As filed with the Securities and Exchange Commission on June 23, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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KIDEO PRODUCTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3729350
(State or other (I.R.S. employer
jurisdiction of incorporation) identification number)
611 Broadway, Suite 523
New York, New York 10012
(212) 505-6605
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
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Richard L. Bulman, President
Kideo Productions, Inc.
611 Broadway, Suite 523
New York, New York 10012
(212) 505-6605
(Address, including zip code, and telephone number, including
area code, of agent for service)
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Copies to:
Michael B. Solovay, Esq.
Solovay Edlin & Eiseman, P.C.
845 Third Avenue
New York, New York 10022
(212) 752-1000
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Approximate date of commencement of proposed sale to public: As soon as
practicable after the Registration Statement becomes effective.
If the only 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 1993, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: |_| __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering: |_| __________
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: |_|
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CALCULATION OF REGISTRATION FEE (2)
<TABLE>
<CAPTION>
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Proposed
Maximum Proposed Maximum Amount of
Amount to be Offering Price Aggregate Offering Registration
Title of Shares to be Registered Registered Per Share (1) Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.0001 per
share........................... 3,220,003 shares $0.890625 $2,867,815 $797.25
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 promulgated under the Securities Act, based on the average of
the bid and asked prices for the shares reported on the OTC Bulletin Board
on June 21, 1999.
(2) An aggregate of (i) 804,550 additional shares of Common Stock issuable
upon exercise of certain warrants to purchase shares of Common Stock, (ii)
12,500 additional shares of Common Stock outstanding, and (iii) pursuant
to Rule 416 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), an indeterminate number of additional shares of Common
Stock as may from time to time become issuable upon the exercise of such
warrants by reason of stock splits, stock dividends and other similar
transactions, are being carried forward from the Company's Registration
Statement on Form SB-2 (Registration No. 333-48657), for which a
registration fee of $794.83 was previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
Pursuant to Rule 429 under the Securities Act, the prospectus included
herein also relates to 817,050 additional shares of Common Stock registered
under the Registrant's Registration Statement on Form SB-2 (Registration No.
333-48657). This Registration Statement constitutes Post-Effective Amendment No.
1 to the Registrant's Registration Statement on Form SB-2 (Registration No.
333-48657).
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not seeking an offer to buy these securities in
any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS--SUBJECT TO COMPLETION, DATED JUNE 23, 1999
PROSPECTUS
Kideo Productions, Inc.
4,037,053 shares of Common Stock
o The shares of common stock offered by this prospectus are being sold
by the selling stockholders.
o We will not receive any proceeds from the sale of these shares. We
will receive proceeds from the exercise of warrants and those
proceeds will be used for our general corporate purposes.
o Our common stock is traded on the over-the-counter market under the
symbol "KIDO."
o On June 21, 1999, the closing bid price for our common stock was
$0.84375.
The securities offered in this prospectus involve a high degree of risk.
You should carefully consider the factors described under the heading
"Risk Factors" beginning on page 3 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
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___________, 1999
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TABLE OF CONTENTS
PAGE
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Summary.......................................................................1
Risk Factors..................................................................3
Where You Can Find More Information...........................................8
Incorporation of Documents by Reference.......................................8
Note Regarding Forward Looking Statements.....................................9
Use Of Proceeds..............................................................10
Selling Stockholders.........................................................10
Plan Of Distribution.........................................................14
Legal Matters................................................................15
Experts......................................................................15
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities..............................................................15
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SUMMARY
The Company
Kideo is a low-cost manufacturer of photo-personalized home videos and
books for children. These products allow a child to be the star in a story.
Kideo uses its recently patented production process to place the child's face
and name in a videocassette or book. As a result of improved technology used by
Kideo, the child's photo-personalized character can exhibit two-dimensional full
motion animation and interact with the characters.
In 1997, Kideo obtained a five-year license to feature Barney, the
dinosaur character from the highly rated children's television series "Barney
and Friends," in one of Kideo's home videos and three of its books. In the same
year, Kideo also obtained a three-year license to feature certain characters
owned by the Walt Disney Co. in four of Kideo's English language books. Kideo is
currently seeking out licensing, marketing and other arrangements with companies
that control similar types of characters.
Kideo currently markets nine video titles and four books for children.
Historically, Kideo relied primarily on national catalog retailers (such as
Hammacher Schlemmer and Johnson Smith) to market and sell its products. Kideo
recently has increasingly been targeting its marketing strategies towards
direct-to-consumer advertising as well as developing relationships with
established national distributors of children's home video products and
electronic retailers such as television shopping networks.
Kideo's long-term strategy is to become a global leader in the
development, manufacturing and marketing of a wide variety of digitally
photo-personalized products for children and adults.
Kideo's principal executive offices are located at 611 Broadway, Suite
523, New York, New York 10012, and its telephone number is (212) 505-6605.
Recent Developments
On May 11, 1999, we signed a Note and Warrant Purchase Agreement for the
private sale of an aggregate of $1,400,001 principal amount of convertible
promissory notes and warrants to purchase an aggregate of 1,400,001 additional
shares of our common stock. The promissory notes are convertible into an
aggregate of 1,750,002 shares of our common stock.
We paid $70,000 and issued warrants to purchase 70,000 shares of our
common stock to Gerard Klauer Mattison & Co. for acting as the placement agent
in that financing.
In addition, as security for our performance under the promissory notes,
we signed a Security Agreement whereby we granted the purchasers a security
interest in all of our assets.
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The resale by selling stockholders of the shares underlying these warrants and
notes has been registered under the Securities Act of 1933, as amended, and may
be freely sold.
The following is a summary of material terms of the promissory notes and
warrants issued in the financing:
Convertible Promissory Notes
The principal amounts of the notes are due as follows:
o $225,000 on February 15, 2000,
o $225,000 on March 15, 2000,
o $225,000 on April 15, 2000, and
o $725,001 on May 15, 2000.
The notes have an interest rate of 10% per annum and are payable quarterly
commencing June 30, 1999.
