AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1999
Registration Statement No. 333-69923
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE
AMENDMENT NO 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ACTV, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 7812 94-2907258
- --------------------------------------------------------------------------------
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code)
organization)
1270 Avenue of the Americas
New York, New York 10020
(212) 217-1600
--------------
(Address, including zip code and telephone number,
including area code, of Registrant's principal executive offices)
WILLIAM C. SAMUELS
President
ACTV, INC.
1270 Avenue of the Americas
New York, New York 10020
(212) 217-1600
(Name, address, including zip code and telephone number,
including area code, of agent for service)
Copies To:
JAY M. KAPLOWITZ, ESQ.
Gersten, Savage & Kaplowitz, LLP
101 East 52nd Street
New York, New York 10022
(212) 752-9700
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and from
time to time.
------------
If the securities being registered on this form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [x]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ]
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<TABLE>
<CAPTION>
=====================================================================================================
Title of Amount Being Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Offering Price Per Aggregate Registration Fee
Registered Security Offering Price
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common 9,307,067 $3.63(1) $33,738,117.88 $13,157.87
Stock, par value 2,525,851 $5.00(2) $12,629,255.00 $ 4,925.41
$.10 per share
=====================================================================================================
Total Registration $18,083.28
Fee
=====================================================================================================
Amount Previously $13,157.87
Paid
=====================================================================================================
Amount Due With $ 4,925.41
Filing
=====================================================================================================
</TABLE>
(1) Pursuant to Rule 457, estimated solely for the purpose of calculating
the registration fee for the registration of 9,307,067 shares of Common
Stock filed with the Form S-3, File No. 333-69923 on December 30, 1998,
based upon the last reported sales price of the Registrant's Common
Stock of the same class as quoted by the National Association of
Securities Dealers Automated Quotation System on December 22, 1998.
(2) Pursuant to Rule 457, estimated solely for the purpose of calculating
the registration fee for the registration of an additional 2,525,851
shares of Common Stock filed with this Pre-Effective Amendment No. 1 to
Form S-3, File No. 333-69923, based upon the last reported sales price
of the Registrant's Common Stock of the same class as quoted by the
National Association of Securities Dealers Automated Quotation System on
January 14, 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 THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS
THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
ACTV, INC.
11,832,918 Shares of Common Stock
Shareholders of ACTV, Inc. named under the caption "Selling
Security Holders", from time to time, may offer and sell up to 11,832,918 shares
of ACTV common stock. The selling security holders acquired their shares from
ACTV previously or will acquire such shares upon the exercise of options,
warrants or stock appreciation rights, or upon conversion of convertible
preferred stock.
The selling security holders may, from time to time, offer their
shares through public or private transactions, on or off United States
exchanges, at prevailing market prices or at privately negotiated prices.
ACTV's common stock is traded on the Nasdaq SmallCap Market and
on the Boston Stock Exchange. On January 15, 1999, the last reported sale price
of ACTV's common stock on Nasdaq was $5 1/4.
An investment in these securities is risky. You should only purchase these
shares if you can afford to lose your entire investment. See Risk
Factors commencing on page 8.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed
on the accuracy or adequacy of this Prospectus. Any representation
to the contrary is a criminal offense.
The date of this prospectus is January ___, 1999
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements,
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also read
and copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. ACTV is
listed on the Nasdaq SmallCap market and the Boston Stock Exchange. Our periodic
reports, proxy statements, and other information can be inspected at the offices
of Nasdaq at 1735 K Street, NW, Washington, DC, 20006, or the offices of the BSE
at 1 Boston Place, Boston, Massachusetts, 02108.
The SEC allows us to "incorporate by reference" the information
we file with them. This Prospectus incorporates important business and financial
information about ACTV which is not included in or delivered with this
Prospectus. The information incorporated by reference is an important part of
this Prospectus, and information that we file later with the SEC will
automatically update and supersede this information.
We incorporate by reference our Quarterly Report on Form 10-Q/A
for the quarter ended September 30, 1998 as filed on November 19, 1998, our
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 as filed on
August 14, 1998, our Quarterly Report on Form 10-Q for the quarter ended March
31, 1998 as filed on May 15, 1998, our Annual Report on Form 10-K for the year
ended December 31, 1997 as amended by Form 10-K/A1 filed on April 20, 1998, our
Current Report on Form 8-K filed on February 6, 1998, our Proxy Statement for
the year ended December 31, 1997, and future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the shares offered by the selling security holders have been sold.
You may obtain a copy of these filings, without charge, by
writing or calling us at:
ACTV, Inc.
1270 Avenue of the Americas
New York, New York 10020
Attention: Secretary
(212) 217-1600
If you would like to request these filings from us, please do so
at least five business days before you have to make an investment decision.
You should rely only on the information incorporated by reference
or provided in this Prospectus. We have not authorized anyone else to provide
you with different information. We are not making an offer of these securities
in any state where the offer is not permitted. You should not assume that the
information in this Prospectus or the documents incorporated by reference is
accurate as of any date other then the date on the front of those documents.
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PROSPECTUS SUMMARY
This summary does not contain all of the information that may be
important. You should read the detailed information appearing elsewhere in this
Prospectus including the documents incorporated by reference. To the extent that
the information presented in this Prospectus discusses financial projections,
information or expectations about our products or markets, or otherwise makes
statements about future events, such statements are forward-looking. Although we
believe that the expectations reflected in these forward-looking statements are
based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking
statements. These include, among others, the successful and timely development
and acceptance of new products and markets and the availability of sufficient
funding to effect such product and/or market development. When considering such
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this Prospectus.
The Company
ACTV has developed proprietary technologies, Individualized
Television and HyperTV, that allow content providers to create unique
interactive programming for both the digital television and Internet platforms.
ACTV's Individualized Television software technology provides the tools needed
to create, encode, distribute, decode and view live or pre-recorded television
programming that individualizes what the viewer sees and hears. The proprietary
software remembers every viewer's response, allowing the television to literally
respond to each viewer with tailored programming and advertising content.
HyperTV software technologies enable the simultaneous delivery of complementary
video and Internet URL's (uniform resource locators) directly to television
viewers and/or personal computer users. Our first digital television application
is regional sports cable networks and the first Internet application of HyperTV
is the online education market. We also plan to use HyperTV to enhance our
regional sports cable networks.
We use patented software technologies to create Individualized
Television, which enables viewers to switch seamlessly and instantly among
multiple, real-time feeds of live or pre-recorded video, audio and data.
Individualized Television is a multi-path telecast of several elements of
programming material, such as instant replay on demand, isolation cameras,
statistical data, and/or additional features. There is no limit to the number of
viewers who can interact simultaneously with a program enhanced by our
Individualized Television programming capabilities. All the viewer needs at home
to receive individualized television programming is a standard digital set-top
box and remote control.
HyperTV is a patented Java-based software technology (Java is a
programming language developed by Sun Microsystems). HyperTV enables the
practical convergence of video with the vast information resources of the
Internet whether it be for the benefit of television users in the home or for
students in educational settings. The first application of HyperTV is in the
education market, for which we have developed eSchool Online(TM). eSchool
Online(TM) uses HyperTV technology to create virtual learning communities that
integrate streamed educational video, relevant Web content, and collaboration
and assessment resources for students and educators.
