Filed pursuant to Rule 424(b)(3)
File No. 333-91090
PROSPECTUS
2,779,980 SHARES OF COMMON STOCK
HOLLYWOOD MEDIA CORP.
THE OFFERING:
This prospectus relates to the resale of 2,779,980 shares of common
stock, which consist of 2,233,295 shares of common stock issuable upon the
conversion of Hollywood Media's 6% Senior Convertible Debentures Due 2005 and as
payment of interest thereon and 526,012 shares of common stock issuable upon the
exercise of warrants. In addition, this prospectus includes 20,673 shares of
common stock that are currently outstanding. All of these shares and warrants
were issued and sold pursuant to private placements to the selling shareholders
listed on pages 13 and 14 of this prospectus. We are registering these shares of
common stock pursuant to commitments to register the shares with the selling
shareholders.
USE OF PROCEEDS:
We will not receive any proceeds from the sale of the shares of
common stock by the selling shareholders, other than payment of the exercise
price of the warrants. The selling shareholders may sell the shares at prices
determined by the prevailing market price for the shares or in negotiated
transactions. The selling shareholders may also sell the shares to or with the
assistance of broker-dealers who may receive compensation in excess of their
customary commissions.
TRADING MARKET:
Our common stock is quoted on the Nasdaq National Market under the
symbol "HOLL." On July 2, 2002, the last reported sales price of our common
stock on the Nasdaq National Market was $2.00 per share.
OFFERING EXPENSES:
We will pay the expenses of registering the shares.
YOU SHOULD CAREFULLY CONSIDER THE "RISKS OF INVESTING IN OUR SHARES"
SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
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These shares have not been approved by the Securities and Exchange
Commission or any state securities commission nor have these organizations
determined whether this prospectus is complete or accurate. Any representation
to the contrary is a criminal offense.
You should only rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. Our common stock is not being
offered in any state where the offer or sale is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date on the front of those documents.
THE DATE OF THIS PROSPECTUS IS JULY 3, 2002
TABLE OF CONTENTS
Page
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RISKS OF INVESTING IN OUR SHARES.........................................3
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS.....................9
ABOUT HOLLYWOOD MEDIA CORP..............................................10
PROCEEDS FROM SALE OF THE SHARES........................................13
SELLING SHAREHOLDERS....................................................13
HOW THE SHARES MAY BE DISTRIBUTED.......................................16
OUR CAPITAL STOCK.......................................................18
LEGAL OPINION...........................................................20
EXPERTS.................................................................20
WHERE YOU CAN FIND MORE INFORMATION.....................................20
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RISKS OF INVESTING IN OUR SHARES
THE SHARES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING MATTERS, AS WELL AS THE OTHER
INFORMATION IN THIS PROSPECTUS, BEFORE INVESTING.
WE HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT. WE ANTICIPATE
FURTHER LOSSES IN THE FUTURE AND OUR OPERATING RESULTS COULD FLUCTUATE
SIGNIFICANTLY ON A QUARTERLY AND ANNUAL BASIS.
We have incurred significant losses since we began doing business. In
the years ended December 31, 2001, 2000 and 1999 we had net losses of
approximately $41.8 million, $51.8 million and $24.7 million, respectively. In
the three months ended March 31, 2002, we had a net loss of $7.5 million. As of
March 31, 2002, we had an accumulated deficit of approximately $162.2 million.
We expect to incur additional losses during the next several years while we
continue to grow our businesses. Our future success will depend on the continued
growth in the use of the Internet in general, our ticketing services and web
sites in particular and our ability to generate ticketing, syndication and
advertising revenues.
