PROSPECTUS
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UC TELEVISION NETWORK CORP.
10,823,046 SHARES OF COMMON STOCK
This Prospectus relates to the offering by (i) UC Television Network Corp.,
formerly known as Laser Video Network, Inc. (the "Company"), of 4,914,293 shares
of the Company's common stock, par value $.001 per share (the "Common Stock"),
that are issuable upon the exercise of outstanding warrants (the "Warrants")
included in units (the "Units") sold by the Company to certain accredited
investors (collectively, the "Private Placement Stockholders") in a private
placement in April and May of 1996 (the "Private Placement"), (ii) the Private
Placement Stockholders of 4,914,293 shares of Common Stock included in the Units
and (iii) The Roberts Family Trust of 1991 of 11,604 shares of Common Stock
(together with the Private Placement Stockholders, the "Selling Stockholders").
Each outstanding Warrant is immediately exercisable and currently entitles the
holder thereof to purchase 142,857 shares of Common Stock at an exercise price
of $1.29 per share at any time through April 25, 2001. At July 30, 1996, none of
the Warrants had been exercised.
This Prospectus also relates to the offering by the Company of (i) 491,428
shares of the Company's Common Stock that are issuable to Barington Capital,
L.P., (the "Placement Agent") upon exercise by Barington Capital Group, L.P.
(the "Placement Agent") of an Option, dated April 26, 1996, to purchase 3.44
Units from the Company (the "Unit Purchase Option") and (ii) 491,428 shares of
common stock issuable to the Placement Agent upon exercise of the Warrants
issuable upon exercise of the Unit Purchase Option.
The Common Stock of the Company is quoted on the Nasdaq Stock Market's
SmallCap Market ("Nasdaq") under the symbol "UCTN." On August 1, 1996, the last
reported sale price of the Common Stock as quoted on the Nasdaq was $1.00 per
share.
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock by the Selling Stockholders or the Placement Agent.
However, the Company will receive approximately $7,317,380 if all of the
Warrants (inclusive of the Warrants subject to the Unit Purchase Option) are
exercised and the Placement Agent's Unit Purchase Option is exercised in full.
See "Use of Proceeds."
All expenses of the registration of securities covered by this Prospectus,
estimated to be approximately $23,000, are to be borne by the Company.
A portion of the Common Stock offered by this Prospectus may be sold
following the effective date of this Prospectus by the Selling Stockholders, or
by their transferees. The distribution of the securities offered hereby may be
effected in one or more transactions that may take place on the over-the-counter
market, including ordinary broker transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the Selling Stockholders.
The Selling Stockholders, Placement Agent and intermediaries through whom
such securities are sold may be deemed "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"), with respect to the securities
offered, and any profits realized or commissions received may be deemed
underwriting compensation.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. SEE "RISK FACTORS," PAGE 4 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------------
THE DATE OF THIS PROSPECTUS IS AUGUST 14, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Northeast
Regional Office, Seven World Trade Center, Suite 1300, New York, New York 10048,
and Midwest Regional Office, Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained at
prescribed rates from the Public Reference Section of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
World Wide Web site that contains reports, proxy and information statements and
other information regarding the Company. The address of such site is
http://www.sec.gov.
This Prospectus constitutes part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Act. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is hereby made
to the Registration Statement. The statements contained in this Prospectus as to
the contents of any contract or other document identified as exhibits in this
Prospectus are not necessarily complete and, in each instance, reference is made
to a copy of such contract or document filed as an exhibit to the Registration
Statement. Each such statement is qualified in any and all respects by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following Company documents filed with the Commission are incorporated
by reference in this Prospectus:
1. Annual Report on Form 10-KSB for the year ended October 31, 1995.
2. Quarterly Report on Form 10-QSB for the quarter ended January 31, 1996.
3. Quarterly Report on From 10-QSB for the quarter ended April 30, 1996.
4. Proxy Statement for the July 30, 1996 Special Meeting of Stockholders.
5. Proxy Statement for the 1996 Annual Meeting of Stockholders.
6. Report on Form 8-K, dated March 4, 1996, regarding the resignation of
two directors of the Company.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the securities
covered by this Prospectus shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents.