Since its inception, ACTV has incurred operating losses
approximating $61 million related directly to the development and marketing of
the Individualized Television and HyperTV.
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Strategic Alliances
We are seeking to exploit the U.S. entertainment market on both a
regional and national basis. We are launching regionally based, Individualized
Television digital cable networks, with programming provided through our
strategic alliance with FOX Sports Net. We have the rights to license FOX Sports
Net programming from each of FOX Sports Net's regional sports affiliates and to
offer enhanced FOX Sports Net programming to any distributor that carries the
corresponding regional FOX Sports Net channel. The FOX Sports Net agreement
extends through June 2003.
FOX Sports Net is a service of "National Sports Partners," a
joint venture between Cablevision's Rainbow Media Holdings, Inc. and FOX/Liberty
Networks, which is a 50/50 partnership between News Corp. and
Tele-Communications Inc.'s Liberty Media Corporation. Equally owned by
FOX/Liberty Networks and Cablevision's Rainbow Media Holdings, Inc., the venture
now reaches more than 58 million homes nationwide through 22 regional sports
networks.
We plan to develop regional networks in regions served by Fox
Sports Net, with distribution to be provided by cable operators that are
currently upgrading their service from analog to digital transmission.
Initially, the regional networks will feature sports programming. We believe
that the differentiation afforded by our individualized programming will allow
distributors to offer their customers a unique programming service that will
enhance their customer's acceptance of digital television. We will be
responsible for the incremental content, transmission, delivery and master
control costs incurred in connection with the production and distribution of
individualized programming for our regional networks.
We plan to launch our first regional network in 1999 in the
region served by FOX Sports Southwest. FOX Sports Southwest distributes
programming to more than 5 million households in Texas, Louisiana, Arkansas,
Oklahoma and nine New Mexico counties. The southwest regional network will
feature individualized telecasts of professional basketball (Houston Rockets,
Dallas Mavericks, San Antonio Spurs), hockey (Dallas Stars), and baseball (Texas
Rangers, Houston Astros), along with college sports events from the
Southeastern, Southland and Western Athletic conferences.
We have an agreement with Tele-Communications Inc., or TCI, under
which TCI will distribute and market our southwest regional network programming
to its digital subscribers in Texas. The agreement also contemplates potential
nationwide distribution by TCI of ACTV's regional sports networks.
ACTV's first national individualized programming will be
developed and managed through a joint venture formed in September 1998 with
Liberty Media Corporation, called LMC IATV Events, LLC. LMC IATV, through an
exclusive license from ACTV, has the right to produce and distribute telecasts
of major events incorporating our individualized programming enhancements. As
consideration for granting such a license, ACTV received a fixed one-third
equity interest in the joint venture, with no obligations to make additional
capital contributions.
In September 1998, Liberty Media Corporation invested $5 million
in ACTV common stock with an option to invest an additional $5 million.
Simultaneous with this strategic investment, as noted above, ACTV and Liberty
Media Corporation created a joint venture, LMC IATV Events, LLC, to explore
national applications of individualized programming for major events.
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We have other strategic alliances, including General Instrument
Corporation and Scientific-Atlanta, Inc. General Instrument, an investor in
ACTV, and Scientific-Atlanta, Inc. are the leading suppliers of digital
television head systems and digital set-top terminals. We have agreements with
both General Instrument and Scientific-Atlanta for the incorporation of our
individualized programming into each supplier's respective digital set-top cable
terminals.
Our target markets for HyperTV are both consumer homes and
educational settings, including K-12 classrooms, universities, distance learning
programs, and corporations. Our first HyperTV application is eSchool Online(TM),
which is designed for the education market. It consists of a suite of integrated
software products, including content creation software, student and teacher user
software, and database assessment software. In addition, we provide eSchool
Online(TM) clients with Internet content development assistance, hosting of
eSchool programs on computer servers, and consulting to schools and
universities. Currently, all of our revenues are derived from sales to the
online learning market.
In August 1998, we entered into a joint marketing agreement with
Sun Microsystems, Inc., the developer of the Java programming language and a
leading provider of hardware, software and services for the Internet. Under the
agreement, ACTV and Sun will work together to offer eSchool Online(TM) in
conjunction with Sun servers to large school districts and state education
departments for statewide programs.
ACTV was incorporated in Delaware on July 24, 1989. ACTV is the
successor, by merger effective November 1, 1989, to ACTV, Inc., a California
corporation, organized on July 11, 1983. Our executive offices are located at
1270 Avenue of the Americas, New York, New York 10020, telephone number (212)
217-1600.
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RISK FACTORS
An investment in ACTV's shares involves a high degree of risk.
You should carefully consider the following risks, in addition to the other
information contained in this Prospectus, before deciding to invest in ACTV's
shares.
Risks Related to Our Business
Operating Losses and Limited Revenues to Date.
We have been operating at a loss to date. Losses applicable to
common shareholders for the nine months ended September 30, 1998, the years
ended December 31, 1997, 1996 and 1995 (the "1997 Fiscal Year", the "1996 Fiscal
Year," and "1995 Fiscal Year," respectively) were $9,869,022, $10,358,683,
$10,300,481 and $6,826,789, respectively. The 1995 Fiscal Year includes an
extraordinary gain of $94,117. Through September 30, 1998, we had an accumulated
deficit of approximately $61 million. We have had limited revenues. Revenues for
the nine months ended September 30, 1998 were $1,058,560, $1,650,955 in the 1997
Fiscal Year, $1,476,329 in the 1996 Fiscal Year and $1,311,860 in the 1995
Fiscal Year. We may not be able to be profitable or generate significant
revenues in the future.
Unproven Business Strategy.
We made our first sale in the Internet market in the second
quarter of 1997. We have had only a limited number of additional sales to the
online learning market segment, which itself is a newly developing market in a
process of evolution. Also, we have not had significant sales of our
individualized programming. While we plan to commercialize our individualized
programming in conjunction with FOX Sports Net and have conducted certain test
marketing, we have not yet introduced this product on a commercial basis.
Therefore, our products should be viewed as newly introduced products, the
demand for, and market acceptance of which, is uncertain. Our individualized
programming and our Internet products may not become commercially successful,
and there may not be sufficient demand and market acceptance for our products to
become profitable.
Need for Additional Financing; Accumulated Deficit.
We have required significant capital to develop our
Individualized Television and HyperTV technologies, to produce programming, to
develop marketing approaches and strategic alliances, and to cover costs of
selling, general and administrative expenses. As a result, we have an
accumulated deficit as of September 30, 1998 of approximately $61 million. We
have also from time to time experienced working capital deficits. To date, we
have not generated revenues sufficient to sustain our operations, and cannot
generate such revenues, if at all, without raising additional funds to implement
our business plan. We have issued debt to raise funds for the development of the
southwest regional network; however, we are not yet delivering our product to
consumers or deriving any revenue from the southwest regional network. Although
we believe we have the necessary resources to launch the southwest regional
network, we may need additional funding to operate the network at planned levels
and to fund our operations. We will need additional funding to launch networks
in other regions. We currently do not have any arrangements for additional
financing and cannot assure you that additional financing will be available on
acceptable terms, or at all. Additional equity financing may substantially
dilute your investment in ACTV's common stock.
