Common Stock, par value
$.01 per share (1)
5.1 * Opinion of Parker Duryee Rosoff & Haft A Professional Corporation
23.1 Consent of Paneth, Haber & Zimmerman LLP
23.2 * Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of Part II of this
Registration
- -----------------
* To be filed by amendment.
(1) Denotes document filed as an exhibit to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1997 and incorporated
herein by reference.
16
<PAGE>
Item 17. Undertakings.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, that is
incorporated by reference in the Registration Statement, shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to Item 15 of Part II of the Registration Statement, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
17
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on February 16,
1999.
KALEIDOSCOPE MEDIA GROUP INC.
By:
---------------------------------
Henry Siegel
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Henry Siegel and Paul Siegel, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this Registration Statement was signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
Signatures Capacity Date
---------- -------- ----
<S> <C> <C>
Chief Executive Officer, Director February 16, 1999
- ---------------------------- (Principal Executive Officer)
Henry Siegel
- ---------------------------- President, Director February 16, 1999
Paul Siegel
- ---------------------------- Chief Financial Officer (Principal Financial February 16, 1999
Irving Greenman Officer and Principal Accounting Officer)
- ---------------------------- Director February 16, 1999
Ray Volpe
- ---------------------------- Director February 16, 1999
Martin Miller
- ---------------------------- Director February 16, 1999
Jean Chalopin
</TABLE>
<PAGE>
EXHIBIT INDEX
4.1 Specimen Certificate representing the Common Stock, par value
$.001 per share (1)
5.1* Opinion of Parker Duryee Rosoff & Haft A Professional
Corporation
23.1 Consent of Paneth, Haber & Zimmerman LLP
23.2 Consent of Parker Duryee Rosoff & Haft (included in
Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of Part II
of this Registration
- ----------------
* To be filed by amendment.
(1) Denotes document filed as an exhibit to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997 and
incorporated herein by reference.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated April 14 1998 which
appears on page F-2 of the annual report on Form 10-KSB of Kaleidoscope Media
Group Inc. for the year ended December 31, 1997 and to the reference to our firm
under the caption "Experts" in the prospectus.
- --------------------------------
Paneth, Haber & Zimmerman LLP
New York, New York
February ,1999