Any statements contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, upon written or oral request of any such person, a
copy of any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus other than the exhibits thereto.
Requests for such copies should be directed to the Company at 645 Fifth Avenue,
East Wing, New York, New York 10022, Attn:
Alan Pearl, Chief Financial Officer and Treasurer, telephone (212) 888-0617.
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THE COMPANY
General
The Company is an interactive multimedia company whose principal
activities, since the fourth quarter of the fiscal year ended October 31, 1993
("Fiscal 1993"), involve operating and marketing its College Television Network
("CTN"), a private commercial television network airing the Company's
programming on university and college campuses located throughout the United
States. As of July 8, 1996, CTN was installed or contracted for installation in
224 locations throughout the country, as compared with 211 locations as of July
6, 1995. Through a single-channel interactive television system (the "System")
placed free of charge in locations where students congregate, such as
cafeterias, student centers and recreational facilities, CTN currently reaches a
daily viewership, as estimated by Sound Data, a marketing consultant firm, of
more than 500,000 students.
The Company believes CTN to be the largest college and university private
commercial television network in the United States. CTN is installed in many of
the nation's largest colleges and universities, including among others: Penn
State University, Michigan State University, Arizona State University, UCLA,
Florida State University, Syracuse University, Georgia Tech University, North
Carolina State University, University of Missouri, University of Kentucky,
University of Alabama and New York University. There are approximately 4,000
colleges and universities in the United States. The Company's goal is to place
CTN in a significant number of these institutions.
CTN, which currently airs primarily music videos, is viewed over 25-inch
television monitors strategically placed throughout the installation site to
provide the highest degree of exposure. Each site is equipped with an
interactive touch screen unit and from three to ten monitors. The System allows
students to select from a wide variety of music videos or to view a pre-set
format. In order to enhance the flexibility and program diversification of CTN
and to maintain its state-of-the-art appeal, the Company intends to replace its
existing CD-ROM technology by converting each System to receive programming
directly through satellite-delivered transmission. Management believes satellite
delivery will, after completion, likely result in significant cost savings to
the Company and will facilitate expanded programming opportunities, such as
frequent updates of news, sports and campus current events, in addition to music
videos. The Company has recently entered into agreements with IBM Credit
Corporation ("IBM Credit") to finance the conversion of the entire network to a
Hughes Direct PC satellite-delivery system and with International Business
Machines Corporation ("IBM") to provide hardware and services required in
connection with such conversion.
The Company derives its revenues from advertisers displaying their
commercials on CTN, with the Company presently allotting eight minutes of
advertising per hour. The Company believes CTN is well-positioned to offer
advertisers an inexpensive and effective way to reach a highly desirable
audience: 18-25 year old students with significant disposable income, a
demographic group with proven attractiveness to national advertisers. Each
advertiser's cost per thousand viewers ("CPM") on CTN is substantially below
that of national advertising in competing media, such as radio, television, MTV,
campus newspapers or campus billboards. National advertisers on CTN during the
fiscal year ended October 31, 1995 ("Fiscal 1995") included Burger King, Coca
Cola, Discover Card, Dodge Neon, Gatorade, Gramercy Pictures, MasterCard, Mistic
Beverages, Nestles, New Line Cinema, Pontiac, Reebok, Sony, Twentieth Century
Fox, Universal Pictures, Visa and Warner Brothers. Generally, the Company's mix
of advertisers on CTN changes from time to time. The Company's revenues have
grown from $240,920 in Fiscal 1993, to $705,413 in the fiscal year ended October
31, 1994, to $1,621,465 in Fiscal 1995.
The Company's overall strategy is to expand the number of institutions in
which CTN is being offered and to expand the number of advertisers. As
additional institutions are added, the Company expects to be able to attract
additional advertisers as well as increase its CPM rate, which is currently
significantly below that of other competing media. If the Company successfully
meets these objectives, revenues should grow significantly and enhance
profitability. The Company also continues to explore other avenues where its
interactive technology can be used (i.e., on-line sales, Internet sales,
couponing and the sale of market research information collected by the touch
screen).