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Dependence on Strategic Relationships.
We are dependent upon our relationships with General Instrument,
Scientific-Atlanta and other digital set-top box manufacturers to sell such
digital boxes to cable systems. In addition, we are dependent upon Liberty Media
Corporation to fund and direct LMC IATV, our joint venture with Liberty Media.
We are also dependent upon the cooperation of FOX Sports Net in connection with
the marketing of our regional sports networks to cable systems. We cannot assure
you that these third parties will dedicate sufficient resources to their
relationships with us or perform their obligations in a time frame that will
allow us to implement our current business plan. Their failure to do so could
have a material adverse effect on our operations, or result in delays in our
ability to implement our business plan in a timely manner.
Patents and Proprietary Information.
We have obtained patents covering certain aspects of
Individualized Television and HyperTV and have patents pending with respect to
other developments or enhancements. We cannot assure you (i) that patents
applied for will be granted, (ii) that the patents we own or have rights to or
that may be granted or obtained by us in the future will be enforceable or will
provide us with meaningful protection from competition, (iii) that any products
developed by us will not infringe any patent or rights of others, or (iv) that
we will possess the financial resources necessary to enforce any patent rights
that we hold.
We require each of our employees, consultants and advisors to
execute confidentiality and assignment of proprietary rights agreements upon the
commencement of employment or a consulting relationship with us. These
arrangements generally provide that all inventions, ideas and improvements made
or conceived by the individual arising out of the employment or consulting
relationship shall be our exclusive property. In addition, all proprietary
information is required to be kept confidential and not disclosed to third
parties except with our consent or in other specified circumstances. These
agreements, however, may not provide effective protection of our proprietary
information in the event of unauthorized use or disclosure of such information.
Dependence Upon Key Management and Technical Personnel.
We are largely dependent upon the efforts of William C. Samuels,
ACTV's Chairman of the Board, President and Chief Executive Officer, David
Reese, Executive Vice President and a Director of ACTV and President of ACTV
Entertainment, Inc., our Individualized Television division, and Bruce Crowley,
Executive Vice President and a Director of ACTV and President of ACTV Net, Inc.,
our Internet division. ACTV has entered into five-year employment agreements
with Mr. Samuels, Mr. Reese and Mr. Crowley. We currently do not maintain "key
employee" insurance on the lives of Messrs. Samuels, Reese or Crowley. We may
not be able to obtain such insurance at an acceptable cost should we seek to
acquire such insurance in the future.
We are also dependent on a group of employees, who are expert in
the Java computer language. The Internet industry is very competitive and there
is large demand for, and a high turnover rate of, qualified Java programmers. If
we were required to replace such personnel, we may not be readily able to do so.
Even if we are able to hire such qualified replacements, our business
development may be delayed.
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Year 2000 Compliance.
The year 2000 issue is the result of computer software that was
written with only two digits rather than four digits to represent the year in a
date field. Computer hardware and software applications that are date-sensitive
may interpret a date represented as "00" to be the year 1900 rather than the
year 2000. The result could be system failure or miscalculations causing the
disruption of operations.
We believe that our internal systems, relating to both computer
hardware and software, will function properly with respect to dates in the year
2000 and beyond. In addition, we believe that our proprietary software either
sold directly to third parties or incorporated in products sold to third parties
is year 2000 compliant. Having performed an assessment of the potential year
2000 problem, we do not expect to incur significant costs related to year 2000
issues.
However, there is general uncertainty regarding the year 2000
problem and its effect on the overall business environment. We cannot determine
at this time whether the year 2000 problem will have a material impact on our
operations or financial condition as the result of significant disruptions to
the U.S. economy and/or business infrastructure.
Risks Related to Our Industry
Timely Upgrade of Cable Headends for Digital Delivery.
Our entertainment business strategy depends in large part on the
ability of major cable system operators to upgrade their programming
distribution systems (commonly known as headends) for digital programming and to
deploy digital set-top boxes, and upon the manufacturers of the set-top boxes to
manufacture the boxes compatible with our downloadable software. In order to
utilize individualized programming, subscribers must have a digital television
set-top box installed in their homes. The timely deployment of digital
television set-top boxes is entirely out of our control. There may not be a
sufficient number of potential subscribers to receive digital television set-top
boxes in the near future so as to enable us to deploy our individualized
programming in accordance with our business plan. Material delays in the upgrade
of cable headends or the deployment of digital television set-top boxes could
have a material effect on our results of operations and financial condition.
Technological Obsolescence.
Both the digital television and Internet platforms are
characterized by extensive research efforts and rapid, significant technological
change, often resulting in product obsolescence or short product life cycles.
Our ability to compete will depend in large part on our capacity to introduce
individualized programming and Internet products in a timely manner, to
continually enhance and improve individualized programming and Internet
products, and to adapt to technological changes and advances in the markets in
which we compete. Our competitors may develop technologies or products that
render our individualized programming and/or Internet products obsolete or less
marketable. We may not be able to keep pace with the demands of an ever-changing
marketplace.
Possible Shortage of Available Channels for In-Home Cable Applications.
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In order for our individualized programming to be delivered over
cable and direct broadcast satellite systems to the home, we must compete with
other programming services for digital channel space. Most distributors of
television programming have channel capacity limitations. Our individualized
programming applications currently require four channels of band-width in a
digital system. We believe, although there can be no assurance, that the cable
and direct broadcast satellite industries, in general, will continue to increase
digital channel capacity. We cannot assure you that distributors of television
programming will devote a sufficient number of channels of band-width to our
individualized programming in the future, even they do increase channel
capacity.
Changes in Government Funding.
The success of our Internet division is dependent on public
schools' continuing to receive various federal and state funding for Internet
connectivity and a broader distribution of computers. If such government funding
were to be substantially reduced or eliminated, it could have a material adverse
effect on our operations and financial condition.
Restrictions of Government Regulation.
We believe that neither the present or future implementation of
our individualized programming is subject to any substantial government
regulation. However, the broadcast industry in general, and cable television,
direct broadcast satellite and wireless communication in particular are subject
to substantial government regulation.
Pursuant to federal legislation enacted in 1992 ("1992 Cable
Act"), the Federal Communications Commission ("FCC") substantially re-regulated
the cable television industry in various areas including rate regulation,
competitive access to programming, "must carry" and retransmission consent for
broadcast stations. These rules, among other things, restrict the extent to
which a cable system may profit from, or recover costs associated with, adding
new program channels, impose certain carriage requirements with respect to
television broadcast stations, limit exclusivity provisions in programming
contracts and require prior notice for channel additions, deletions and changes.
The United States Congress and the FCC also have under consideration, and may in
the future adopt new laws, regulations and policies regarding a wide variety of
matters which could, directly or indirectly, materially adversely affect our
operations.