An "event of default" under the notes will occur if, among other things,
we (1) fail to pay interest or principal when due, or (2) fail to perform in any
material respect an agreement or obligation, or materially breach any of our
representations or warranties, under the Note and Warrant Purchase Agreement.
Upon an event of default, the entire indebtedness and accrued interest may
become immediately due and payable. We may prepay any amount outstanding under
the notes at any time.
All or any part of the notes may be converted into shares of our common
stock at any time. If a holder of notes elects to convert them, the holder will
receive the number of shares of our common stock determined by dividing the
principal amount of that portion of the note being converted (plus accrued and
unpaid interest) by $0.80. The conversion price and the number of shares
received upon conversion may be adjusted in the event of a stock split,
dividend, recapitalization, reorganization, merger, consolidation or sale of our
assets, or the issuance by us of shares of our common stock (or securities
convertible into or exercisable for shares of our common stock) at a price less
than the then adjusted conversion price.
Warrants
At any time after August 31, 1999 until August 31, 2004, the holders of
the warrants are entitled to purchase an aggregate of 1,400,001 shares of our
common stock, at a price of $0.80 per share. The exercise price and the number
of shares received upon exercise may be adjusted in the event of a stock split,
dividend, recapitalization, reorganization, merger, consolidation or sale of our
assets, or the issuance by us of shares of our common stock (or securities
convertible into or exercisable for shares of common stock) at a price less than
the then adjusted exercise price.
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RISK FACTORS
The shares offered hereby are speculative and involve a high degree of
risk. Each prospective investor should carefully consider the following risk
factors before making an investment decision.
We have a history of losses and if we do not achieve profitability we may
not be able to continue our business in the future.
We have incurred substantial operating losses since our inception, which
has resulted in an accumulated deficit of approximately $12,691,000 as of April
30, 1999. For our fiscal year ended July 31, 1998, we had revenues of
approximately $2,033,000 and a net loss of approximately $2,730,000, and for the
nine months ended April 30, 1999, we had revenues of approximately $4,007,000
and a net loss of approximately $792,000. We anticipate incurring additional
losses until we increase our client base and revenues. If we are unable to
achieve increased revenues, we will continue to have losses and might not be
able to continue our operations.
The "going concern" qualification on the report of our independent
accountants may hurt our ability to raise additional financing.
The accountants' report on our financial statements for the most recent
fiscal year contains a statement that the financial statements were prepared on
the assumption that we will continue as an ongoing business. However, the report
noted that our recurring losses from operations and net working capital
deficiency raise substantial doubt about our ability to continue as an ongoing
business. This "going concern" qualification may reduce our ability to obtain
necessary financing in the future to run our business.
Our common stock has been delisted from Nasdaq and is subject to "penny
stock" restrictions, which may negatively affect your ability to sell the stock.
On September 26, 1997, Nasdaq notified us that since we did not meet
certain financial requirements our common stock had been deleted from listing on
The Nasdaq Stock Market's SmallCap Market. Therefore, our common stock is now
subject to the "penny stock" rules. The penny stock rules require additional
disclosure by broker-dealers in connection with any trades involving a penny
stock. These additional burdens imposed on broker-dealers could discourage them
from effecting transactions in our common stock, which could severely limit the
market liquidity of the common stock and your ability to sell the common stock
in the secondary market.
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We could be required to cut back or stop operations if we are unable to
raise or obtain needed funding.
Our ability to continue operations will depend on our positive cash flow,
if any, from future operations or our ability to raise additional funds through
equity or debt financing. In May 1999, we consummated a financing in order to
obtain the working capital we required to continue our creative development
activities and fund our marketing plans. See "Recent Developments." Although we
anticipate that future revenues and our current cash balance will be sufficient
to fund our operations and capital requirements until approximately January 31,
2000, we cannot give you any assurance that we will not need additional funds
before such time. We have no current arrangements for additional financing and
we may not be able to obtain additional financing on commercially reasonable
terms, if at all. We could be required to cut back or stop operations if we are
unable to raise or obtain funds when needed.
Enough people to enable us to grow our business and be profitable may not
accept our products.
The market for digitally personalized media products is in its early
development stages and is rapidly evolving. We believe that rapid technological
changes and an increasing number of market entrants will characterize this
market. Because of the infancy of this market, we cannot predict the future
growth rate, if any, and size of this market. We cannot assure you that the
market for our products will develop to a point that will enable our business to
grow significantly (if at all) or become profitable. Failure of the market to
develop as expected or the saturation of the market with competitors could
significantly negatively affect our revenues.
Developing increased market acceptance for our current and future products
requires substantial marketing efforts and the expenditure of a significant
amount of funds. We believe that we do not currently have the necessary means to
create broad consumer awareness of our products. Due to our limited resources,
we have been looking into possible arrangements with companies that have
demonstrated the ability to promote and distribute children's home video
products through a broad range of distribution channels. We cannot assure you
that any marketing efforts we take will result in an increased demand for our
products or in any significant increase in revenues.
We depend highly on Richard L. Bulman and if we lost his services it could
have a material adverse effect on us.
Our success is largely dependent on the personal efforts of Richard L.
Bulman, our President and Chairman of the Board. Our business, financial
condition and operating results could be materially adversely affected if the
services of Mr. Bulman become unavailable. We have obtained "key man" life
insurance on the life of Mr. Bulman in the amount of $2,000,000. Our success
will also depend on our ability to hire and retain qualified personnel. There is
considerable
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and often intense competition for the services of such personnel. We may not be
able either to retain our existing personnel or acquire additional qualified
personnel as and when needed. We will be materially adversely affected if we are
unable to attract such personnel.
We may not be successful unless we are able to develop and implement
improved technologies.