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<PAGE>
The Company, a Delaware corporation, commenced operations in January 1991.
Its principal executive offices are located at 645 Fifth Avenue, East Wing, New
York, New York 10022. The Company's telephone number is (212) 888-0617.
Recent Developments
In July 1996, the Company changed its name from Laser Video Network, Inc.
to UC Television Network Corp. Also, in July 1996, the Company increased its
authorized shares of Common Stock from 20 million shares to 50 million shares.
RISK FACTORS
Prospective purchasers of the securities offered hereby, prior to making an
investment decision, should carefully consider, along with other matters
referred to herein, the following risk factors:
1. NET LOSSES AND EXPECTATION OF CONTINUING LOSSES. The Company's
statements of operations for the six months ended April 30, 1996 and for Fiscal
1995 reflect net losses of $902,524 and $2,494,387, respectively, or
approximately $.15 and $.44 per share, respectively. In addition, the Company
expects to incur significant operating losses through the fiscal year ended
October 31, 1996 and until such time, if ever, as operations generate sufficient
revenues to cover its costs.
2. NEGATIVE CASH FLOW; GOING CONCERN ISSUE. Since inception, the Company
has experienced, and is continuing to experience, operating losses and negative
cash flow from operations. There can be no assurance that the Company's
operations will ever be profitable, or that the Company will have sufficient
funds available to continue its activities. See "--Need for Additional
Financing." The Company's auditors have issued their Fiscal 1995 Report of
Independent Auditors which contains a reference to the Company's ability to
continue as a going concern.
3. NEED FOR ADDITIONAL FINANCING. Because the Company continues to operate
at a loss, the Company anticipates that additional financing will be needed in
order to continue the installation of the Systems at a rate necessary to achieve
projected levels of operations and to expand programming through the use of
satellite-delivered transmission. The Company has no commitment from others to
provide financing and there can be no assurance that additional financing will
be available to the Company and if so, whether it will be on terms acceptable to
the Company. The Company's inability to receive additional financing could have
a material adverse effect on the Company's financial condition and results of
operations, and the Company will have to substantially reduce or cease
operations.
4. LIMITED OPERATING HISTORY. The Company first began developing and
marketing CTN in the third quarter of Fiscal 1993 and, accordingly, the Company
has a relatively limited operating history with respect thereto. In light of
this limited operating history, the likelihood of the future success of the
Company must be evaluated in light of the problems, expenses, difficulties,
risks and complications frequently encountered in connection with similarly
situated companies. There can be no assurance that future revenues of the
Company will ever be significant or that the Company's operations will ever be
profitable.
5. SEASONALITY. The Company's revenues are affected by the pattern of
seasonality common to most school-related businesses. Historically, the Company
generates a significant portion of its revenues during the September through May
months and substantially less revenues during the summer months when colleges
and universities do not hold regular classes.
6. RELIANCE ON ADVERTISING REVENUES. The Company derives its revenues from
advertisers displaying their commercials on CTN. Although the Company has
agreements with national advertisers and has held discussions or had prior
agreements with other national advertisers, no assurance can be given that these
or other advertisers will enter into longer term contracts with, or continue to
purchase advertising from, the Company, or that future significant advertising
revenues will ever be generated. Because advertisers can be expected to
discontinue from time to time, the Company anticipates that it will experience
fluctuations in operating results and revenues. The failure to attract and enter
into new and/or additional agreements with national advertisers and to
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<PAGE>
derive significant revenues therefrom would have a material adverse effect on
the Company and its financial condition.
7. DEPENDENCE ON MARKET ACCEPTANCE. The success of CTN will depend upon
several factors, including the ability of the Company to secure a sufficient
number of additional installation sites and its ability to maintain viewer
interest in order to continue to attract advertisers. There can be no assurance
that CTN will continue to be accepted in the marketplace. The Company is
marketing CTN directly to colleges and universities and through operators having
relationships, contractual or otherwise, with such institutions. As a result,
the Company is substantially dependent on the efforts of its marketing personnel
and management to generate revenues for the Company.