We cannot predict the outcome of future federal legislation or
regulatory proposals or the impact of any current or future laws or regulations
on our operations. We may not be able to comply with future laws or regulations
that may be imposed on our operations or our industry.
Intense Competition.
We compete with many other companies that provide programming for
the television industry and, in particular, with companies that provide sports
programming. Moreover, our enhanced version of FOX Sports Net programming will
compete with the simultaneous telecast of the un-enhanced version of the same
event. In addition, our individualized programming technology may compete with
other technologies described as interactive television, some of which may be
developed or promoted by companies with resources significantly greater than
ours. In general, our individualized programming competes with many other forms
of entertainment content, many of which are significantly more established,
including the basic
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television industry, the movie industry, cable television, programming services
and other forms of entertainment.
In the Internet market, our competition includes companies that
offer products and services based on the convergence of television and Internet
technologies, as well as providers of online learning applications and
traditional distance learning companies.
Nearly all of our competitors have greater financial, and other,
resources than ACTV.
Risks Related to the Offering
Control by Officers, Directors and Principal Stockholders.
Our officers and directors own, of record, approximately 6.9
million outstanding shares of common stock, assuming the exercise of all options
currently exercisable and those exercisable within 60 days of the date of this
Prospectus and the conversion of all outstanding convertible securities held by
such individuals and including shares beneficially owned pursuant to voting
trust agreements. William C. Samuels, our Chairman, President and Chief
Executive Officer, pursuant to a voting agreement, has voting control of the
2,341,334 shares of common stock owned of record by the Washington Post Company.
Consequently, Mr. Samuels has voting control over approximately 5.0 million
shares of common stock, or approximately 15% of the outstanding shares of common
stock. Accordingly, Mr. Samuels could have substantial influence over the
affairs of ACTV, including the election of directors.
Limited Trading Market for Common Stock; Possible Volatility of Securities
Prices; Possible Delisting of Common Stock.
The average number of shares of ACTV's common stock traded on
Nasdaq and BSE has been limited. As a result, your ability to sell your shares
may be limited and the sale of a large number of shares at any time may
adversely affect the trading market to a greater extent than would be the case
if the shares were more actively traded. The market price of ACTV's securities
may be highly volatile, as has been the case with the securities of other
companies engaged in high technology research and development. Factors such as
our competitors' announcements concerning technological innovations, new
commercial products or procedures, proposed government regulations and
developments or disputes relating to patents or proprietary rights may have a
significant impact on the market price of ACTV's securities. Such volatility may
be increased as a result of the limited trading market.
In order to continue to be listed on Nasdaq, we are required to
maintain (i) net tangible assets of at least $2,000,000, or market
capitalization of $35,000,000 or $500,000 in net income for two of the last
three years (ii) a minimum bid price of $1.00, (iii) two market makers, (iv) 300
stockholders, (v) at least 500,000 shares in the public float, (vi) a minimum
market value for the public float of $1,000,000 and (vii) compliance with
certain corporate governance standards. If ACTV is unable to satisfy Nasdaq's
maintenance criteria in the future, its common stock may be delisted from
Nasdaq. The BSE requires us to have total assets of at least $1,000,000 and
total stockholder equity of $500,000 to maintain its listing. In the event of
delisting, trading, if any, would be conducted only in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board."
As a consequence of such
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delistings, an investor would likely find it more difficult to dispose of, or to
obtain quotations as to, the price of ACTV's common stock.
Rule 144 Sales.
Of the shares of the common stock presently outstanding,
approximately 2.6 million are "restricted securities" as that term is defined by
Rule 144 promulgated under the Securities Act and in the future may be sold only
in compliance with Rule 144 or pursuant to registration under the Securities Act
or pursuant to another exemption therefrom. For so long as the Registration
Statement of which this Prospectus is a part is current and effective, the
shares being offered may be sold without regard to the volume limitations,
described below, set forth in Rule 144. Generally, under Rule 144, each person
having held restricted securities for a period of one year may, every three
months, sell in ordinary brokerage transactions an amount of shares which does
not exceed the greater of one percent (1%) of ACTV's then outstanding shares of
common stock, or the average weekly volume of trading of such shares of common
stock as reported during the preceding four calendar weeks. A person who has not
been an ACTV affiliate for at least the three months immediately proceeding the
sale and who has beneficially owned shares of the common stock for at least two
years is entitled to sell such shares under Rule 144 without regard to any of
the limitations described above. Of the restricted shares, a substantial number
have been held for less than one year. Actual sales, or the prospect of sales by
the present stockholders of ACTV or by future holders of restricted securities
under Rule 144, or otherwise, may, in the future, have a depressive effect upon
the price of ACTV's common stock in any market that may develop therefor, and
also could render difficult future sales of ACTV's shares.
Penny Stock Regulation.
Broker-dealer practices in connection with transactions in "penny
stocks" are regulated by certain penny stock rules adopted by the SEC. Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq, provided that current prices and volume information with respect to
transactions in such securities are provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson it transaction, and monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules generally require that prior to a transaction in
a penny stock the broker-dealer make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for a stock that becomes subject to the penny stock rules. If ACTV's
securities become subject to the penny stock rules, stockholders may find it
more difficult to sell their securities.
Outstanding Options and Warrants.
As of the date of this Prospectus, ACTV has granted options and
warrants to purchase an aggregate of 9,964,340 shares of common stock that had
not been exercised. Of the shares of common stock subject to these unexercised
options and warrants 4,801,177 may be purchased for between $1.00 and $1.99
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<PAGE>
per share; 4,785,663 may be purchased for between $2.00 and $2.99 per share;
150,000 may be purchased for between $3.00 and $3.99 per share; 225,000 may be
purchased for between $4.00 and $4.99 per share; and 2,500 may be purchased for
between $5.00 to $5.99 per share. To the extent that the outstanding stock
options and warrants are exercised, our stockholders' interest in ACTV will be
diluted. Moreover, the terms upon which we will be able to obtain additional
equity capital may be affected adversely, since the holders of the outstanding
options and warrants can be expected to exercise them at a time when we would,
in all likelihood, be able to obtain any needed capital on more favorable terms
than those provided in the outstanding options and warrants.
Effect of Conversion of Convertible Preferred Stock.
In November 1998, we issued 5,017 shares of ACTV's Series B 10%
Convertible Preferred Stock, which has a face value of $5,017,000 and pays an
annual dividend of 10%. The dividend may be paid either in cash or in kind, at
our option.
We may redeem the Series B Preferred at any time at a 10% premium
above face value plus accrued dividends. The Series B Preferred holders may not
convert any Series B Preferred into common stock until November 13, 1999,
whether or not we give a redemption notice prior to such date. The Series B
Preferred shares are convertible at a fixed price, subject to a single
adjustment. From November 13, 1999 to February 13, 2000, the Series B Preferred
is convertible at a price of $2.00 per share. If the Series B Preferred is not
redeemed by February 13, 2000, its conversion price will be adjusted to a fixed
price of $1.33 per share for the remainder of its life.