The technologies underlying our products (such as personal computer
hardware and software) are subject to rapid changes and evolving industry
standards, which often results in product obsolescence or short product
lifecycles. Our success will likely depend considerably on our ability to
develop and implement improved technologies for the production of digitally
personalized media products that embody features (such as improved animation)
superior to those currently displayed by our products. The development and
implementation of such new technologies may require substantial time, skill and
expense. Our products are designed for a relatively new and largely untested
market. Such a new market is particularly susceptible to rapidly changing and
evolving technologies and industry standards. The introduction by competitors of
digitally personalized media products embodying superior technologies or the
emergence of new industry standards could exert adverse price pressures on our
products or could render our technologies obsolete or our products unmarketable.
Our business, financial condition and operating results may be adversely
affected by any of such occurrences.
We may have to lower our prices or spend more money to effectively compete
against companies with greater resources than we have which could result in
lower revenues and/or profits.
The success of our products depends on a number of factors, including
price and superior technology. We believe that the market for digitally
personalized video media will likely evolve into a highly competitive market.
There are numerous other companies involved in video media production that could
possibly enter the personalized market segment in which we do business. If this
were to occur, we cannot assure you that we will be able to compete
successfully. Many of our potential customers have substantially greater
financial, technical, production, marketing and other resources than we do. If
they were to offer lower prices, we could be forced to lower prices, which would
result in reduced margins and a decrease in revenues. If we do not lower prices,
we could lose sales and market share. In either case, if we were unable to
compete against companies who can afford to cut prices, we would not be able to
generate sufficient revenues to grow the company or reverse our history of
losses.
In addition, we may have to spend more money to effectively compete for
market share. If other companies want to aggressively compete against us, we may
have to spend more money on product development, advertising, trade shows,
marketing, and hiring and retaining personnel. These higher expenses would hurt
our net income and profits.
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We may not be able to adequately protect our proprietary technology, which
could result in lower revenues and/or profits.
We rely on a combination of copyright, trademark and trade secret laws to
protect our proprietary technologies, ideas, know-how and other proprietary
information. If we are unable to protect our proprietary technology, this could
result in lower revenues and/or profits. In April 1997, we received a U.S.
patent relating to our digital personalization production process (Patent No.
5,623,587). This is currently the only patent we hold in the United States and
we have no foreign patents. Notwithstanding the precautions we take, third
parties may copy or otherwise obtain and use our proprietary technologies,
ideas, know-how and other proprietary information without authorization or may
independently develop technologies similar or superior to our technologies. If
we were to become involved in litigation to enforce any of our patent rights,
the attendant costs could be substantial or even prohibitive.
We believe that our technologies have been developed independent of
others. Nevertheless, third parties may assert infringement claims against us
and our technologies may be determined to infringe on the intellectual property
rights of others. We could become liable for damages, be required to modify our
technologies or obtain a license if our technologies are determined to infringe
upon the intellectual property rights of others. We may not be able to modify
our technologies or obtain a license in a timely manner, if required, or have
the financial or other resources necessary to defend an infringement action. We
would be materially adversely affected if we fail to do any of the foregoing.
We may be unable to use or register the word "Kideo" as a trademark, which
could have a significant adverse effect on us.
We have adopted and used the word "Kideo" as our principal trademark for
our products and services. If it is determined that we may not use or register
the word "Kideo" as a trademark, this could have a significant adverse effect on
us. We have applied for registration of this trademark in the United States,
Australia, France, Germany, Japan, Spain and the United Kingdom. It is possible
that we may not be granted a registered trademark of the word "Kideo" in any
jurisdiction.
In the United States, a third party had previously registered two
allegedly similar trademarks but had ceased using them and had filed for
bankruptcy. We have been negotiating with the successor to those trademarks and
are in the process of executing an agreement in which the successor entity
agrees to withdraw its registration and pending application to register the mark
"Kideo" and to cease using this mark in the United States. If for any reason the
settlement agreement is not executed and delivered by the successor entity
(which we currently considers unlikely), then we would recommence the proceeding
we have pending against them. A proceeding of this nature is a lengthy and
potentially expensive, and we ultimately may not obtain a registered
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trademark for the word "Kideo" or the right to use this mark in connection with
our products and services. Another third party also has been using the trademark
"Kideo" locally in the State of Illinois and has obtained an Illinois State
registration of this mark. This may prevent us from using this mark in the state
of Illinois. However, we have not yet received a communication from any party
objecting to or otherwise challenging our right to conduct business in Illinois
under the name "Kideo."
The significant number of privately held shares, options and warrants
outstanding may adversely affect the market price for our common stock.
As of the date of this prospectus, there are outstanding (1) 999,314
shares of our outstanding common stock are "restricted securities," as defined
in Rule 144 under the Securities Act, (2) options and warrants to purchase an
aggregate of 4,320,062 shares of our common stock at exercise prices ranging
from $.80 to $3.60 and (3) convertible debt in the principal amount of
$1,400,001, which can be converted into 1,750,002 shares of our common stock. To
the extent that outstanding options, warrants or convertible debt are exercised
or converted, your percentage ownership will be diluted and any sales in the
public market of the common stock underlying such options, warrants or
convertible debt may adversely affect prevailing market prices for our common
stock.
Substantially all of the "restricted securities" are either eligible for
sale in the public market pursuant to Rule 144 or subject to the exercise of
certain registration rights we have granted. The mere possibility that a
substantial number of shares may be sold in the public market may adversely
affect prevailing market prices and could impair our ability to raise capital
through the sale of its equity securities. We cannot predict the effect, if any,
that sales of such securities or the availability of such securities for sale
will have on the market prices prevailing from time to time.
We would lose revenues and incur significant costs if our systems or
material third-party systems are not Year 2000 compliant. We have not devised a
Year 2000 contingency plan.
The failure of our internal systems, or any material third-party systems,
to be Year 2000 compliant could have a material and adverse effect on our
business, results of operations and financial condition. We reviewed Year 2000
readiness disclosure statements prepared by the United States Postal Service,
our mail carrier, and Pitney Bowes, which maintains our postage equipment, and
we believe that they will be Year 2000 compliant by September 1999.
