<PAGE>
As filed with the Securities and Exchange Commission on November 24, 1999
File No. 333-51373
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment 2
TO
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
value $.001 per share 55,526,979 $.205 $11,383,030.70 $3,164.48
- ------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.001 per share adj. (5,826,000) $.11 $ 640,860.00 $ 178.16
- ------------------------------------------------------------------------------------------------------------------------
Total 37,687,229 _____ 12,712,780.30 $3,342.16
========================================================================================================================
</TABLE>
(1) Included in prior filings a portion of the shares will be deregistered.
(2) Represents fee for additional shares included in this Amendment No. 2. The
Fee is based upon the average of the bid and asked prices of the Common
Stock on the OTC Bulletin Board on November 22, 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, November 24, 1999
37,687,229 shares
KALEIDOSCOPE MEDIA GROUP, INC.
Common Stock
This Prospectus relates to 37,687,229 shares of common stock, par value
$.001 per share, of Kaleidoscope Media Group, Inc. These shares are being
offered for sale by the persons named herein under the caption "Selling
Stockholders". Most of the shares offered will be issued in the future pursuant
to options, warrants and convertible debenture. We will not receive any of the
proceeds from the sale of shares by the selling stockholders.
See "Risk Factors" commencing on page 7.
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 common stock is quoted on the OTC Bulletin Board. On November 22,
1999 the price of the Common Stock was $.11 per share.
The date of this Prospectus is , 1999
<PAGE>
TABLE OF CONTENTS
Page
----
Where You Can Find More Information................................ 3
Incorporation of Certain Documents by Reference.................... 3
The Company........................................................ 5
Risk Factors....................................................... 6
Forward Looking Statements.........................................
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. 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 does not
imply that the information contained is correct at any time subsequent to its
date.
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission in connection with this offering. In addition, we file
annual, quarterly and current reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy the
registration statement and any other documents filed by us at the Securities
and Exchange Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the Public Reference Room. Our
Securities and Exchange Commission filings are also available to the public at
the Securities and Exchange Commission's Internet site at "http//www.sec.gov."
This prospectus is part of the registration statement and does not contain all
of the information included in the registration statement. Whenever a reference
is made in this prospectus to any contract or other document of ours, the
reference may not be complete and you should refer to the exhibits that are a
part of the registration statement for a copy of the contract or document.
The Securities and Exchange Commission allows us to "incorporate by reference"
into this prospectus the information we file with it, which means that we can
disclose important information to you by referring you to those documents.
Information incorporated by reference is part of this prospectus. Later
information filed with the Securities and Exchange Commission will update and
supersede this information.
We incorporate by reference the documents listed below and any future filing
made with the Securities and Exchange Commission under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until this offering is
completed:
Annual Report on Form 10-KSB for year ended December 31, 1998 and
Amendment I thereto on Form 10-KSB/A
Quarterly Report on Form 10-QSB for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999
You may request a copy of these filings, at no cost, by contacting us at:
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
Corporate History
On October 22, 1996 we acquired all the shares of our current wholly
subsidiary HSPSMM, Inc. At that time we were called BNN Corporation and
incorporated in Nevada and were a publicly trade corporation without operations
or revenues. Our subsidiary HSPSMM, Inc. was then called Kaleidoscope Media,
Inc. After the acquisition the former holders of HSPS owned approximately 40% of
our then outstanding shares. On December 3, 1997, we were, a Nevada corporation
but we changed our state of incorporation to Delaware under our present name.
Introduction
At the beginning of 1998, we were a diversified entertainment, sports
and direct marketing company that operated, through three divisions through
subsidiaries.
In December 1998 we determined to curtail all significant operations of
both the sports and direct marketing divisions. While we may market existing
content owned by these divisions, for the foreseeable future we will concentrate
our efforts on our entertainment division.
During 1998 we incurred significant losses in the entertainment
division because the introduction of programming was either postponed, or not
introduced at all. In addition, revenues derived from the sales of programs were
less than anticipated. As a result, we took steps to reduce or eliminate costs
by moving offices to less costly quarters, reducing the number of employees and,
most importantly, establishing strategic alliances with production
4
<PAGE>
and distribution companies. The Company determined not to be responsible for the
financing of production costs of its programs unless such financing was
restricted to future distribution proceeds.