In addition, our Internet and ticketing operating results may
fluctuate significantly in the future as a result of a variety of factors,
including:
o seasonal variations in the demand for Broadway tickets and resulting
variations in our revenue from Broadway ticket sales;
o our ability to maintain and increase levels of traffic on our web
sites;
o the possibility of decreased demand for our syndicated content as a
result of decreases in the number of content-oriented web sites and
general downturns in the Internet industry;
o our ability to sell advertisements to be displayed on our web sites;
o seasonal trends in Internet usage and Internet sales and advertising
placements;
o our ability to enter into or renew strategic relationships and
agreements with popular media and entertainment organizations, web
sites and media celebrities;
o the amount and timing or our marketing expenditures and other costs
relating to the expansion of our operations;
o new products, web sites or Internet services introduced by us or our
competitors; and
o technical difficulties, security concerns or system downtime
affecting the Internet generally or the operation of our web sites
in particular.
As a result, our operating results for any particular period may not
accurately predict our future operating results.
WE MAY NOT ABLE TO COMPETE SUCCESSFULLY.
Ticketing Businesses. The market for Internet, telephone and wireless
ticketing services and products is intensely competitive and rapidly changing.
The number of telephone services, online services, wireless services and web
sites competing for consumers' attention and spending has proliferated and we
expect that competition will continue to intensify. We compete, directly and
indirectly, for customers, advertisers, members and content providers with the
following categories of companies:
o telephone services, wireless services and web sites targeted to
entertainment enthusiasts, moviegoers, theatergoers and other
eventgoers, which feature directories of movies, shows, events,
showtimes, theater and event locations and related content, and also
allow users to purchase tickets;
o travel agents and other traditional ticketing organizations,
companies, agents and brokers; and
o the box office at each of the venues that hold events for which we
sell tickets.
Internet Businesses. The market for Internet services and products is
intensely competitive and rapidly changing. Competition could result in reduced
traffic to our web sites, price reductions for content that we syndicate and
advertising that we offer, a decline in product sales, reduced margins or loss
of market share, any of which could cause a material decrease in our revenues.
We compete, directly and indirectly, for advertisers, viewers, members and
content providers with the following categories of companies:
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o online services or web sites targeted to entertainment enthusiasts,
particularly moviegoers and theatergoers, such as Film.com, IMDb.com
and Playbill.com;
o publishers and distributors of traditional off-line media, such as
television, radio and print, including those targeted to movie
enthusiasts, many of which have established or may establish web
sites, such as Eonline.com;
o traditional movie and entertainment organizations and vendors or
entertainment merchandise and products, including conventional
retail stores and catalog retailers, many of which have established
web sites, including Disney and Warner Bros.;
o general purpose consumer online services such as AOL, Yahoo!, and
MSN, each of which provides access to movie-related information and
services; and
o web search and retrieval and other online services, such as Yahoo!,
Lycos and other high-traffic web sites.
We believe that the principal competitive factors in attracting and
retaining users are the depth, breadth and timeliness of content, the ability to
offer compelling and entertaining content and brand recognition. Other important
factors in attracting and retaining users include ease of use, service quality
and cost. We believe that the principal competitive factors in attracting and
retaining advertisers include the number of users of our web site, the
demographics of our users, price and the creative implementation of
advertisement placements and sponsorship promotions. There can be no assurance
that we will be able to compete favorably with respect to these factors.
Based on our review of publicly available documents, we believe some
of our existing competitors in both our ticketing and Internet businesses, as
well as potential new competitors, have longer operating histories,
significantly greater financial, technical and marketing resources, greater name
recognition and substantially larger user bases than we do and, therefore, have
significantly greater ability to attract advertisers and users. In addition,
many of these competitors may be able to respond more quickly than us to new or
emerging technologies and changes in Internet user requirements and to devote
greater resources than us to the development, promotion and sale of their
services. There can be no assurance that our current or potential competitors
will not develop products and services comparable or superior to those developed
by us or adapt more quickly than us to new technologies, evolving industry
trends or changing Internet user preferences. Increased competition could result
in price reductions, reduced margins or loss of market share, any of which would
result in a decrease in our revenues. There can be no assurance that we will be
able to compete successfully against current and future competitors, or that
competitive pressures faced by us would not impair our ability to expand our
operations or grow our revenues.