To date, we have not incurred any material costs in identifying or
evaluating Year 2000 compliance issues. However, we may fail to discover Year
2000 compliance problems in our systems that will require substantial revisions
or replacements. In the event that the fulfillment and operational facilities
that support our business are not Year 2000 compliant, we would be
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unable to deliver products or services to our customers. In addition, we cannot
assure you that third-party software, hardware or services incorporated into our
material systems will not need to be revised or replaced, which would be
time-consuming and expensive. If we are unable on a timely basis to fix or
replace third-party software, hardware or services that could result in lost
revenues, increased operating costs and other business interruptions, this could
have a material and adverse effect on our business, results of operations and
financial condition. Moreover, the failure to adequately address Year 2000
compliance issues in our software, hardware or systems could result in claims of
mismanagement, misrepresentation or breach of contract and related litigation,
which could be costly and time-consuming to defend.
In addition, there can be no assurance that governmental agencies, utility
companies, third-party service providers and others outside our control will be
Year 2000 compliant. The failure by these entities to be Year 2000 compliant
could result in a systematic failure beyond our control, such as a prolonged
telecommunications or electrical failure, which could also prevent us from
delivering our product or providing services to our customers.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The SEC has prescribed rates for copying. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our
SEC filings are also available to you on the SEC's Internet site at
http://www.sec.gov.
This prospectus is part of a Registration Statement and Post-Effective
Amendment on Form S-3 (the "Registration Statement") filed by us with the SEC
under the Securities Act and therefore omits certain information in the
Registration Statement. We have also filed exhibits with the Registration
Statement that are not included in this prospectus, and you should refer to the
applicable exhibit for a complete description of any statement referring to any
document. You can inspect a copy of the Registration Statement and its exhibits,
without charge, at the SEC's Public Reference Room, and can copy such material
upon paying the SEC's prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information we incorporate by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede the information in this
prospectus. Accordingly, we incorporate by reference the documents listed below
and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act:
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1. our Annual Report on Form 10-KSB for the year ended July 31, 1998
(filed October 29, 1998);
2. our Quarterly Report on Form 10-QSB for the quarter ended October
31, 1998 (filed December 14, 1998);
3. our Quarterly Report on Form 10-QSB for the quarter ended January
31, 1999 (filed March 17, 1999);
4. our Quarterly Report on Form 10-QSB for the quarter ended April 30,
1999 (filed June 11, 1999);
5. our Current Report on Form 8-K (filed May 25, 1999); and
6. the description of our common stock incorporated by reference in our
Registration Statement on Form 8-A (filed April 9, 1996).
We will provide at no cost to each person to whom this prospectus is
delivered, upon written or oral request, a copy of any of these filings. You
should direct such requests to us at 611 Broadway, Suite 523, New York, New York
10012, Attention: Vice President-Finance, telephone number (212) 505-6605.
You should rely only on the information and representations provided in
this prospectus or on the information incorporated by reference in this
prospectus. Neither we nor the selling stockholders have authorized anyone to
provide you with different information. Neither we nor the selling stockholders
are 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 is
accurate as of any date other than the date on the front of this document.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. Forward-looking statements are statements that include information based
upon beliefs of our management, as well as assumptions made by and information
available to our management. Statements containing terms such as "believes,"
"expects," "anticipates," "intends" or similar words are intended to identify
forward-looking statements.
Our management, based upon assumptions they consider reasonable, has
compiled these forward-looking statements. Such statements reflect our current
views with respect to future events. These statements involve known and unknown
risks and uncertainties that may cause our actual results in future periods to
differ materially from what is currently anticipated. We make cautionary
statements in certain sections of this prospectus, including under "Risk
Factors." You should read these cautionary statements as being applicable to all
related forward-looking
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statements wherever they appear in this prospectus, the materials referred to in
this prospectus or the materials incorporated by reference into this prospectus.
You are cautioned that no forward-looking statement is a guarantee of
future performance and you should not place undue reliance on any
forward-looking statement. Such statements speak only as of the date of this
prospectus and we are not undertaking any obligation to publicly release any
revisions to these forward-looking statements to reflect events or circumstances
after the date of this prospectus or to reflect the occurrence of unanticipated
events.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of our common
stock by the selling stockholders. All proceeds from the sale of such shares
will be for the account of the selling stockholder. We will receive
approximately $1,819,640 in proceeds equal to the exercise price of the
warrants, if the holders of the warrants convert such securities into shares of
common stock. Any proceeds that we may receive upon an exercise of a warrant
will be used for working capital purposes.
SELLING STOCKHOLDERS
The following table sets forth information, as of June 21, 1999, with
respect to the common stock beneficially owned by each selling stockholder. The
selling stockholders are not obligated to sell any of the shares offered by this
prospectus. The number of shares sold by each selling stockholder may depend on
a number of factors, such as the market price of our common stock.
We are registering 3,220,003 shares of our common stock for resale by the
selling stockholders in accordance with registration rights previously granted
to them. We agreed to file a registration statement under the Securities Act
with the SEC, of which this prospectus is a part, with respect to the resale of:
o an aggregate of 1,400,001 shares that we may issue to Felton
Investments Ltd., Greatview Investments Ltd. and Mermaid Investments
Ltd. upon the exercise of warrants we issued in May 1999;
o an aggregate of 1,750,002 shares that we may issue to Felton
Investments Ltd., Greatview Investments Ltd. and Mermaid Investments
Ltd. upon conversion of promissory notes we issued in May 1999; and
o 70,000 shares that we may issue to Gerard Klauer Mattison & Co. upon
the exercise of warrants we issued for services they provided
relating to the May 1999 financing.