The principal executive offices of the Company are located at 244 West
54th Street, New York, New York and its telephone number is (212) 757-0700.
Business Strategy
With respect to its entertainment operations, we focus primarily on
distribution of television products.
Our distribution strategy is to become a leader in the
international distribution of television properties in two categories: one
hour action dramas and mini series and; children's programming. Our strategic
goal is expand our television operations through the acquisition of distribution
and other representation rights to entertainment properties.
During 1998 and 1999 we entered into arrangements with
o Victory Media of Germany for distribution of mini-series like "Shaka
Zulu" and "Diamond Hunters";
o Abrams Gentile Entertainment for production of animated and live
action series and specials based on the micronauts and;
o BKS Entertainment for the domestic distribution of the Company's
product.
One of the first programs that BKS will be handling for us is the
domestic distribution of "Digital Cafe 2000". This half-hour weekly series
currently airing in the U.S., focuses on the internet, E-commerce and the impact
of the computer on literally every aspect of our daily lives.
Our entertainment division principally consisting of SeaGull's
business activities is primarily engaged in the business of 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.
5
<PAGE>
Recent Securities Developments
From October 1998 through January 1999 we issued 1,000,000 shares of
common stock to Robert Lancelotti at a purchase price of averaging $.10 per
share.
As of December 1998, we entered into a settlement agreement in
conjunction with claims made by several groups of investors. Pursuant to this
agreement that we issued warrants to purchase 3,285,539 shares at $.10 per
share. We also issued, pursuant to this agreement, 2,000,000 shares of our
shares of common stock at $.10 per share to investors to be used for the
repayment of our indebtedness. If the warrants issued to satisfy indebtedness
are not exercised we will not have the proceeds available for use to pay down
indebtedness. The sale of the shares underlying these warrants is being
registered in this Offering.
In January and February 1999 we sold 2,725,000 shares to several
investors at prices ranging from $.05 per share to $.10 per share.
We entered into a subsequent agreement with Mr. Robert Lancelotti and
Mr. Byron Lerner for the issuance of shares to Messrs. Lerner and Lancelotti.
The Company is obligated to issue a total of 3,150,000 and 2,100,000 shares to
Messrs. Lerner and Lancelotti, respectively. In certain circumstances these
shares may be returned to the Company.
In April 1999, we issued eight (8%) percent convertible promissory
notes aggregating eight hundred fifty thousand dollars ($850,000) to foreign
private investors. The Notes are convertible into an indeterminate number of
shares at a conversion price of the lower of fifteen ($0.15) cents per share or
70% of the lowest closing price within sixty (60) days of conversion. In
conjunction with the financing, the Company issued a total of 850,000 warrants
at an exercise price of $.19. The Company has also issued an additional
$1,250,000 of principal amount of notes which were to be paid for in
installments after the registration statement becomes effective and subject to
other conditions because this statement did not become effective in the required
time the note may be cancelled which together with 1,250,000 of such warrants
will be canceled upon certain circumstances. We had the right to require these
noteholders to. In August 1999 we sold an additional $112,000 principal amount
of notes and issued an additional 1,500,000 warrants to acquire our common
stock.
We also sold 350,000 shares of our common stock to an investor in July
1999 at approximately seven cents per share and 200,000 shares to another
investor in October 1999 at a price of ten cents per share.
As compensation, in April 1999 and October 1999, our board granted
options to Henry Siegel, Paul Siegel and Ray Volpe in the amounts of 2,037,420,
350,000 and 437,500, respectively, at an exercise price of $.10 per share. Mr.
Henry Siegel has transferred 1,687,420 options issued to him to a related trust.
The optionees have indicated that they may set off indebtedness owed to them
against the exercise price. Indebtedness includes the Henry Siegel Pension Fund
against accrued interest and principal of a Note.
We have also issued or agreed to issued 2,933,770 shares in settlement
of various claims.