Intellectual Properties and Book Development and Licensing
Businesses. Numerous companies and individuals are engaged in the book
development business. We also compete with a large number of companies that
license characters and properties into film, television, books and merchandise.
Competition in these businesses is largely based on the number and quality of
relationships that we are able to develop with authors and celebrities. There
can be no assurance that our current or future competitors will not be
successful in developing relationships with authors and celebrities with whom we
have previously had relationships. Our revenues will decrease if we are unable
to maintain these relationships or develop new relationships.
WE MAY REQUIRE ADDITIONAL CAPITAL TO FINANCE OUR OPERATIONS AND THERE
CAN BE NO ASSURANCE THAT ADDITIONAL FINANCING WILL BE AVAILABLE.
We have required substantial financing to fund our acquisitions and
growth since our inception. We may continue to require additional financing for
marketing and promotional activities, to fund our growth plan and for working
capital. Our current operating plans and assumptions indicate that anticipated
cash flows when combined with cash on hand and other potential sources of
capital will be enough to meet our working capital requirements for the next
twelve months. If plans change or our assumptions prove to be inaccurate, we may
need to seek further financing or curtail our operations. The actual amount and
timing of our future capital requirements may differ materially from our
estimates as a result of, among other things, decreases in revenue from
advertising sales compared to our projections, the possibility that we acquire
new businesses that generate cash losses, and unanticipated capital expenditures
to maintain and improve our web sites and other operations. Our long-term
financial success depends on our ability to generate enough revenue and cash
flow to offset operating expenses. To the extent we do not generate sufficient
revenues and cash flow to offset expenses we will require further financing to
fund our ongoing operations. We cannot assure you that any additional financing
will be available or if available, that it will be on favorable terms. The terms
of any financing that we enter into will vary depending on, among other things,
our then current financial condition, the market price of our common stock and
the number of outstanding options and warrants to purchase our common stock and
the exercise price of those options and warrants.
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WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR TRADEMARKS AND
PROPRIETARY RIGHTS.
Intellectual Properties Business. Hollywood Media has applied for
trademark and copyright protection for each of its major intellectual property
titles and featured characters. Hollywood Media (including Netco Partners)
currently has approximately 46 U.S. registered trademarks and approximately
seven trademark applications are pending related to this business. As Hollywood
Media's properties are developed, Hollywood Media intends to apply for further
trademark and copyright protection in the United States and certain foreign
countries.
Internet Businesses. We own trademark registrations in the United
States for ALL ABOUT MOVIES, HOLLYWOOD ONLINE, MOVIETUNES.COM, THE GOLDEN HITCH,
GIVING TRAILERS THE RESPECT THEY DESERVE and ISN'T IT TIME YOU WENT HOLLYWOOD!
and in a number of foreign countries for HOLLYWOOD ONLINE. We have filed
trademark applications in the United States for the marks HOLLYWOOD MEDIA CORP.,
HOLLYWOOD.COM, BROADWAY.COM and the slogans ON STAGE! ONLINE, and WHERE
MOVIEGOERS GO and we have filed trademark applications in foreign countries for
the mark HOLLYWOOD.COM.
Our performance and ability to compete are dependent to a significant
degree on our internally developed and licensed content and technology. We rely
on a combination of copyright, trademark and trade secret laws, confidentiality
and nondisclosure agreements with our employees and with third parties and
contractual provisions to establish and maintain our proprietary rights. There
can be no assurance that the steps taken by us to protect our proprietary rights
will be adequate, or that third parties will not infringe upon or misappropriate
our copyrights, trademarks, service marks and similar proprietary rights. In
addition, effective copyright and trademark protection may be unenforceable or
limited in certain foreign countries. In the future, litigation may be necessary
to enforce and protect our trademarks, service marks, trade secrets, copyrights
and other intellectual property rights. Any such litigation would be costly and
could divert management's attention from other more productive activities.