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We had previously registered the offering of 12,500 shares of our common
stock that had been issued as consideration to KSH Investment Group, Inc. for
arranging a financing for us in January 1998. At the same time, we registered
473,334 shares issuable upon the exercise of warrants granted to the selling
stockholders in our January 1998 financing. Due to the terms of our recent
financing, anti-dilution provisions in the outstanding warrants require
additional shares to be issued when such warrants are exercised. In addition, a
number of our convertible promissory notes are no longer outstanding and so the
shares of common stock into which such notes could have been converted no longer
need to be included in such previous registration statement. For these reasons,
we have filed an amendment to such registration statement (of which this
prospectus is a part) to reflect that the adjusted number of shares to be issued
upon conversion of the warrants is 804,550 and that the convertible promissory
notes will no longer be outstanding.
The number of shares shown in the following table as being offered by the
selling stockholders do not include such presently indeterminate number of
additional shares of our common stock that may be issuable as a result of stock
splits, stock dividends and similar transactions. Pursuant to Rule 416 under the
Securities Act, however, such shares are included in the Registration Statement
of which this prospectus is a part.
The selling stockholders may sell any or all of their shares listed below
from time to time. Accordingly, we cannot estimate how many shares the selling
stockholders will own upon consummation of any such sales. Also, the selling
stockholders may have sold, transferred or otherwise disposed of all or a
portion of their shares since the date on which the information was provided, in
transactions exempt from the registration requirements of the Securities Act.
Except as indicated in this prospectus, none of the selling stockholders
has had a material relationship with us within the past three years other than
as a result of the ownership of our securities.
11
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares Number of Shares Percentage of
Beneficially Beneficially Owned Outstanding
Owned Prior to Number of Shares After Common Stock
Name and Address Offering(1) Being Offered Offering(1)(2) After Offering(1)
- ---------------- ----------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
Felton Investments Ltd.(3) 1,050,001 1,050,001 0 0
Greatview Investments Ltd.(3) 1,050,001 1,050,001 0 0
Mermaid Investments Ltd.(3) 1,050,001 1,050,001 0 0
Benjamin Bollag(4) 275,000 275,000 0 0
Michael Bollag(4) 275,000 275,000 0 0
KSH Investment Group, Inc.(5) 35,572 12,500 23,072 *
Charles C. Johnston(6) 554,500 36,364 518,136 13.2%
Michael B. Solovay(7) 56,528 32,728 23,800 *
Richard A. Edlin(8) 36,528 32,728 3,800 *
Jonathan Eiseman(8) 36,528 32,728 3,800 *
Wayne Lehrhaupt(8) 36,528 32,728 3,800 *
Norman Solovay(8) 36,528 32,728 3,800 *
Eric R. Levine(9) 25,455 25,455 0 0
Peter Kakoyiannis(9) 25,455 25,455 0 0
Stephen L. Weinstein(10) 3,636 3,636 0 0
Gerard Klauer Mattison & Co.(11) 70,000 70,000 0 0
</TABLE>
- ----------
An asterisk (*) indicates less than 1%.
(1) Percentage of beneficial ownership is calculated assuming 3,775,886 shares
of common stock were outstanding. Ownership after this offering assumes
that such selling stockholder sold all of the shares he is offering in
this prospectus. Beneficial ownership is determined in accordance with the
rules of the SEC and the footnotes to this table, and generally includes
voting or investment power with respect to securities. Shares of common
stock that are subject to options or warrants that are exercisable within
60 days are deemed outstanding
12
<PAGE>
for computing the percentage of the person holding such option or warrant
but are not deemed outstanding for computing the percentage of any other
person.
(2) Beneficial ownership of shares held by selling stockholders after this
offering will depend on the number of securities sold by each selling
stockholder in this offering.
(3) Includes (i) 466,667 shares of common stock issuable upon exercise of
outstanding warrants that are currently exercisable and (ii) 583,334
shares of common stock issuable upon conversion of certain promissory
notes outstanding.
(4) Includes 275,000 shares of common stock issuable upon exercise of
outstanding warrants that are currently exercisable.
(5) Includes 20,072 and 3,000 shares of common stock beneficially owned by
Harvey Kohn and Cary Sucoff, respectively, who are owners and executive
officers of that company.
(6) Includes (i) 36,364 shares of common stock issuable upon exercise of
outstanding warrants and (ii) options to purchase 20,000 shares of common
stock that are currently exercisable. Mr. Johnston is one of our directors
and principal stockholders. Mr. Johnston's address is c/o Kideo
Productions, Inc., 611 Broadway, Suite 523, New York, New York 10012.
(7) Includes (i) 32,728 shares of common stock issuable upon exercise of
outstanding warrants and (ii) options to purchase 20,000 shares of common
stock that are currently exercisable. Michael Solovay is a member of the
law firm Solovay Edlin & Eiseman, P.C., our outside legal counsel.
(8) Includes 32,728 shares of common stock issuable upon exercise of
outstanding warrants that are currently exercisable. This selling
stockholder is a member of the law firm Solovay Edlin & Eiseman, P.C., our
outside legal counsel.
(9) Includes 25,455 shares of common stock issuable upon exercise of
outstanding warrants that are currently exercisable. This selling
stockholder is a member of the law firm Solovay Edlin & Eiseman, P.C., our
outside legal counsel.
(10) Includes 3,636 shares of common stock issuable upon exercise of
outstanding warrants that are currently exercisable. This selling
stockholder is a member of the law firm Solovay Edlin & Eiseman, P.C., our
outside legal counsel.
(11) Includes 32,728 shares of common stock issuable upon exercise of
outstanding warrants that will be exercisable on July 2, 1999.
13
<PAGE>
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale by the selling stockholders
of:
o 1,750,002 shares of our common stock issuable upon exercise of our
outstanding promissory notes;
o 2,274,551 shares of our common stock issuable upon the exercise of
outstanding warrants issued by us in various private placements; and
o 12,500 shares of our common stock issued for services related to one
of the private placements.
The selling stockholders may sell the shares in transactions in the
over-the-counter market, in negotiated transactions, or a combination of such
methods of sale. The selling stockholders may sell the shares through public or
private transactions at prevailing market prices, at prices related to such
prevailing market prices or at privately negotiated prices. The selling
stockholders may also sell shares pursuant to Rule 144 of the Securities Act, if
applicable.