8. LICENSE AGREEMENTS. The Company obtains music videos pursuant to written
or oral licensing agreements with music companies. The Company has such
agreements with a number of the major music company labels, which are
represented by Sony, Warner/Electric/Atlantic, EMI, Polygram, MCA and BMG. Each
of these agreements permits the Company to use the music videos for a modest
annual fee, which fee, the Company believes, is not material to either the
Company or the music companies. Such agreements are terminable by the licensor
on short notice. Although termination of substantially all or a large number of
the agreements would have a material adverse impact on the Company's operations,
the Company believes that such a termination is not likely to occur since it is
in the best interests of the music companies to have their music videos aired as
widely and as frequently as possible. The Company believes that its ability to
maintain access to music and other videos on a regular, long-term basis, on
terms favorable to the Company is important to its future success and
profitability.
9. IMPACT OF TECHNOLOGICAL CHANGES. The Company expects technological
developments and enhancements to continue at a rapid pace in the interactive
network and related industries, and there can be no assurance that technological
developments will not cause the Company to switch to a different transmission
technology or cause the Company's technology and products to be rendered
obsolete. The Company's future success will be largely dependent upon its
ability to adapt to technological change and remain competitive with others
involved with similar products or services.
10. RELIANCE ON KEY PERSONNEL AND MANAGEMENT. The Company is substantially
dependent on the efforts of Peter Kauff, its Chief Executive Officer, Alan
Pearl, its Chief Financial Officer and Treasurer, and Richard Vogel, its Chief
Technical Officer and Vice President of Product Development. The loss of one or
more of these executives could have a material adverse effect on the Company.
The Company maintains "key-man" insurance on the life of Mr. Kauff in the amount
of $1,000,000. The Company believes that it may be necessary to hire additional
experienced management personnel in order to facilitate the Company's planned
expansion. No assurance can be given that the Company will be successful in
recruiting and retaining such personnel or that such personnel will have the
necessary experience in this industry.
11. COMPETITION. CTN competes for advertisers with many other forms of
advertising media, including television, radio, print, direct mail and
billboard. Future competition could adversely affect the Company and its
financial condition. Moreover, to the extent that the number of desired
locations for Systems is limited, the Company may have to cause or persuade
potential targeted colleges and universities to remove and replace existing
alternative equipment with the Company's Systems. There can be no assurance that
the Company will be able to do so. In addition, because the Company currently
has minimal patent and copyright protection in respect of its proprietary
information and know-how, there are practically no intellectual property
barriers to prevent competitors from entering into this market. There is also no
assurance that someone with greater resources will not enter into the market,
particularly because there are few proprietary characteristics associated with
the business. As other organizations perceive the potential for commercial
application of the Company's product or service, competition is expected to
increase.
12. EFFECT OF OUTSTANDING WARRANTS AND OPTIONS; POSSIBLE IMPACT ON MARKET
PRICE AND FUTURE FINANCING. In addition to the Warrants included as part of the
Units sold to the Selling Stockholders and the Units subject to the Unit
Purchase Option, the Company has 144,979 Redeemable Class A Warrants and
2,270,021
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<PAGE>
Redeemable Class B Warrants outstanding, all of which expire on June 10, 1997.
Each Class A Warrant entitles the holder thereof to purchase 1.3 shares of
Common Stock and one Class B Warrant for $4.61 (subject to adjustment) and each
Class B Warrant entitles the holder to purchase 1.3 shares of Common Stock for
$6.91 (subject to adjustment). In addition, there is an outstanding option
expiring June 10, 1997 (the "IPO Unit Purchase Option") to purchase up to
109,502 units (subject to adjustment) (each unit consisting of two shares of
Common Stock, one Class A Warrant and one Class B Warrant, the "IPO Units"),
granted to the underwriter of the Company's initial public offering (the "IPO"),
exercisable at $8.63 per unit (subject to adjustment). Any shares of Common
Stock issued upon exercise of the Class A and Class B Warrants or the IPO Unit
Purchase Option may be tradeable without restriction, provided that the Company
satisfies certain securities registration and qualification requirements. As of
June 27, 1996 there are outstanding options to purchase 526,791 shares of Common
Stock granted to certain officers and directors of the Company pursuant to stock
option plans of the Company. Certain stockholders of the Company also have
demand and piggy-back registration rights. See "Description of
Securities--Registration Rights." While such rights, warrants and options are
outstanding, they may (i) adversely affect the market price of such securities
and (ii) impair the ability of the Company to, and the terms on which it can,
raise additional equity capital or obtain debt financing.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
shares of the Common Stock being offered hereby. If all of the Warrants are
exercised and the Placement Agent's Unit Purchase Option is exercised in full,
the Company will receive approximately $7,317,380. There can be no assurance
that any of the Warrants will be exercised.