Adverse determinations in such litigation could result in the loss of certain of
our proprietary rights, subject us to significant liabilities, require us to
seek licenses from third parties, or prevent us from selling our services.
There can be no assurance that third parties will not bring copyright
or trademark infringement claims against us, or claim that our use of certain
technology violates a patent. Even if these claims are not meritorious, they
could be costly and could divert management's attention from other more
productive activities. If it is determined that we have infringed upon or
misappropriated a third party's proprietary rights, there can be no assurance
that any necessary licenses or rights could be obtained on terms satisfactory to
us, if at all. The inability to obtain any required license on satisfactory
terms could force us to incur expenses to change the way we operate our
businesses. If our competitors prepare and file applications that claim
trademarks owned or registered by us, we may oppose these applications and have
to participate in administrative proceedings to determine priority of right in
the trademark, which could result in substantial costs to us, even if the
eventual outcome is favorable to us. An adverse outcome could require us to
license disputed rights from third parties or to cease using such trademarks. In
addition, inasmuch as we license a portion of our content from third parties,
our exposure to copyright infringement or right of privacy or publicity actions
may increase; because we must rely upon such third parties for information as to
the origin and ownership of such licensed content. We generally obtain
representations as to the origins, ownership and right to use such licensed
content and generally obtain indemnification to cover any breach of any such
representations; however, there can be no assurance that such representations
will be accurate or that such indemnification will provide adequate compensation
for any breach of such representation. There can be no assurance that the
outcome of any litigation between such licensors and a third party or between us
and a third party will not lead to royalty obligations for which we are not
indemnified or for which such indemnification is insufficient, or that we will
be able to obtain any additional license on commercially reasonable terms if at
all.
In 1999 we obtained a federal trademark registration for the name
HOLLYWOOD ONLINE. In December 2000 we changed our corporate name and primary
branding to HOLLYWOOD MEDIA CORP. We have filed a number of United States
trademark applications for HOLLYWOOD MEDIA CORP., HOLLYWOOD.COM, BROADWAY.COM
and variants thereof, and foreign trademark applications for HOLLYWOOD.COM.
There can be no assurance that we will be able to secure adequate protection for
these names or other trademarks in the United States or in foreign countries. If
we obtain registration of those trademarks, we may not be able to prevent our
competitors from using different trademarks that contain the words "Hollywood"
or "Broadway." Many countries have a "first-to-file" trademark registration
system; and thus we may be prevented from registering our marks in certain
countries if third parties have previously filed applications to register or
have registered the same or similar marks. It is possible that our competitors
or others will adopt product or service names similar to ours, thereby impeding
our ability to build brand identity and possibly leading to customer confusion.
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Our inability to protect our HOLLYWOOD.COM and BROADWAY.COM marks and
other marks adequately could impair our ability to maintain and expand our core
brands and thus impair our ability to generate revenue from these brands.
Copyright protection in the United States on new publications of
works for hire extend for a term of 95 years from the date of initial
publication or 120 years from the year of creation, whichever expires first.
Trademark registration in the United States extends for a period of ten years
following the date of registration. To maintain the registration, affidavits
must be filed between the fifth and sixth years following the registration date
affirming that the trademark is still in use in commerce and providing evidence
of such use. The trademark registration must be renewed prior to the expiration
of the ten-year period following the date of registration.
WE MUST MANAGE OUR GROWTH IN ORDER TO ACHIEVE THE DESIRED RESULTS.
We have significantly expanded our syndication, Internet and
ticketing operations over the past three years through our acquisitions of the
businesses of hollywood.com, Inc., CinemaSource, Inc., Baseline II, Inc.,
BroadwayTheater.com, Inc., Theatre Direct NY, Inc. and FilmTracker and through
the launch of Broadway.com, 1-800-BROADWAY and MovieTickets.com. We plan to
continue to expand our operations and market presence by entering into joint
ventures, acquisitions, business combinations, investments, or other strategic
alliances. These transactions create risks such as:
o difficulty assimilating the operations, technology and personnel of
the combined companies;
o disruption of our ongoing businesses due to the resources needed to
complete these transactions;
o increased marketing and advertising expenses to promote new
ventures;
o problems retaining key technical and managerial personnel;
o the availability of financing to make acquisitions;
o expenses associated with amortization of goodwill and other
purchased intangible assets;
o additional operating losses and expenses of acquired businesses; and
o the inability to maintain relationships with the customers or other
business partners of acquired businesses.