In November 1997, ACTV issued 86,200 shares of Series A
Convertible Preferred Stock. The Series A Preferred, together with accrued
dividends, is convertible into common stock based upon a conversion rate of
$1.50 per share of common stock. As of the date of this Prospectus 56,300 shares
of Series A Preferred remain outstanding and would be convertible into
approximately 1.0 million shares of common stock if exchanged as of January 19,
1999.
Common stockholders will be diluted by future conversions to
common stock, if they should occur, by holders of our convertible preferred
stock. Additionally, since such shares of common stock will be registered for
sale in the marketplace, future offers to sell such shares could have a
potentially depressive effect upon the price of the common stock and make future
sales of common stock by ACTV or our stockholders difficult.
Possible Issuance of Preferred Stock; Affiliate's Option to Acquire Voting
Control of Certain Subsidiaries; Anti-takeover Provisions.
ACTV's Certificate of Incorporation permits our Board of
Directors to designate the terms of, and issue, up to 1,000,000 shares of
preferred stock without further stockholder approval. The issuance of shares of
preferred stock by the Board of Directors could adversely affect the rights of
the holder of the common stock by, among other things, establishing preferential
dividends, liquidation rights and voting power. As of the date of this
Prospectus, 91,218 shares of preferred stock have been issued.
ACTV has issued to William C. Samuels, ACTV's Chairman, President
and Chief Executive Officer, David Reese, ACTV's Executive Vice President and a
director, Bruce Crowley, ACTV's Executive
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Vice President, Christopher Cline, ACTV's Senior Vice President, Chief Financial
Officer and Secretary and three other employees, options to acquire Class B
Common Stock of certain of our material subsidiaries. The ten year options are
currently fully vested. In each case, the Class B Common Stock is identical to
the common stock of each such subsidiary that is owned by ACTV, but has voting
rights of 25 votes per share. If exercised, such options will result in the
optionees' having approximately 75% of the voting power of each subsidiary. As a
result, should such options be exercised as to any such subsidiary, the holders
thereof would have the right to elect the Board of Directors of such subsidiary
and otherwise control its business and affairs. The holders have also entered
into an agreement as to the voting of certain of such shares if issued.
The issuance of the preferred stock, or the exercise by the
holders of the options to acquire the Class B Common Stock of such subsidiaries,
either alone or together, might render it more difficult, and therefore
discourage, an unsolicited takeover proposal such as a tender offer, proxy
contest or removal of incumbent management, even if such actions would be in the
best interest of our stockholders.
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<PAGE>
USE OF PROCEEDS
ACTV will not receive any proceeds from the sale of the
Security Holders' Shares offered hereby. All proceeds from the sale of the
Security Holders' Shares will be for the account of the Selling Security Holders
described herein. See "Selling Security Holders."
MATERIAL CHANGES
There have been no material changes since the filing of ACTV's
Form 10-K for the year ended December 31, 1997 on March 31, 1998 as amended by
ACTV's Form 10-K/A1 filed on April 20, 1998, except as set forth on the Form
10-Q/A for the period ended September 30, 1998, as filed on November 19, 1998.
SELLING SECURITY HOLDERS
All of the shares of common stock of ACTV ("Common Stock")
offered under this Prospectus ("Security Holders' Shares") may be sold by the
holders {"Selling Security Holders") who have acquired previously or will
acquire such shares from ACTV (i) upon the exercise of currently exercisable
options, warrants, or stock appreciation rights, or (ii) upon conversion of
ACTV's 10% Series B Convertible Preferred Stock. ACTV will not receive any of
the proceeds from sales of Selling Security Holders' Shares, but will receive
the exercise price upon the exercise of the options or warrants described above.
All costs, expenses and fees in connection with the registration
of the Security Holders' Shares will be borne by ACTV. All brokerage
commissions, if any, attributable to the sale of Security Holders' Shares by
Selling Security Holders will be borne by such Selling Security Holders.
The Selling Security Holders are offering hereby a total of
11,832,918 shares of ACTV's common stock. The following table sets forth the
name of each person who is a Selling Security Holder, the number of securities
owned by each such person at the time of this offering and the number of shares
of common stock such person will own after the completion of this offering. The
following table assumes the exercise of all options and warrants beneficially
owned by each such security holder and the conversion of all Series B Preferred
Stock into shares of Common Stock.
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<TABLE>
<CAPTION>
Beneficial Beneficial
Ownership Shares Ownership
Prior to Included in After
Name Offering (1) % This Offering Offering (2) %
<S> <C> <C> <C> <C> <C> <C>
Westgate International, L.P. 2,459,719 7.2% 1,944,710 (3) 515,009 1.6%
Elliott Associates, L.P. 2,549,622 7.4% 1,955,478 (4) 594,144 1.8%
Ravich Children's Trust 366,444 1.1% 366,444 (5) 0 *
Ravich Revocable Trust of 1989 810,729 2.5% 765,729 (6) 45,000 *
US Bancorp Investments, Inc. 889,583 2.7% 859,583 (7) 30,000 *
Rand Ravich 87,753 * 63,673 (8) 24,080 *
Lee Helper 4,000 * 4,000 0 *
Dean Bender 4,000 * 4,000 0 *
Larry Goldman 4,000 * 4,000 0 *
David Alworth 126,000 * 75,000 (9) 51,000 *
Banca del Gottardo 5,076,820 15.2% 25,000 (10) 5,051,820 15.2%
Richard Barron 85,000 * 25,000 (11) 60,000 *
Richard Carvalho 25,000 * 15,000 (11) 10,000 *
Christopher Cline 131,489 * 75,000 (12) 56,489 *
Peter Cohen 7,000 * 7,000 (11) 0 *
James Crook 79,294 * 5,000 (11) 74,294 *
Bruce Crowley 833,800 2.5% 524,000 (13) 309,800 *
Xiomara DeLeon 5,260 * 5,000 (10) 260 *
Frank Deo 75,000 * 75,000 (14) 0 *
Jeff Harrington 25,000 * 10,000 (11) 15,000 *
Brent Imai 77,500 * 25,000 (11) 52,500 *
Jennifer Lange 10,000 * 10,000 (10) 0 *
Kevin Liga 75,000 * 75,000 (15) 0 *
Eric Martinez 22,600 * 4,183 (11) 18,417 *
Margie Mercado 6,050 * 5,000 (10) 1,050 *
Ted O'Donnell 15,000 * 15,000 (16) 0 *
Eric Pack 12,653 * 12,500 (10) 153 *
Stanley Plesent 10,000 * 10,000 (11) 0 *
David Reese 1,305,500 3.9% 860,000 (17) 445,500 1.4%
William Samuels 5,397,817 15.9% 1,619,000 (18) 3,778,817 11.7%
Amy Satin 15,000 * 15,000 (10) 0 *
Steven Schuster 30,000 * 12,500 (16) 17,500 *
Patricia Wilson 5,000 * 5,000 (10) 0 *
Michael Freeman 346,598 1.1% 32,000 (19) 314,598 *
Dorsey & Whitney 112,500 * 40,000 72,500 *
Value Partners Ltd. 2,266,246 7.0% 2,266,246 0 *
Russell Riopelle 10,072 * 10,072 0 *
Bratskeir & Co. 29,700 * 7,800 21,900 *
</TABLE>
* Less than one percent
(1) Includes (i) shares of Common Stock issuable upon exercise of all
options, warrants, and stock appreciation rights and conversion of all
Series B Preferred, based on the lesser of current or future conversion
prices and (ii) shares that have been registered on previous
registration statements but have not been sold as of January 19, 1999.