SELLING STOCKHOLDERS
The following table sets forth the beneficial ownership of Common Stock by
the Selling Stockholders and the Placement Agent as of June 27, 1996:
<TABLE>
<CAPTION>
Amount of Beneficial Amount of Beneficial
Name of Ownership of Ownership of
Beneficial Owner Common Stock Prior to Number of Shares Common Stock After
Offering(1) to be Offered Offering(4)
Number Percentage of Number Percentage of
of Outstanding of Outstanding
Shares(2) Shares(3) Shares Shares
<S> <C> <C> <C> <C> <C>
Paul Alter 214,286 1.9% 214,286 0 0
Marvin Barish 142,858 1.3% 142,858 0 0
Jim Beldner 285,714 2.6% 285,714 0 0
John Bykowsky 142,856 1.3% 142,856 0 0
CLFS Equities 285,714 2.6% 285,714 0 0
Dennis J. Drebsky 142,858 1.3% 142,858 0 0
Thomas Espy 47,620 * 47,620 0 0
Drobny Fischer LLC 142,858 1.3% 142,858 0 0
Harold Fischer 285,714 2.6% 285,714 0 0
David W. Fried 142,858 1.3% 142,858 0 0
Fulton Street Partners 214,286 1.9% 214,286 0 0
Douglas Gill 285,714 2.6% 285,714 0 0
Stuart Gold 285,714 2.6% 285,714 0 0
Jay Goldman
Master Limited Partnership 228,572 2.1% 228,572 0 0
Paul Goodman 214,286 1.9% 214,286 0 0
Albert Goudis and
Richard Goudis, JTWROS 142,858 1.3% 142,858 0 0
Jimmy B. Hanks &
San Juanita R. Hanks, JTWROS 95,238 * 95,238 0 0
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Amount of Beneficial Amount of Beneficial
Name of Ownership of Ownership of
Beneficial Owner Common Stock Prior to Number of Shares Common Stock After
Offering(1) to be Offered Offering(4)
Number Percentage of Number Percentage of
of Outstanding of Outstanding
Shares(2) Shares(3) Shares Shares
<S> <C> <C> <C> <C> <C>
Peter Horrigan 142,858 1.3% 142,858 0 0
Steven Israel 142,858 1.3% 142,858 0 0
Paul Jurgensen 114,286 1.0% 114,286 0 0
Kensington Partners, L.P. 428,572 3.9% 428,572 0 0
Thomas P. Kikis 214,286 1.9% 214,286 0 0
David Kohane, D.M.D. 285,714 2.6% 285,714 0 0
Leckson Unlimited 2,857,144 23.2% 2,857,144 0 0
Brett Levkoff 285,714 2.6% 285,714 0 0
Shelley Magness 57,144 * 57,144 0 0
Paul Matusow 142,858 1.3% 142,858 0 0
M. Arshad Mirza &
Najma A. Mirza, JTWROS 142,858 1.3% 142,858 0 0
Jayman Mistry 71,428 * 71,428 0 0
Guy Montanari 71,428 * 71,428 0 0
Steve Ostner 142,858 1.3% 142,858 0 0
Preferred Maintenance
Services, Inc. 57,144 * 57,144 0 0
Jerry Ruyan 114,286 1.0% 114,286 0 0
Wayne Saker 142,858 1.3% 142,858 0 0
Stan Sech 142,858 1.3% 142,858 0 0
Floyd M. Smith 71,428 * 71,428 0 0
Robert Spitzer 214,286 1.9% 214,286 0 0
Jack Threadgill 142,858 1.3% 142,858 0 0
David M. Walker and
Mary E. Walker, JTWROS 142,858 1.3% 142,858 0 0
Little Wings L.P. 400,000 3.6% 400,000 0 0
The Roberts Family Trust of 1991(5) 11,604 * 11,604 0 0
Barington Capital Group, L.P.(6) 982,856 8.3% 982,856 0 0
------- ------- -
Totals..................... 10,823,046 64.5%(7) 10,823,046 0 0
========== ========== =
</TABLE>
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* Less than 1%.