We may not succeed in addressing these risks if we do not adequately
increase our management, operational and financial resources and systems. To the
extent that we are unable to identify and successfully integrate future ventures
into our operations, our growth strategy may not be successful and our stock
price could decrease.
WE ARE DEPENDENT ON OUR ABILITY TO DEVELOP STRATEGIC RELATIONSHIPS
WITH MEDIA AND ENTERTAINMENT ORGANIZATIONS AND BEST-SELLING AUTHORS.
The success of our Internet operations is dependent in part on our
ability to enter into and renew strategic relationships and agreements with
media and entertainment organizations. Our intellectual property division is
dependent on our ability to identify, attract and retain best-selling authors
and media celebrities who create our intellectual properties. Our business could
be harmed by the loss of the services of Dr. Martin H. Greenberg, who has been
primarily responsible for developing relationships with the best-selling authors
who create our intellectual properties. Dr. Greenberg owns the remaining 49%
interest in Tekno Books through which we operate our intellectual properties
division. Although many of the authors with whom we have relationships are bound
to multiple book contracts, our ability to renew these contracts or enter into
contracts with new authors would be impaired without the services of Dr.
Greenberg.
OUR OPERATIONS COULD BE NEGATIVELY IMPACTED BY SYSTEMS INTERRUPTIONS.
The hardware and software used in our Internet and ticketing
operations, or that of our affiliates, could be damaged by fire, floods,
earthquakes, power loss, telecommunications failures, break-ins and similar
events. Our web sites could also be affected by computer viruses, electronic
break-ins or other similar disruptive problems. These system problems could
affect our business. Insurance may not adequately compensate us for any losses
that may occur due to any failures or interruptions in systems. We do not
currently have a formal system disaster recovery plan. General Internet traffic
interruptions or delays could also harm our business. As with Internet web sites
in general, our web sites may experience slower response times or decreased
traffic for a variety of reasons. Additionally, online service providers have
experienced significant outages in the past, and could experience outages,
delays and other difficulties due to system failures unrelated to our systems.
To the extent our services are disrupted, we could lose users of our web sites
and our ticketing and advertising revenues could decline.
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WE ARE SUBJECT TO ADDITIONAL SECURITY RISKS BY DOING BUSINESS OVER
THE INTERNET.
A significant obstacle to consumer acceptance of electronic commerce
over the Internet has been the need for secure transmission of confidential
information in transaction processing. Internet usage could decline if any
well-publicized compromise of security occurred. We may incur additional costs
to protect against the threat of security breaches or to alleviate problems
caused by these breaches. If a third person were able to misappropriate our
users' personal information or credit card information, we could be held liable
for failure to adequately protect such information and subject to monetary
damages to the extent our users suffer financial losses or other harm as a
result thereof.
WE MAY NOT BE ABLE TO ADAPT AS TECHNOLOGIES AND CUSTOMER EXPECTATIONS
CONTINUE TO EVOLVE.
To be successful, we must adapt to rapidly changing technologies by
continually enhancing our web sites and ticketing services and introducing new
services to address our customers' changing expectations. We must evaluate and
implement new technologies that are available in the marketplace or risk that
our customers will not continue using our services. Examples of new technologies
that we are currently evaluating include those related to streaming and
downloading of audio and video content on our web sites, delivery of content
over wireless devices and the convergence of cable television, satellite and
Internet services and delivery systems. We could incur substantial costs if we
need to modify our services or infrastructure in order to adapt to changes
affecting providers of content and services through the Internet. Our customer
base and thus our revenues could decrease if we cannot adapt to these changes.