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<PAGE>
(2) Gives effect to the sale of all the shares of Common Stock being offered
hereby.
(3) Consists of 660,671 shares of Common Stock issuable upon the exercise
of warrants at $2.00 per share and 1,284,039 shares of Common Stock
issuable upon conversion of Series B Preferred Stock at $1.33 per share.
(4) Consists of 664,329 shares of Common Stock issuable upon the exercise of
warrants at $2.00 per share and 1,291,149 shares of Common Stock
issuable upon conversion of Series B Preferred Stock at $1.33 per share.
(5) Consists of 124,491 shares of Common Stock issuable upon the exercise of
warrants at $2.00 per share and 241,953 shares of Common Stock issuable
upon conversion of Series B Preferred Stock at $1.33 per share.
(6) Includes 178,016 shares of Common Stock issuable upon the exercise of
warrants at $2.00 per share and 345,980 shares of Common Stock issuable
upon conversion of Series B Preferred Stock at $1.33 per share.
(7) Consists of 292,024 shares of Common Stock issuable upon the exercise of
warrants at $2.00 per share and 567,559 shares of Common Stock issuable
upon conversion of Series B Preferred Stock at $1.33 per share.
(8) Consists of 21,632 shares of Common Stock issuable upon the exercise of
warrants at $2.00 per share per share and 42,041 shares of Common Stock
issuable upon conversion of Series B Preferred Stock at $1.33 per share.
(9) Consists of 25,000 shares of Common Stock issuable upon the exercise of
options at $1.50 per share and 50,000 shares of Common Stock issuable
upon the exercise of stock appreciation rights at $1.50 per share.
(10) Consists of Common Stock issuable upon the exercise of options at $1.60
per share.
(11) Consists of Common Stock issuable upon the exercise of options at $1.50
per share.
(12) Consists of 25,000 shares of Common Stock issuable upon the exercise
of options at $1.60 per share and 50,000 shares of Common Stock
issuable upon the exercise of stock appreciation rights at $1.50 per
share.
(13) Consists of 323,000 shares of Common Stock issuable upon the exercise of
options at $1.50 per share and 201,000 shares of Common Stock issuable
upon the exercise of options at $1.60 per share.
(14) Consists of 62,500 shares of Common Stock issuable upon the exercise
of warrants at $1.50 per share and 12,500 shares of Common Stock
issuable upon the exercise of options at $1.60 per share.
(15) Consists of 50,000 shares of Common Stock issuable upon the exercise
of warrants at $1.50 per share and 25,000 shares of Common Stock
issuable upon the exercise of options at $1.60 per share.
(16) Consists of Common Stock issuable upon the exercise of options at $1.63
per share.
(17) Consists of 530,000 shares of Common Stock issuable upon the exercise
of options at $1.50 per share and 330,000 shares of Common Stock
issuable upon the exercise of options at $1.60 per share.
(18) Consists of 1,094,000 shares of Common Stock issuable upon the exercise
of options at $1.50 per share and 525,000 shares of Common Stock
issuable upon the exercise of options at $1.60 per share.
(19) Consists of Common Stock issuable upon the exercise of stock
appreciation rights at $1.50 per share.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The total authorized capital stock of ACTV consists of 65,000,000
shares of Common Stock, par value $0.10 per share, and 1,000,000 shares of
Preferred Stock, par value $0.10 per share. The following descriptions of
capital stock are qualified in all respects by reference to the Restated
Certificate of Incorporation and By-Laws of ACTV, which are incorporated by
reference as exhibits to the Registration Statement of which this Prospectus is
a part.
Common Stock
The holders of Common Stock will elect all directors and are
entitled to one vote for each share held of record. As of the date of this
Prospectus, 32,260,407 shares of Common Stock were issued and outstanding. All
shares of Common Stock will participate equally in dividends, when and as
declared by the Board of Directors and in net assets on liquidation. The shares
of Common Stock will have no preference, conversion, exchange, preemptive or
cumulative voting rights.
Preferred Stock
ACTV's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of Preferred Stock with designations, rights and preferences
determined from time to time by its board of directors. Accordingly, ACTV's
Board of Directors is empowered, without stockholder approval, to issue
Preferred Stock with dividend, liquidation, conversion or other rights that
could adversely affect the rights of holders of the Common Stock. Except as set
forth below, ACTV has no current plans to issue any shares of its Preferred
Stock, but there can be no assurance that it will not do so in the future.
ACTV has designated 120,000 shares of its Preferred Stock as
Series A 7% Convertible Preferred Stock ("Series A Preferred"). In November
1997, ACTV issued 86,200 shares of the Series A Preferred in exchange for
consideration equal to $25.00 per share. The Series A Preferred has a
liquidation preference $25.00 per share and pays a dividend, in cash or
accumulated and pain in Common Stock upon conversion, of 7% per annum. The
Series A Preferred is convertible into Common Stock. The number of shares issued
upon conversion is determined by dividing the liquidation value of $25.00 plus
accrued dividends by the conversion price of $1.50 per common share. As of the
date of this Prospectus 56,300 shares of Series A Preferred remain outstanding
and would be convertible into approximately 1.0 million shares of Common Stock
if exchanged as of January 19, 1999.
ACTV has designated 6,110 shares of its Preferred Stock as Series
B 10% Convertible Preferred Stock ("Series B Preferred"). In November 1998, ACTV
issued 5,018 shares of the Series B Preferred as a partial exchange for
approximately 179,000 shares of exchangeable preferred stock, which had been
issued by a subsidiary of ACTV (see "Other Derivative Securities"). The Series B
Preferred has a liquidation preference $1,000.00 per share and pays a dividend,
in cash or accumulated and paid in Common Stock upon conversion, of 10% per
annum.
The Series B Preferred is fully redeemable by ACTV at any time at
a 10% premium above face value plus accrued dividends. The holders of Series B
Preferred are prohibited from converting any shares into Common Stock through
November 13, 1999, whether or not ACTV gives a notice of redemption during this
period. Beginning November 13, 1999, the number of shares issued upon conversion
is determined by dividing the liquidation value of $1,000.00 plus accrued
dividends by the conversion price of $2.00 per
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<PAGE>
common share. Beginning February 13, 1998, the number of shares issued upon
conversion is determined by dividing the liquidation value of $1,000.00 plus
accrued dividends by the conversion price of $1.33 per common share. As of the
date of this Prospectus 5,018 shares of Series B Preferred remain outstanding.
Such preferred shares are currently not convertible into Common Stock and will
be convertible into Common Stock only after November 23, 1999.
Other Derivative Securities
In August 1996, one of ACTV's wholly-owned subsidiaries conducted
a private placement in which it issued an aggregate of 400,000 shares of
exchangeable preferred stock ("Exchangeable Preferred Stock") at $25.00 per
share and placement agent's warrants to purchase an aggregate of 36,000 shares
of Exchangeable Preferred Stock at $25.00 per share. The Exchangeable Preferred
Stock was exchangeable into Common Stock at varying prices.