In September, 1999 we issued 600,000 warrants to purchase shares at
$.10 per share to individuals who will act as advisors to the board.
6
<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.
Risk Factors to the Company
WE HAVE INCURRED LOSSES AND MAY INCUR LOSSES IN THE FUTURE. We
incurred a net loss of approximately ($8,066,000) for 1998 compared to a loss of
approximately ($280,000) in 1997. There is no assurance that the Company will be
operated profitabilily in the future. In addition the Company has been dependent
upon financing for its operations.
WE MUST OBTAIN ADDITIONAL FUNDS TO CONTINUE OPERATIONS. We presently
have negative working capital, minimum revenue and difficulty in meeting our
financial obligations. Moreover investors who purchased $962,000 of our
convertible notes are not required to make an additional investment of
$1,250,000 and the aforesaid outstanding notes may not be converted. In that
event we would be required to repay $962,000 plus interest to these investors by
April 2000. Therefore we must obtain additional financing. There is no assurance
the Company can obtain any financings. If we do not obtain adequate financing
and do not achieve adequate cash flow, we may have to cease operations.
BECAUSE OUR BUSINESS DEPENDS UPON AUDIENCE ACCEPTANCE OF OUR PRODUCT
OUR BUSINESS IS UNPREDICTABLE. 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 we 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 of properties which we may distribute cannot be assured
and will depend upon many factors including those over which we will have little
or no control.
WE ARE DEPENDENT ON NEW PRODUCTS. Our growth will be dependent on our
ability to identify, acquire the rights to distribute properties which can be
sold at acceptable profit margins. We will also be dependent on our ability to
obtain rights to sell ancillary products related to such projects. There can be
no assurance that we will be successful in identifying, and acquiring the rights
to properties that will be successfully distributed and marketed to the public.
7
<PAGE>
Risks Relating to this Offering
OUR COMMON STOCK PRICE IS PARTICULARLY VOLATILE. 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 our common stock and could cause the market price of our Common Stock
to fluctuate more significantly than other stocks.
WE HAD EXTRAORDINARY OVERHANG OF SECURITY WHICH COULD ADVERSELY EFFECT
OUR COMMON STOCK. Options, Warrants and Convertible Securities. There are
presently options and warrants outstanding to purchase or acquire in excess of
21,806,828 shares of Common Stock, with exercise and converging prices ranging
from $.05 to $1.10 per share and which will expire on various dates through
April 1, 2002 and later. The outstanding convertible notes are convertible based
upon market prices in the future and the number of shares are presently
indeterminate if they were converted at the time of the Prospectus these notes
would be converted to 13,742,857 shares. If the outstanding options and warrants
are exercised or notes converted, 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 we would be able to
obtain funds from the sale of common stock or other securities at a price higher
than the exercise prices or conversion prices thereof.
8
<PAGE>
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus and in the information incorporated
by reference contains forward-looking statements within the meaning of the
federal securities laws. These statements include, among others, the following:
o Those pertaining to the implementation of our growth strategy and business
strategy,
o Our projected business; and
o The impact of Year 2000 on our information and those of third parties.
These statements may be found in this prospectus and in the information
incorporated by reference under "Risk-Factors", "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
Forward-looking statements typically are identified by use of terms, including,
"may," "will," "expect," anticipate," "estimate," and similar words, although
some forward-looking statements are expressed differently. You should be aware
that our actual results could differ materially from those contained in
forward-looking statements due to a number of factors including:
o general economic conditions;
o competitive market influences;
o audience acceptance of our products;
o finding new product to distribute;
o availability of funds.
You should also consider carefully the statements under "Risk Factors" and other
sections of this prospectus, which address additional factors that cause our
actual results to differ from those set forth in the forward-looking statements.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares hereby. Any
proceeds received upon exercise of warrants will be utilized as working capital.