GOVERNMENT REGULATION OF THE INTERNET COULD IMPACT OUR BUSINESS.
The application of existing laws and regulations to our business
relating to issues such as user privacy, pricing, taxation, content,
sweepstakes, copyrights, trademarks, advertising, and the characteristics and
quality of our products and services can be unclear. We also may be subject to
new laws and regulations related to our business. Although we endeavor to comply
with all applicable laws and regulations and believe that we are in compliance,
because of the uncertainty of existing laws and the possibility that new laws
may be adopted, there is a risk that we will not be in full compliance.
Several federal laws could have an impact on our business. The
Digital Millennium Copyright Act establishes binding rules that clarify and
strengthen protection for copyrighted works in digital form, including works
used via the Internet and other computer networks. The Child Online Protection
Act is intended to restrict the distribution of certain materials deemed harmful
to children. The Children's Online Privacy Protection Act of 1998 protects the
privacy of children using the Internet, by requiring, among other things, (1)
that in certain specific instances the operator of a web site must obtain
parental consent before collecting, using or disclosing personal information
from children under the age of 13, (2) the operator of a web site to make
certain disclosures and notices on the web site or online service regarding the
collection, use or disclosure of such personal information, and (3) the operator
of a web site or online service to establish and maintain reasonable procedures
to protect the confidentiality, security and integrity of personal information
collected from children under the age of 13. Compliance with these laws will
subject our business to additional costs and failure to comply could expose our
business to liability.
WE MAY NOT BE ABLE TO ACQUIRE OR MAINTAIN EFFECTIVE WEB ADDRESSES.
We hold rights to more than 150 web domain names, including
hollywood.com, hollywood.net, broadway.com, broadway.net, musicsite.com,
showtimes.com, theater.com, allaboutmovies.com, cableguide.com, cablesite.com,
cdguide.com, cdsite.com, cinemasite.com, eguide.com, esites.com, filmpick.com,
moviecritics.com, movieguide.com, moviepeople.com and moviesite.com. We may not
be able to acquire or maintain appropriate domain names in all countries in
which we plan to do business. Furthermore, regulations governing domain names
may not protect our trademarks and similar proprietary rights. We may be unable
to prevent third parties from acquiring domain names that are similar to,
infringe upon or diminish the value of our trademarks and other proprietary
rights. In addition, we may not be able to secure the rights to appropriate
domains using new top level domains that are developed and marketed from time to
time, such as ".biz," ".info" and ".cc."
WE ARE DEPENDENT ON MITCHELL RUBENSTEIN AND LAURIE S. SILVERS, OUR
FOUNDERS.
Mitchell Rubenstein, our Chairman of the Board and Chief Executive
Officer, and Laurie S. Silvers, our Vice Chairman, President and Secretary, have
been primarily responsible for our organization and development. The loss of the
services of either of these individuals would hurt our business. If either of
these individuals were to leave Hollywood Media unexpectedly, we could face
substantial difficulty in hiring qualified successors and could experience a
loss in productivity while any successor obtains the necessary training and
7
experience. The employment agreements between Hollywood Media and each of these
individuals provide, among other things, that if we terminate either of their
agreements without "cause," we will have also terminated the other's agreement
without "cause."
Our future success will be dependent upon our ability to attract and
retain qualified and creative key management personnel. The competition for
qualified personnel in our industry and the limited availability of qualified
individuals could make it difficult for us to attract and retain qualified
personnel. If we do not succeed in attracting new qualified personnel, or
retaining and motivating existing qualified personnel, we may not be able to
grow our revenues or expand our operations.
VIACOM INC. BENEFICIALLY OWNS APPROXIMATELY 30% OF OUR COMMON STOCK
AND ITS INTERESTS MAY DIFFER FROM YOURS.