During November and December 1998, all of the outstanding
Exchangeable Preferred Stock was either exchanged for Common Stock or for a
combination of Common Stock, warrants and Series B Preferred. In addition all of
the outstanding warrants to purchase Exchangeable Preferred Stock were exercised
and simultaneously converted into Common Stock.
Transfer Agent
ACTV's transfer agent is Continental Stock Transfer & Trust
Company, New York, New York 10007.
Shares Eligible for Future Sale
Assuming exercise/conversion of all of the Common Stock offered
in this prospectus that are issuable pursuant to warrants, options, stock
appreciation rights, and Series B Preferred Stock, there will be 41,515,474
shares of Common Stock outstanding. Of these shares, the Shares being registered
hereby will be freely tradable without restriction under the Securities Act, for
so long as this Prospectus is kept current by ACTV. An aggregate of
approximately 2.6 million shares of Common Stock held by existing stockholders
will be "restricted" shares as defined in Rule 144.
In general, under Rule 144 a person (or group of persons whose
shares are aggregated) who has beneficially owned restricted shares of ACTV for
at least one year, including any person who may be deemed to be an "affiliate"
of ACTV (as the term "affiliate" is defined under the Securities Act), is
entitled to sell in normal brokerage transactions during the periods when
certain information regarding ACTV is publicly available, within any three-month
period, an amount of shares that does not exceed the greater of (i) the average
weekly trading volume in ACTV's shares during the four calendar weeks preceding
such sale or (ii) 1% of the shares then outstanding. A person who has not been
an "affiliate" of ACTV for the three months prior to such sale and who has held
restricted shares for at least two years would be entitled to sell such shares
without restriction. Most of such restricted shares are held by non-affiliates
of ACTV who will not be able to sell such shares under Rule 144 until October
1999. Actual sales, or the prospect of sales by the present stockholders of
ACTV, or by future holders of restricted securities under Rule 144, or
otherwise, may, in the future, have a depressive effect upon the price of ACTV's
shares of Common Stock in any market that may develop therefor.
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<PAGE>
PLAN OF DISTRIBUTION
Up to 11,832,918 of the Security Holders' Shares may be sold by
the Selling Security Holders who will have acquired such shares from ACTV upon
the exercise of options, warrants, stock appreciation rights, and conversion of
Series B Preferred Stock. ACTV will not receive any of the proceeds from any
sales by Selling Security Holders of the Security Holders' Shares, but will
receive the exercise price upon the exercise of options and warrants by the
Selling Security Holders. See "Selling Security Holders."
The Selling Security Holders have advised ACTV that the sale or
distribution of the Common Stock may be effected directly to purchasers by the
Selling Security Holders as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions (which
may involve crosses or block transactions) (i) on the Boston Stock Exchange, on
the Nasdaq SmallCap Market, or in the over-the-counter market, (ii) in
transactions otherwise than on any stock exchange or in the over-the-counter
market, or (iii) through the writing of options (whether such options are listed
on an options exchange or otherwise) on, or settlement of short sales of, the
Common Stock. Any of such transactions may be effected at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at varying prices determined at the time of sale or at negotiated or
fixed prices, in each case as determined by the Selling Security Holder or by
agreement between the Selling Security Holder and underwriters, brokers, dealers
or agents or purchasers. If the Selling Security Holders effect such
transactions by selling Common Stock to or through underwriters, brokers,
dealers or agents, such underwriters, brokers, dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Security Holders or commissions from purchasers of Common Stock for whom
they may act as agent (which discounts, concessions or commissions as to
particular underwriters, brokers, dealers or agents may be in excess of those
customary in the types of transactions involved). The Selling Security Holders
and any brokers, dealers or agents that participate in the distribution of the
Common Stock may be deemed to be underwriters, and any profit on the sale of
Common Stock by them and any discounts, concessions or commissions received by
any such underwriters, brokers, dealers or agents may be deemed to be
underwriting discounts and commissions under the Securities Act.
Because the Selling Security Holders may each be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act, the
Selling Security Holders will be subject to prospectus delivery requirements
under the Securities Act. Furthermore, in the event of a "distribution" of its
shares, the Selling Security Holder, any selling broker or dealer and any
"affiliated purchasers" may be subject to Regulation M under the Exchange Act
until its participation in that distribution is completed.
At the time of a particular offer of Security Holders' Shares is
made by or on behalf of any of the Selling Security Holders, to the extent such
offer constitutes a distribution under the Securities Act, a supplement to this
Prospectus will be distributed, which will set forth the type and number of
securities being offered by such Selling Security Holders and the terms of such
offering, including the name or names and addresses of any underwriters, dealers
or agents, the purchase price paid by any underwriter for securities purchased
from the Selling Security Holder and any discounts, commissions or concessions
allowed or reallowed or paid to dealers, and the proposed selling price to the
public.
ACTV will bear all costs and expenses of the registration under
the Securities Act and certain state securities laws of the Security Holders'
Shares. However, all brokerage commissions, if any, attributable to the sale of
such shares by holders thereof will be borne by such holders.
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<PAGE>
The shares that may be offered from time to time by Selling
Security Holders may be sold through ordinary brokerage transactions in the
over-the-counter market or on the Boston Stock Exchange, in negotiated
transactions or otherwise, at market prices prevailing at the time of sale or at
negotiated prices.
Under the Securities Exchange Act of 1934 (the "Exchange Act")
and the regulations thereunder, any person engaged in a distribution of the
securities offered by this Prospectus may not simultaneously engage in
market-making activities with respect to shares of the Common Stock during the
applicable "cooling off" period (two or nine days) prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Security Holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including, without limitation,
Regulation M, in connection with transactions in the securities, which
provisions may limit the timing of purchases and sales of the securities by the
Selling Security Holders.
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LEGAL MATTERS
Certain legal matters, including the legality of the issuance by
ACTV of the shares of Common Stock offered herein, are being passed upon for
ACTV by Gersten, Savage & Kaplowitz, LLP ("GSK"), 101 East 52nd Street, New
York, New York 10022. Jay Kaplowitz, a partner in GSK, ACTV's counsel, owns
options to purchase 25,000 shares of ACTV, Inc. Common Stock.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this Prospectus by reference from ACTV's
Annual Report on Form 10-K/A1 for the year ended December 31, 1997 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, (which expresses an
unqualified opinion and includes an explanatory paragraph related to the
restatement described in Note 16), and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to paragraph "Twelfth" of the Restated
Certificate of Incorporation of ACTV (Exhibit 3(i)), which contains a provision,
as permitted by Section 145 of the Delaware General Corporation Law, which
eliminates the personal liability of directors to ACTV and its stockholders for
monetary damages for unintentional breach of a director's fiduciary duty to
ACTV. This provision does not permit any limitation on, or elimination of the
liability of a director for disloyalty to ACTV or its stockholders, for failing
to acting good faith, for engaging in intentional misconduct or a knowing
violation of law, for obtaining an improper personal benefit or for paying a
dividend or approving a stock repurchase that was illegal under the Delaware
General Corporation Law.