The selling stockholders may use underwriters or broker-dealers to sell
the shares. Such underwriters and broker-dealers may receive compensation in the
form of discounts or commissions from the selling stockholders, or they may
receive commissions from the purchasers of shares for whom they acted as agents,
or both (which compensation as to a particular broker-dealer might be in excess
of customary commissions). The selling stockholders and any underwriter or
broker-dealer who participates in the distribution of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the shares
purchased by them may be deemed to be underwriting discounts or commissions
under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the shares may not simultaneously engage in
market-making activities with respect to our common stock for a certain period
of time, except under certain limited circumstances. Also, without limiting the
foregoing, each selling stockholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
rules and regulations thereunder (including Regulation M), which provisions may
limit the timing of purchases and sales of shares of our common stock by such
selling stockholders.
At the time a selling stockholder makes an offer to sell shares, to the
extent required by the Securities Act, a prospectus will be delivered. If a
supplemental prospectus is required, one will be delivered setting forth the
number of shares being offered and the terms of the offering, including the
names of any underwriters, dealers or agents, the purchase price paid by any
underwriter for the shares, and any discounts or commissions.
In order to comply with the securities laws of certain states, if
applicable, the shares will be
14
<PAGE>
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and
complied with. In connection with our initial public offering, we consented to
the denial of secondary trading in its securities in the State of New Jersey. As
a result, stockholders cannot sell our securities through a broker-dealer whose
office is located in New Jersey or to any New Jersey resident, whether through a
broker-dealer or otherwise, unless such denial is removed, of which there can be
no assurance.
We have agreed to pay substantially all of the expenses incident to the
registration, offering and sale of the shares to the public, excluding the
commissions or discounts of underwriters, broker-dealers or agents.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us
by Solovay Edlin & Eiseman, P.C., New York, New York. Michael B. Solovay, a
member of that firm, is one of our directors. As of the date of this prospectus,
members of such firm beneficially own less than 1% of our outstanding common
stock.
EXPERTS
The financial statements on Form 10-KSB for the year ended July 31, 1998
incorporated by reference in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report. Reference is made to said report, which includes an explanatory
paragraph with respect to the uncertainty regarding the Company's ability to
continue as a going concern as discussed in Note 1 to the financial statements.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers or persons controlling us, we
have been advised that it is the SEC's opinion that such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
15
<PAGE>
Kideo Productions, Inc.
4,037,053 Shares
of
Common Stock
------------------
PROSPECTUS
-----------------
________, 1999
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the
offering described in the Registration Statement, all of which will be borne by
the Company.
SEC registration fee............................................ $ 797.25
Legal fees and expenses*........................................ 20,000.00
Accounting fees and expenses*................................... 5,000.00
Miscellaneous expenses*......................................... 2,202.75
----------
TOTAL......................................... $28,000.00
==========
* Estimated.
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporations Law (the "DGCL") contains
provisions entitling the Company's directors and officers to indemnification
from judgments, fines, amounts paid in settlement, and reasonable expenses
(including attorneys' fees) as the result of an action or proceeding in which
they may be involved by reason of having been a director or officer of the
Company. In its Certificate of Incorporation, the Company has included a
provision that limits, to the fullest extent now or hereafter permitted by the
DGCL, the personal liability of its directors to the Company or its stockholders
for monetary damages arising from a breach of their fiduciary duties as
directors. Under the DGCL as currently in effect, this provision limits a
director's liability except where such director (i) breaches his duty of loyalty
to the Company or its stockholders, (ii) fails to act in good faith or engages
in intentional misconduct or a knowing violation of law, (iii) authorizes
payment of an unlawful dividend or stock purchase or redemption as provided in
Section 174 of the DGCL, or (iv) obtains an improper personal benefit. This
provision does not prevent the Company or its stockholders from seeking
equitable remedies, such as injunctive relief or rescission. If equitable
remedies are found not to be available to stockholders in any particular case,
stockholders may not have any effective remedy against actions taken by
directors that constitute negligence or gross negligence.
The Certificate of Incorporation also includes provisions to the effect
that (subject to certain exceptions) the Company shall, to the maximum extent
permitted from time to time under the law of the State of Delaware, indemnify,
and upon request shall advance expenses to, any director or officer to the
extent that such indemnification and advancement of expenses is permitted under
such law, as it may from time to time be in effect. In addition, the By-Laws
require the Company to indemnify, to the full extent permitted by law, any
director, office, employee or agent of the
II-1
<PAGE>
Company for acts which such person reasonably believes are not in violation of
the Company's corporate purposes as set forth in the Certificate of
Incorporation. At present, the DGCL provides that, in order to be entitled to
indemnification, an individual must have acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the Company's best
interests.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to any charter, provision, by-law, contract, arrangement,
statute or otherwise, the Company has been advised that in the opinion of the
SEC such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable.
Item 16. Exhibits
No. Description
- --- -----------
3.1 Certificate of Incorporation. Previously filed as Exhibit 3.1 to the
Company's Registration Statement on Form SB-2 (Registration No.
333-2294), declared effective by the SEC in June 1996 (the "1996
Registration Statement"), and incorporated herein by reference.
3.2 By-laws, as amended and restated as of May 24, 1996. Previously filed
as Exhibit 3.3 to the 1996 Registration Statement and incorporated
herein by reference.
3.3 Certificate of Amendment to the Company's Certificate of Incorporation,
as filed with the Delaware Secretary of State on May 24, 1996.
Previously filed as Exhibit 3.4 to the 1996 Registration Statement and
incorporated herein by reference.
3.4 Certificate of Designations of Series A 6% Convertible Participating
Preferred Stock. Previously filed as Exhibit 3.1 to the Company's
Report on Form 8-K, dated May 27, 1997, and incorporated herein by
reference.
4.1 Form of Common Stock certificate. Previously filed as Exhibit 4.1 to
the 1996 Registration Statement and incorporated herein by reference.