Viacom Inc.'s significant equity interest in us and other rights we
have granted to Viacom could delay or prevent a merger or other transaction
involving a change of control of us that could be beneficial to you. Viacom
beneficially owns approximately 30% of our outstanding common stock. Viacom also
currently has the right to nominate two individuals for election to our board of
directors. If we issue common stock or securities convertible into common stock
in the future, Viacom will, with some exceptions, have the right to purchase for
cash securities from us so it can maintain its percentage ownership. As a result
of its equity interest in us and its right to nominate individuals for election
to our board, Viacom may be able to influence our management and affairs.
THE ACCOUNTING TREATMENT OF VIACOM INC.'S INVESTMENT IN US WILL
RESULT IN FUTURE NON-CASH EXPENSES ON OUR INCOME STATEMENT.
Viacom Inc.'s commitment to provide $105.5 million of advertising,
promotion and content for our Hollywood.com and Broadway.com web sites is
recorded as an asset on our balance sheet. The asset was recorded on our books
at approximately $137 million, the fair market value of the common stock and
warrants issued to Viacom in exchange we received $105.5 million of advertising
and $10.8 million in cash. As we receive the advertising, promotion and content
from Viacom over the seven-year term of the agreements, we will record a
non-cash expense on our income statement in an amount equal to the value paid
for the advertising, promotion and content received. We currently expect to
record an expense of approximately $17.5 million per year to reflect the value
of the advertising, promotion and content expected to be received each year
during the remaining five years of the term. This expense will result in a net
loss to us to the extent our revenues do not increase by an amount at least
equal to the amount of the expense.
OUR STOCK PRICE IS VOLATILE.
The trading price of our common stock has and may continue to
fluctuate significantly. During the 12 months ended July 2, 2002, the trading
price for our common stock on the Nasdaq Stock Market has ranged from $1.55 to
$6.63 per share. Our stock price may fluctuate in response to a number of events
and factors, such as our quarterly operating results, announcements of new
products or services, announcements of mergers, acquisitions, strategic
alliances, or divestitures and other factors, including similar announcements by
other companies that investors may consider to be comparable to us. In addition,
the stock market in general, and the market prices for Internet-related
companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of the companies. These broad market and
industry fluctuations may cause the market price of our stock to decrease,
regardless of our operating performance.
OUR STOCK PRICE MAY BE HURT IF THE NUMBER OF INVESTORS SEEKING TO
SELL SHARES OF OUR COMMON STOCK IN THE PUBLIC MARKET INCREASES.
As of June 19, 2002, approximately 12 million shares of our common
stock, representing approximately 40% of our outstanding shares of common stock,
constituted "restricted securities" as defined in Rule 144 under the Securities
Act. Most of these shares are subject to agreements with Hollywood Media
permitting the holders thereof to demand that Hollywood Media register the
shares for resale under the Securities Act. This will permit the sale of
registered shares of common stock in the open market or in privately negotiated
transactions without compliance with the requirements of Rule 144. In addition,
as of June 19, 2002, we had options and warrants outstanding for the purchase of
an aggregate of approximately 5.8 million shares of our common stock, and we
plan to issue additional options from time to time to our employees and
directors. Approximately 2.4 million of the shares issuable upon exercise of the
options were registered under the Securities Act and will be freely tradable
upon issuance. To the extent the exercise price of the options and warrants is
less than the market price of the common stock, the holders of the options and
warrants are likely to exercise them and sell the underlying shares of common
stock. We are unable to estimate the amount, timing or nature of future sales of
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outstanding common stock. Sales of substantial amounts of our common stock in
the public market could cause the market price for our common stock to decrease.
In addition, a decline in the price of our common stock would likely impede our
ability to raise capital through the issuance of additional shares of common
stock or other equity securities.
OUR STOCK PRICE MAY BE HURT BY THE EFFECTS OF OUTSTANDING WARRANTS
THAT INCLUDE MARKET-BASED ADJUSTMENT FEATURES.