The Restated Certificate of Incorporation and By-Laws of ACTV
require ACTV to indemnify directors and officers against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation (a "derivative action") if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of ACTV,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe their conduct was unlawful. A similar standard of care is applicable
in the case of derivative actions, except that indemnification only extends to
expenses (including attorneys fees) incurred in connection with defense or
settlement of such an action. Moreover, the Delaware General Corporation Law
requires court approval before there can be any indemnification where the person
seeking indemnification has been found liable to ACTV.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of ACTV pursuant to the foregoing provisions, or otherwise, ACTV has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by ACTV of expenses incurred or paid by
a director, officer or controlling person of ACTV in the successful defense of
any action, suit or proceeding) in connection with the securities being
registered, ACTV will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the
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question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
24
<PAGE>
You may rely only on the information contained in this Prospectus. We have not
authorized anyone to provide information different from that contained in this
Prospectus. Neither the delivery of this Prospectus nor sale of common stock
means that information contained in this Prospectus is correct after the date of
this Prospectus. This Prospectus is not an offer to sell or solicitation of an
offer to buy these shares of common stock in any circumstances under which the
offer or solicitation is unlawful.
TABLE OF CONTENTS
Page
----
Where You Can Find More Information 4
Prospectus Summary 5
Risk Factors 8
Use of Proceeds 16
Material Changes 16
Selling Security Holders 16
Description of Capital Stock 19
Plan of Distribution 21
Legal Matters 23
Experts 23
Indemnification of Directors and Officers 23
ACTV, INC.
11,832,918 shares of Common Stock offered by Selling Security Holders,
consisting of:
(a) 2,577,851 shares of Common Stock, and
(b) 9,255,067 shares of Common Stock issuable upon the exercise of options,
warrants, stock appreciation rights and upon the conversion of convertible
preferred shares
January ___, 1999
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing a Form S-3 Registration Statement and has duly
caused this Form S-3 Registration Statement, Pre-Effective Amendment No. 1, to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York and State of New York on the 19th of January, 1999.
ACTV, INC.
By: /s/ William C. Samuels
------------------------
William C. Samuels
Chairman of the Board, Chief
Executive Officer, President
and Director
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and has appointed William C. Samuels,
President and Chief Executive Officer, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her 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 and all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting said attorney-in-fact and agent, full power and authority
to do and perform each and every act and thing requisite and necessary to be
done in and about the premises, as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Form S-3 Registration Statement, Pre-Effective Amendment No. 1, has been signed
by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William C. Samuels Chairman of the Board, Chief January 19, 1999
- ---------------------- Executive Officer and President
William C. Samuels
/s/ David Reese Executive Vice-President, January 19, 1999
- --------------- President--ACTV Entertainment, Inc.
David Reese and Director
/s/ Bruce Crowley Executive Vice-President, January 19, 1999
- ----------------- President--ACTV Net, Inc.
Bruce Crowley and Director
/s/ William A. Frank Director January 19, 1999
- --------------------
William A. Frank
</TABLE>
26
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Steven W. Schuster Director January 19, 1999
- ----------------------
Steven W. Schuster
/s/ Christopher C. Cline Senior Vice President, Chief Financial January 19, 1999
- ------------------------ Officer, Secretary and Chief Accounting
Christopher C. Cline Officer
</TABLE>
27
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. OTHER EXPENSE OF ISSUANCE AND DISTRIBUTION.
SEC registration fee $18,083.28
Fees and expenses of counsel 5,000.00
Miscellaneous 2,000.00
Total $25,083.28
15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to paragraph "Twelfth" of the Restated Certificate of
Incorporation of the Registrant (Exhibit 3(i)), which contains a
provision, as permitted by Section 145 of the Delaware General
Corporation Law, which eliminates the personal liability of directors to
the Registrant and its stockholders for monetary damages for
unintentional breach of a director's fiduciary duty to the Registrant.
This provision does not permit any limitation on, or elimination of the
liability of a director for disloyalty to the Registrant or its
stockholders, for failing to acting good faith, for engaging in
intentional misconduct or a knowing violation of law, for obtaining an
improper personal benefit or for paying a dividend or approving a stock
repurchase that was illegal under the Delaware General Corporation Law.
The Restated Certificate of Incorporation and By-Laws of the
Registrant require the Registrant to indemnify directors and officers
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits
or proceedings, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation (a
"derivative action") if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe their conduct was unlawful. A similar
standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys fees)
incurred in connection with defense or settlement of such an action.
Moreover, the Delaware General Corporation Law requires court approval
before there can be any indemnification where the person seeking
indemnification has been found liable to ACTV.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) in connection with
the securities being registered, the Registrant will, unless in the
opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
28
<PAGE>
such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
16. EXHIBITS
3.1.c Certificate of Designation of Series B 10% Convertible Preferred
Stock of ACTV, Inc.*
5. Opinion of Gersten, Savage, Kaplowitz & Fredericks, LLP*
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Gersten, Savage, Kaplowitz & Fredericks, LLP
*Incorporated by reference to ACTV, Inc.'s Form S-3 Registration Statement filed
December 30, 1998.
17. UNDERTAKINGS.
ACTV hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
in the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the Offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling
persons of ACTV pursuant to the foregoing provisions, or otherwise, ACTV
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in
the Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by ACTV
29
<PAGE>
of expenses incurred or paid by a director, officer, or controlling
person of ACTV 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, ACTV will, unless in
the opinion of 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 of 1933 and will be governed by the final
adjudication of such issue.
EXHIBIT INDEX
3.1.c Certificate of Designation of Series B 10% Convertible Preferred
Stock of ACTV, Inc.*
5. Opinion of Gersten, Savage, Kaplowitz & Fredericks, LLP*
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Gersten, Savage, Kaplowitz & Fredericks, LLP
*Incorporated by reference to ACTV, Inc.'s Form S-3 Registration Statement filed
December 30, 1998.
30
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment No.
1 to Registration Statement No. 333-69923 of ACTV, Inc. on Form S-3, of our
report dated March 18, 1998, April 17, 1998, as to Note 16, (which expresses an
unqualified opinion and includes an explanatory paragraph relating to the
restatement described in Note 16), appearing in the Annual Report on Form 10-K/A
of ACTV, Inc. for the year ended December 31, 1997, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche, LLP
- --------------------------
New York, New York
January 22, 1999
31
EXHIBIT 23.2
[Gersten, Savage & Kaplowitz, LLP Letterhead]
January 19, 1999
ACTV, Inc.
1270 Avenue of the Americas
New York, New York 10020
Gentlemen:
We hereby consent to the filing of the opinion previously filed as Exhibit 23.1
to the Registration Statement on Form S-3 filed on December 30, 1998, in this
Registration Statement on Form S-3, Pre-Effective Amendment No. 1, and to the
reference to our firm under the caption "Legal Matters" in the Registration
Statement. In so doing, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Gersten, Savage & Kaplowitz, LLP
------------------------------------
GERSTEN, SAVAGE & KAPLOWITZ, LLP
32