(1) For purposes of this table, a person or group of persons is deemed to
have "beneficial ownership" of any shares of Common Stock which such
person has the right to acquire after the date of this Prospectus. For
purposes of computing the percentage of outstanding shares of Common
Stock held by each person or group of persons named above, any
security which such person or persons has or have the right to acquire
after the date of this Prospectus is deemed to be outstanding but is
not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person. Except as indicated in the
footnotes to this table and pursuant to applicable community property
laws, the Company believes based on information supplied by such
persons, that the persons named in this table have sole voting power
with respect to all shares of Common Stock which they beneficially
own.
(2) Assuming the exercise of all of the Warrants by the Selling
Stockholders.
(3) Based on 10,899,157 shares of Common Stock outstanding plus in the
case of each individual Selling Stockholder the number of shares of
Common Stock issuable upon exercise of the Warrants held by such
Selling Stockholder and in the case of the Placement Agent the shares
of Common Stock issuable upon the exercise of the Unit Purchase Option
and the exercise of the Warrants granted thereunder.
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<PAGE>
(4) Assuming the sale of all shares of Common Stock being sold in this
offering.
(5) Stephen Roberts, a trustee of The Roberts Family Trust of 1991, is a
director of the Company.
(6) Assuming full exercise of the Unit Purchase Option.
(7) Based on 10,899,157 shares of Common Stock outstanding plus the
aggregate number of shares of Common Stock issuable upon exercise of
the Warrants by all Selling Stockholders and the Placement Agent.
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<PAGE>
PLAN OF DISTRIBUTION
The Company is hereby offering for sale pursuant to this Prospectus,
4,914,293 shares of Common Stock issuable upon exercise of the Warrants. The
Selling Stockholders are hereby offering for sale pursuant to this Prospectus,
an aggregate of 4,925,897 shares of Common Stock owned by them.
The Company is also hereby offering for sale pursuant to this Prospectus
491,428 shares of Common Stock issuable upon exercise of the Warrants that may
be purchased by the Placement Agent pursuant to the Unit Purchase Option and
491,418 shares of Common Stock that may be purchased by the Placement Agent
pursuant to the Unit Purchase Option.
The distribution of shares of Common Stock by the Selling Stockholders may
be effected in one or more transactions that may take place on the
over-the-counter market, including ordinary broker transactions, privately
negotiated transactions or through sales to one or more dealers for resale of
such securities as principals, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
Usual and customary or specifically negotiated brokerage fees or commissions may
be paid by the Selling Stockholders in connection with such sales of securities.
The Selling Stockholders and intermediaries through whom such securities
are sold may be deemed "underwriters" within the meaning of Section 2(11) of the
Act with respect to the securities offered, and any profits realized or
commissions received may be deemed underwriting compensation.
In order to comply with certain state securities laws, if applicable, the
securities offered hereby will not be sold in a particular state unless such
securities have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with.
DESCRIPTION OF SECURITIES
AUTHORIZED STOCK
The authorized capital stock of the Company presently consists of
50,000,000 shares of Common Stock and 2,000,000 shares of preferred stock, par
value $.001 per share (the "Preferred Stock"). The Company's Board of Directors
has authorized for issuance 1,500,000 shares of such preferred stock as Series A
Redeemable Preferred Stock ("Series A Preferred Stock") of which 96,667 are
presently outstanding.