4.2 Form of Warrant issued as of May 11, 1999 to each of Felton Investments
Ltd., Greatview Investments Ltd. and Mermaid Investments Ltd.
Previously filed as Exhibit A of Exhibit 10.1 to the Company's Report
on Form 8-K, filed May 25, 1999 (the "May 1999 8-K") and incorporated
herein by reference.
4.3 Form of Warrant issued as of January 30, 1998 to each of Benjamin
Bollag and Michael Bollag. Previously filed as Exhibit 4.7 to the
Company's Registration Statement on Form SB-2 (Registration No.
333-48657), declared effective by the SEC in May 1998 (the "1998
Registration Statement") and incorporated herein by reference.
4.4 Form of Warrant issued as of January 30, 1998 to various members and
employees of
II-2
<PAGE>
Solovay Edlin & Eiseman, P.C. Previously filed as Exhibit 4.8 to the
1998 Registration Statement and incorporated herein by reference.
4.5 Form of Warrant issued as of January 30, 1998 to Charles C. Johnston.
Previously filed as Exhibit 4.9 to the 1998 Registration Statement and
incorporated herein by reference.
5.1* Opinion of Solovay Edlin & Eiseman, P.C. regarding legality of
securities being registered.
10.1 Form of Note and Warrant Purchase Agreement, dated as of January 30,
1998, among the Company, Michael Bollag and Benjamin Bollag. Previously
filed as Exhibit 10.36 to the 1998 Registration Statement and
incorporated herein by reference.
10.2 Form of Security Agreement, dated as of January 29, 1998, made by the
Company in favor of Michael Bollag and Benjamin Bollag. Previously
filed as Exhibit 10.37 to the 1998 Registration Statement and
incorporated herein by reference.
10.3 Form of Note and Warrant Purchase Agreement, dated as of May 11, 1999,
among the Company, Felton Investments Ltd., Greatview Investments Ltd.
and Mermaid Investments Ltd. Previously filed as Exhibit 10.1 to the
May 1999 8-K and incorporated herein by reference.
10.4 Form of Security Agreement, dated as of May 11, 1999, made by the
Company in favor of Felton Investments Ltd., Greatview Investments Ltd.
and Mermaid Investments Ltd. Previously filed as Exhibit 10.2 to the
May 1999 8-K and incorporated herein by reference.
10.5 Form of Convertible Promissory Note, dated May 11, 1999, made by the
Company in favor of each of Felton Investments Ltd., Greatview
Investments Ltd. and Mermaid Investments Ltd. Previously filed as
Exhibit B of Exhibit 10.1 to the May 1999 8-K and incorporated herein
by reference.
21.1 List of the Company's subsidiaries. Previously filed as Exhibit 21.1 to
the 1996 Registration Statement and incorporated herein by reference.
23.1* Consent of Arthur Andersen LLP, independent certified public
accountants.
24.1 No person has signed this Registration Statement under a power of
attorney. A power of attorney relating to the signing of amendments
hereto is incorporated in the signature pages hereof.
- --------------
* Filed herewith
II-3
<PAGE>
Item 17. Undertakings
(1) The undersigned Registrant hereby undertakes that it will:
(a) File, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
additional or changed material information on the plan of distribution.
(b) For determining liability under the Act, treat each
post-effective amendment as a new Registration Statement of the securities
offered, and the offering of securities at that time to be the initial bona fide
offering.
(c) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of this offering.
(2) Insofar as indemnification for liabilities arising under the Act 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.
(3) The undersigned Registrant hereby undertakes that it will:
(a) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act as part of this registration statement as of the time
the Commission declared it effective.
(b) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and the offering of such securities at that time as the initial bona fide
offering of those securities.
II-4
<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 on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York.
Dated: June 23, 1999
KIDEO PRODUCTIONS, INC.
By: /s/ Richard L. Bulman
----------------------------
Richard L. Bulman
President
KNOW ALL MEN BY THESE PRESENTS, that each director and officer whose
signature appears below constitutes and appoints Richard L. Bulman and Richard
D. Bulman, or any of them, his true and lawful attorney-in-fact and agent, with
full power and substitution and re-substitution, to sign in any and all
capacities any and all amendments or post-effective amendments to this
Registration Statement on Form S-3 and to file the same with all exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting to such attorneys-in-fact and agents, and each of
them, full power and authority to do all such other acts and execute all such
other documents as they, or any of them, may deem necessary or desirable in
connection with the foregoing, as fully as the undersigned might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents, or any of them, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
/s/ Richard L. Bulman President and Chairman June 23, 1999
- ------------------------ of the Board (principal
Richard L. Bulman executive officer)
/s/ Marvin H. Goldstein Vice President-Controller June 23, 1999
- ------------------------ (principal accounting officer)
Marvin H. Goldstein
/s/ Richard D. Bulman Secretary and Director June 23, 1999
- ------------------------
Richard D. Bulman
Director June __, 1999
- ------------------------
Charles C. Johnston
/s/ Michael B. Solovay Director June 23, 1999
- ------------------------
Michael B. Solovay
/s/ Thomas Griffin Director June 23, 1999
- ------------------------
Thomas Griffin
II-5
<PAGE>
INDEX TO EXHIBITS
No. Description
- --- -----------
3.1 Certificate of Incorporation. Previously filed as Exhibit 3.1 to the
Company's Registration Statement on Form SB-2 (Registration No.
333-2294), declared effective by the SEC in June 1996 (the "1996
Registration Statement"), and incorporated herein by reference.
3.2 By-laws, as amended and restated as of May 24, 1996. Previously filed
as Exhibit 3.3 to the 1996 Registration Statement and incorporated
herein by reference.
3.3 Certificate of Amendment to the Company's Certificate of Incorporation,
as filed with the Delaware Secretary of State on May 24, 1996.
Previously filed as Exhibit 3.4 to the 1996 Registration Statement and
incorporated herein by reference.
3.4 Certificate of Designations of Series A 6% Convertible Participating
Preferred Stock. Previously filed as Exhibit 3.1 to the Company's
Report on Form 8-K, dated May 27, 1997, and incorporated herein by
reference.