9
<PAGE>
SELLING STOCKHOLDERS
The following table contains certain information as of October 15,
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 356,556 350,000(3) 6,556
Staffin Limited 651,666 650,000(3) 1,666
Rowlett Enterprises Limited 800,000 800,000 -0-
Southern Provinces Limited 800,000 800,000 -0-
Coastal Provinces Limited 800,120 800,000 120
NewCard, Inc. 800,000 800,000 -0-
Newco. Management Limited 800,000 800,000 -0-
Rothesay Limited 285,539 285,539(3) -0-
ARAN Limited 500,000 500,000 -0-(3)
Craignine Limited 500,000 500,000 -0-(3)
Chesterton Trading 500,000 500,000(3) -0-
Robert Lancelotti 1,962,000 1,962,000 -0-
Carol Sitte 1,000,000 1,000,000 -0-
Byron R. Lerner 1,443,000 1,443,000 -0-
</TABLE>
10
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<TABLE>
<S> <C> <C> <C>
Pasquale Ceruasio 120,000 120,000
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 10,000 10,000
Donald J. Schleifer 100,000 100,000 -0-
Artur Gomes 100,000 100,000 -0-
Oranzio Bencivenni 100,000 100,000 -0-
Luigi Andreotti 50,000 50,000 -0-
Esquire Trades Finance Inc. 4,284,000(4) 4,284,000(4) -0-
Ellis Enterprises Ltd. 737,500(4) 737,500(4) -0-
Austinvest AnStalt Balzers 4,284,000(4) 4,284,000(4) -0-
Amro International 2,212,500(4) 2,212,500(4) -0-
Nesher Inc. 1,400,000(4) 1,400,000(4) -0-
Guarantee & Finance Corp. 700,000(4) 700,000(4) -0-
Libra Finance, SA 1,875,000(3) 1,875,000(3) -0-
Talibya B. Investments 112,500(3) 112,500(3) -0-
J. Hayut 212,500(3) 212,500(3) -0-
Henry Siegel Pension Trust 1,687,420(3) 1,687,420 -0-
Irving Greenman 1,000,000(3) 1,000,000 -0-
Barbara Hamway 500,000(3) 500,000 -0-
Richard Gersh Associates, Inc. 352,770(3) 352,770 -0-
Paul Siegel(5) 3,255,364 350,000 2,905,364
Henry Siegel(5) 2,905,364 350,000 2,555,364
Ray Volpe(5) 3,342,864 437,500 2,905,364
Pegasus Finance 260,000 260,000 -0-
Gary Hudson 100,000 100,000 -0-
Richard Kostyra 350,000 350,000 -0-
Jack Woolf 35,000 35,000 -0-
Media Partners 315,000 315,000 -0-
Tree House Media 146,000 146,000 -0-
Eric Ashenberg 300,000 300,000 -0-
Jan McCormack 250,000(3) 250,000(3) -0-
Polly Bergan 100,000(3) 100,000(3) -0-
David Haselhof 250,000(3) 250,000(3) -0-
Paneth Kaber Zimmerman 300,000 300,000 -0-
Mark DiPippa 640,000 640,000 -0-
Tempomedia 1,100,000 1,100,000 -0-
Lawrence Montorff 200,000 200,000
</TABLE>
- ----------
(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.
(3) Represents the number of shares issuable upon the exercise of warrants or
options.
(4) Represents rights to obtain an indeterminate number of shares based on lower
of market price or a fixed price pursuant to convertible notes. The number
above reflects the minimum number of shares required to be registered
pursuant to the terms of convertible notes, except for 37,500 shares in case
of Ellis Enterprises Ltd. and 150,000 shares in case of Amro International
which are issuable upon exercise of warrants.
<PAGE>
(5) Includes shares subject to presently exercisable options. Messrs. Henry
Siegel, Paul Siegel and Ray Volpe have been granted presently exercisable
Options covering 350,000, 350,000 and 437,500 shares. The foregoing
excludes 1,687,420 shares subject to presently exercisable options now owned
by the Henry Siegel Pension Fund of which Mr. Siegel is a beneficiary. If
these shares were included as owned by Mr. Siegel he would beneficially own
4,592,784 shares prior to sale.
(6) 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.
11
<PAGE>
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. Sales may be made at prices at
terms then prevailing or at prices related to the then current market price, or
at privately negotiated prices as follows:
o on the over-the-counter market or foreign securities exchange,
o in privately negotiated transactions or
o otherwise or in a combination of these transactions.