COMMON STOCK
Subject to the prior rights of the holders of any shares of Preferred Stock
which have been issued and are outstanding or may be issued in the future, the
holders of the Common Stock are entitled to receive dividends from funds of the
Company legally available therefor when, as and if declared by the Board of
Directors of the Company, and are entitled to share ratably in all of the assets
of the Company available for distribution to holders of Common Stock upon the
liquidation, dissolution or winding-up of the affairs of the Company. There are
presently 95 record holders of the Common Stock, although the Company believes
there are approximately 1,500 beneficial owners of the Common Stock. Holders of
the Common Stock do not have any preemptive, subscription, redemption or
conversion rights. Holders of the Common Stock are entitled to one vote per
share on all matters which they are entitled to vote upon at meetings of
stockholders or upon actions taken by written consent pursuant to Delaware
corporate law. The holders of Common Stock do not have cumulative voting rights,
which means that the holders of more than 50% of such outstanding shares can
elect all of the directors of the Company. Certain holders of the Common Stock
have demand and/or piggyback registration rights. See "--Registration Rights"
below. All of the shares of the Common Stock currently issued and outstanding
are fully-paid and nonassessable. No dividends have been paid to holders of the
Common Stock since the inception of the Company, and no dividends are
anticipated to be declared or paid in the foreseeable future. The Common Stock
is currently quoted on Nasdaq. There can be no assurance, however, that such
securities will not subsequently be delisted from Nasdaq.
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PREFERRED STOCK
The Board of Directors of the Company has the authority, without further
action by the holders of the outstanding Common Stock, to issue Preferred Stock
from time to time in one or more classes or series, to fix the number of shares
constituting any class or series and the stated value thereof, if different from
the par value, and to fix the terms of any such series or class, including
dividend rights, dividend rates, conversion or exchange rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price and the liquidation preference of such class or series. The
Company presently has one series of Preferred Stock outstanding, the Series A
Preferred Stock. The Company has no present plans to issue any other series or
class of Preferred Stock. The designations, rights and preferences of the Series
A Preferred Stock are set forth in a Certificate of Designations, Rights and
Preferences which has been filed with the Secretary of State of the State of
Delaware.
Series A Preferred Stock. The Company has 1,500,000 authorized shares of
Series A Preferred Stock, of which 96,667 shares are currently issued and
outstanding and held of record by three persons.
Dividend and Other Rights. The shares of Series A Preferred Stock have no
conversion or preemptive rights. The Series A Preferred Stock has a
non-cumulative dividend of $0.10 per share, payable when, as and if declared by
the Company's Board of Directors and is subject to any legal and financing
agreement restrictions on the payment of dividends by the Company. No dividends
may be paid to the holders of Common Stock prior to payment of such dividend to
holders of Series A Preferred Stock. The Company paid dividends of $109,272 in
connection with the redemption of all but 100,000 shares of the Series A
Preferred Stock in June 1992 which were paid from the net proceeds of the IPO.
The Company is continuing to accrue the dividends previously declared on the
remaining 96,667 shares of Series A Preferred Stock which are presently intended
to be paid upon the redemption of such shares. As of April 30, 1996, the Company
had accrued $50,823 of dividends with respect to the outstanding shares of
Series A Preferred Stock which will be payable upon redemption.
Redemption. The Company has the right to redeem all, but not less than all,
of the outstanding Series A Preferred Stock at any time at a price equal to
$1.00 per share, plus all declared, accrued and unpaid dividends thereon. The
outstanding shares of Series A Preferred Stock, including all accrued dividends
thereon, are redeemable at any time upon the request of the holders thereof.
Voting Rights. The holders of the Series A Preferred Stock have no voting
rights other than those as are provided by statute.
Liquidation Preference. Each share of the Series A Preferred Stock shall
have a liquidation preference over the holders of the Common Stock equal to
$1.00 per share, plus the amount of all declared, accrued and unpaid dividends
thereon, upon the dissolution, liquidation or winding-up of the Company.
THE WARRANTS
The following statements relating to certain provisions of the Warrants are
summaries, do not purport to be complete and are subject to and qualified in
their entirety by reference to all of the provisions, including the definitions
of certain terms, contained in the Warrants (a copy of which is on file with the
Company).