4.1 Form of Common Stock certificate. Previously filed as Exhibit 4.1 to
the 1996 Registration Statement and incorporated herein by reference.
4.3 Form of Warrant issued as of May 11, 1999 to each of Felton Investments
Ltd., Greatview Investments Ltd. and Mermaid Investments Ltd.
Previously filed as Exhibit A of Exhibit 10.1 to the Company's Report
on Form 8-K, filed May 25, 1999 (the "May 1999 8-K") and incorporated
herein by reference.
4.3 Form of Warrant issued as of January 30, 1998 to each of Benjamin
Bollag and Michael Bollag. Previously filed as Exhibit 4.7 to the
Company's Registration Statement on Form SB-2 (Registration No.
333-48657), declared effective by the SEC in May 1998 (the "1998
Registration Statement") and incorporated herein by reference.
4.4 Form of Warrant issued as of January 30, 1998 to various members and
employees of Solovay Edlin & Eiseman, P.C. Previously filed as Exhibit
4.8 to the 1998 Registration Statement and incorporated herein by
reference.
4.5 Form of Warrant issued as of January 30, 1998 to Charles C. Johnston.
Previously filed as Exhibit 4.9 to the 1998 Registration Statement and
incorporated herein by reference.
5.1* Opinion of Solovay Edlin & Eiseman, P.C. regarding legality of
securities being registered.
10.1 Form of Note and Warrant Purchase Agreement, dated as of January 30,
1998, among the Company, Michael Bollag and Benjamin Bollag. Previously
filed as Exhibit 10.36 to the 1998 Registration Statement and
incorporated herein by reference.
II-6
<PAGE>
10.2 Form of Security Agreement, dated as of January 29, 1998, made by the
Company in favor of Michael Bollag and Benjamin Bollag. Previously
filed as Exhibit 10.37 to the 1998 Registration Statement and
incorporated herein by reference.
10.6 Form of Note and Warrant Purchase Agreement, dated as of May 11, 1999,
among the Company, Felton Investments Ltd., Greatview Investments Ltd.
and Mermaid Investments Ltd. Previously filed as Exhibit 10.1 to the
May 1999 8-K and incorporated herein by reference.
10.7 Form of Security Agreement, dated as of May 11, 1999, made by the
Company in favor of Felton Investments Ltd., Greatview Investments Ltd.
and Mermaid Investments Ltd. Previously filed as Exhibit 10.2 to the
May 1999 8-K and incorporated herein by reference.
10.8 Form of Convertible Promissory Note, dated May 11, 1999, made by the
Company in favor of each of Felton Investments Ltd., Greatview
Investments Ltd. and Mermaid Investments Ltd. Previously filed as
Exhibit B of Exhibit 10.1 to the May 1999 8-K and incorporated herein
by reference.
21.1 List of the Company's subsidiaries. Previously filed as Exhibit 21.1 to
the 1996 Registration Statement and incorporated herein by reference.
23.1* Consent of Arthur Andersen LLP, independent certified public
accountants.
24.1 No person has signed this Registration Statement under a power of
attorney. A power of attorney relating to the signing of amendments
hereto is incorporated in the signature pages hereof.
- ----------
* Filed herewith
II-7
[Solovay Edlin & Eiseman, P.C. Letterhead]
June 23, 1999
Kideo Productions, Inc.
611 Broadway, Suite 523
New York, New York 10012
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Kideo Productions, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), pursuant to the above-referenced
registration statement (the "Registration Statement"), of the offer and sale
from time to time, by the selling stockholders named therein, of 3,220,003
shares of the Company's common stock, par value $.0001 per share (the "Common
Stock"), consisting of (i) 1,470,001 shares of Common Stock issuable upon the
exercise of warrants granted by the Company to certain selling stockholders
named therein (the "Warrant Shares") and (ii) 1,750,002 shares of Common Stock
issuable upon the conversion of promissory notes granted by the Company to
certain selling stockholders named therein (the "Note Shares").
In connection with this opinion, we have examined and relied upon a copy
of the Registration Statement. We have also examined originals, or copies of
originals certified to our satisfaction, of such agreements, documents,
certificates and other instruments as we have deemed relevant and necessary to
enable us to express an opinion on the matters covered hereby.
In all such examinations, we have assumed the completeness and
authenticity of all records and documents submitted to us as originals and the
conformity to original records and documents of all copies submitted to us as
reproduced or conformed copies.
Based upon the foregoing, and subject to the limitations and assumptions
heretofore and hereinafter set forth, it is our opinion that:
1. The Warrant Shares, when issued in accordance with the terms of the
relative warrants and when certificates representing such shares have been duly
executed, countersigned and delivered to the persons entitled thereto against
payment to the Company for
<PAGE>
Kideo Productions, Inc.
June 23, 1999
Page 2 of 2 pages
the exercise price provided for in such warrants, will be validly issued, fully
paid and non-assessable; and
2. The Note Shares, when issued in accordance with the terms of the
relative promissory notes and when certificates representing such shares have
been duly executed, countersigned and delivered to the persons entitled thereto,
will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Registration Statement. In giving such consent, we do not
hereby admit that we come within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations thereunder.
The foregoing opinion is based on and limited to the Delaware General
Corporation Law and the relevant federal laws of the United States. We express
no opinion with respect to the laws of any other jurisdiction.
The opinions expressed herein are based upon the laws in effect on the
date hereof, and we assume no obligation to revise or supplement this opinion
should any such law be changed by legislative action, judicial decision or
otherwise.
Very truly yours,
SOLOVAY EDLIN & EISEMAN, P.C.
By: /s/ Michael B. Solovay
----------------------------------
Michael B. Solovay, Chairman
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement, of our report dated October 18, 1998
included herein (the Company's Form 10-KSB for the year ended July 31, 1998)
and to all references to our Firm included in this registration statement filed
on Form S-3.
New York, New York
June 22, 1998