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:
o 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;
o purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus;
o an exchange distribution in accordance with the rules of such
exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o 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,
broker-dealers may engage in short sales of the shares. That is they may sell
the shares prior the dealer acquiring the shares. 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. These 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 these sales and any
commission, discount or concession may be considered 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. Any dealer or broker participating in any distribution of the shares
may be required to deliver a copy of this prospectus, including any
12
<PAGE>
prospectus supplement, if any, to a person who purchases any of the shares from
or through the dealer or broker.
We have advised the selling stockholders that during the time they
may be engaged in a distribution of the shares they are required to comply with
Regulation M adopted under the Securities Exchange Act. In general, Regulation M
precludes the selling stockholders, any affiliated purchasers and any
broker-dealer or other person who participates in a 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. This
distinction 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, the sales, or the possibility of sale,
may have a depressive effect on the market price of the common stock.
DESCRIPTION OF SECURITIES
The following descriptions of our securities are qualified in
all respects by reference to our Certificate of Incorporation and By-laws. The
Certificate of Incorporation authorizes us 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.
Common Stock
As of November 4, 1999 there were 45,419,730 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 terms of future outstanding preferred stock, holders of common stock are
entitled to receive dividends as may be declared by our board of directors out
of funds legally available for this purpose. In the event of our liquidation,
dissolution or winding up, 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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Preferred Stock
There are no shares of preferred stock outstanding our 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 our stockholders, 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 our liquidation 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 our stockholders.
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 including preferred stock with super-voting rights. This may make
it more difficult to remove current management, even in situations where removal
may be in the stockholders' best interests. We have no current plans to issue
any of the preferred stock.
Delaware Law and Certain Charter Provisions
We are 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:
o the Board of Directors prior to the date the interested stockholder
obtained such status or
o the holders of two-thirds of the outstanding shares of each class or
series owned by the interested stockholder.
Our Certificate of Incorporation and By-laws contain certain additional
provisions which may have the effect of delaying or preventing a change in
control. These provisions include blank check preferred stock containing term
may be fixed by our 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.
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<PAGE>
Transfer and Warrant Agent
The transfer agent for our common stock is Holladay Stock Transfer,
Inc.
LEGAL MATTERS
Certain legal matters in connection with the securities offered will be
passed upon by Parker Duryee Rosoff & Haft, New York, New York 10017.
EXPERTS
Our consolidated financial statements included in our annual report on
Form 10-KSB for the year ended December 31, 1998, and incorporated in this
prospectus by reference. These statements have been audited by Liebman
Goldberg & Drogin LLP, independent certified public accountants, as set forth
in their report, and are incorporated herein by reference in reliance upon the
report of said firm given upon their authority as experts in accounting and
auditing.
-------------------
15
<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...................................... 7,500
Legal fees and expenses................................ 15,000
Accounting fees and expenses........................... 10,000
Blue Sky expenses...................................... --
Miscellaneous expenses................................. 2,500
----------
TOTAL........................................ $ 35,000
- ------------
* 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
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<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
$.001 per share (1)
5.1* Opinion of Parker Duryee Rosoff & Haft A Professional
Corporation
23.1 Consent of Liebman, Goldberg & Drogin LLP (2)
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) 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.
(2) Filed as an exhibit to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1998 and incorporated
herein by reference.
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<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.
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<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 Amendment
to the 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
November 24, 1999.
KALEIDOSCOPE MEDIA GROUP INC.
By: /s/ Henry Siegel
---------------------------------
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>
/s/ Henry Siegel Chief Executive Officer, Director November 24, 1999
- ---------------------------- (Principal Executive Officer)
Henry Siegel
/s/ Paul Siegel
- ---------------------------- President, Director November 24, 1999
Paul Siegel
/s/ Irving Greenman
- ---------------------------- Chief Financial Officer (Principal Financial November 24, 1999
Irving Greenman Officer and Principal Accounting Officer)
/s/ Martin Miller
- ---------------------------- Director November 24, 1999
Martin Miller
</TABLE>
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