General. Each Warrant entitles the holder to purchase 142,857 shares of
Common Stock at an exercise price of $1.29 per share, subject to adjustment. The
Warrants may be exercised at any time after issuance and will expire April 25,
2001.
Exercise. A Warrantholder may exercise a Warrant in whole, or in part from
time to time, by payment in cash or certified or official bank check of the
aggregate per share exercise price for the number of shares being purchased.
Holders of the Warrants as such will not have any of the rights or privileges of
stockholders of the Company prior to the exercise of the Warrants.
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Redemption. The Warrants are subject to redemption by the Company, upon 30
days' written notice, at a price of $.01 per Warrant, if the closing bid price
for the Common Stock has been at least $3.87 for the 20 trading day period
ending on the third day prior to the date on which notice of redemption is
given. For these purposes, the closing bid price of the Common Stock shall be
determined by the closing bid price, as reported by Nasdaq, so long as the
Common Stock is quoted on Nasdaq and, if the Common Stock is listed on a
securities exchange or the Nasdaq Stock Market's National Market (the "NNM"),
shall be determined by the last reported sales price where such securities are
primarily traded. The Company's redemption rights will be in effect only if the
Common Stock is either quoted on Nasdaq or listed on a securities exchange or
the NNM. Holders of the Warrants will automatically forfeit their rights to
purchase the shares of Common Stock issuable upon exercise of such Warrants
unless the Warrants are exercised before they are to be redeemed. All of the
outstanding Warrants must be redeemed if any portion of them are to be redeemed.
A notice of redemption will be mailed to each of the registered holders of the
Warrants no later than 30 days before the date fixed for redemption. The notice
of redemption shall specify the redemption price, the date fixed for redemption,
the place where the Warrant certificates shall be delivered and the date of
expiration of the right to exercise the Warrants.
DELAWARE ANTI-TAKEOVER LAW
The Company will be governed by the provisions of Section 203 of the
General Corporation Law of the State of Delaware, an anti-takeover law. In
general, this law prohibits a public Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which such person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. "Business combination" is defined to include mergers, asset
sales and other transactions resulting in a financial benefit to the
stockholder. An "interested stockholder" is defined as a person who, together
with affiliates and associates, owns (or, within the prior three years, did own)
15% or more of the corporation's voting stock.
REGISTRATION RIGHTS
Purchasers of units in the private placement completed in September 1991
have been granted certain demand and piggy-back registration rights with respect
to the shares of Common Stock comprising a portion of such units. Peter Kauff,
the Company's Chief Executive Officer and Chairman of the Board, and Stephen
Roberts, a director of the Company, have also been granted piggy-back
registration rights identical to those granted to the purchasers of units in
such private placement. Additionally, certain other stockholders have been
granted demand and piggy-back registration rights substantially identical to
those rights granted to purchasers of units in such private placement.
TRANSFER AGENT
American Stock Transfer & Trust Company serves as the transfer agent for
the Common Stock.
LEGAL MATTERS
Legal matters relating to the securities offered hereby have been passed
upon for the Company by Kramer, Levin, Naftalis & Frankel, New York, New York.
Members of that firm own 30,000 shares of Common Stock.
EXPERTS
The financial statements included in the Annual Report on Form 10-KSB
incorporated in this Prospectus by reference, have been so incorporated in
reliance upon the report of Richard A. Eisner & Company, LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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_______________________________________________________ ____________________
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF 10,823,046
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHARES
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 ANY OF THE SECURITIES OFFERED HEREBY TO ANYONE LASER VIDEO
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION NETWORK, INC.
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, IMPLY THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY OR THAT THE COMMON STOCK
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSE-
QUENT TO THE DATES AS OF WHICH SUCH INFORMATION IS
GIVEN.
__________________
TABLE OF CONTENTS
Page
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Available Information...................... 2
Incorporation of Certain Documents by
Reference................................ 2
The Company................................ 3 ______________
Risk Factors............................... 4
Use of Proceeds .......................... 6 PROSPECTUS
Selling Stockholders....................... 6
Plan of Distribution....................... 9 _______________
Description of Securities.................. 9
Legal Matters.............................. 11
Experts.................................... 11
August 14, 1996
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