In connection with our financing in May 2001, we issued adjustment
warrants to Viacom Inc., Societe Generale and Velocity Investment Partners Ltd.
The warrants provide that if at the conclusion of any of five adjustment periods
specified in the warrants, the average of the ten lowest closing sale prices of
the common stock during twenty consecutive days of the adjustment period is
below a specified price, Hollywood Media will be obligated to issue a fixed
number of additional shares to the investors for no consideration. During the
first adjustment period, which ended November 27, 2001, the average price was
$3.03 per share and we issued additional shares of common stock to the investors
under the warrants. We will only issue additional shares under the warrants if
the average price during any remaining adjustment period is less than $3.03 per
share. In May 2002, Velocity Investment Partners Ltd. agreed to cancel its
adjustment warrant in exchange for Hollywood Media agreeing to decrease the
exercise price from $6.44 per share to $5.25 per share under a previously issued
warrant to purchase up to 177,524 shares of its common stock. The maximum number
of additional shares issuable in the future to Viacom Inc. under the warrants is
218,849, which aggregate number of shares would only be issuable if the average
price per share of the common stock was $2.15 or less during any adjustment
period. Hollywood Media believes that Societe Generale failed to comply with
certain provisions of the Securities Purchase Agreement between the parties and
therefore believes that Societe Generale is not entitled to any of the
additional 328,275 shares of common stock that may otherwise be issuable to it
under the warrants.
The lower the market price of the common stock during any adjustment
period, the more shares that will be issuable to the investors upon exercise of
the warrants. If the investors exercise the warrants and sell the common stock,
the market price of the common stock may decrease due to the presence of
additional shares in the market. This decrease in the market price of the stock
could allow the investors to receive greater amounts of common stock through
subsequent exercises of the warrants. Sales of these additional shares could
further depress the market price of the common stock. Significant downward
pressure on the market price of the common stock could encourage short sales of
the common stock. Any material amount of short sales could place further
downward pressure on the market price of the common stock.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus or that are otherwise made by
us or on our behalf about our financial condition, results of operations and
business constitute "forward-looking statements," within the meaning of federal
securities laws. Hollywood Media cautions readers that certain important factors
may affect Hollywood Media's actual results, levels of activity, performance or
achievements and could cause such actual results, levels of activity,
performance or achievements to differ materially from any future results, levels
of activity, performance or achievements anticipated, expressed or implied by
any forward-looking statements that may be deemed to have been made in this
prospectus or that are otherwise made by or on behalf of Hollywood Media. For
this purpose, any statements contained in this prospectus that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, "forward-looking statements"
are typically phrased using words such as "may," "will," "should," "expect,"
"believe," "anticipate," "intend," "could," "estimate," "pro forma" or
"continue" or the negative variations thereof or similar expressions or
comparable terminology. Factors that may affect Hollywood Media's results and
the market price of our common stock include, but are not limited to:
o our continuing operating losses,
o negative cash flows from operations and accumulated deficit,
o our limited operating history,
o the need for additional capital to finance our operations,
o the need to manage our growth and integrate new businesses into
Hollywood Media,
o our ability to develop strategic relationships,
o our ability to compete with other Internet companies,
o technology risks and the general risk of doing business over the
Internet,
o future government regulation,
o dependence on our founders,
o the interests of our largest shareholder, Viacom Inc.,
9
o accounting considerations related to our strategic alliance with
Viacom Inc.,
o the volatility of our stock price, and
o the effects of outstanding warrants that include market-based
adjustment features.
Hollywood Media is also subject to other risks detailed herein,
including those risk factors discussed in the "Risks of Investing in Our Shares"
section as well as those discussed elsewhere in this prospectus or detailed from
time to time in Hollywood Media's filings with the Securities and Exchange
Commission.
Because these forward-looking statements are subject to risks and
uncertainties, we caution you not to place undue reliance on these statements,
which speak only as of the date of this prospectus. We do not undertake any
responsibility to review or confirm analysts' expectations or estimates or to
release publicly any revisions to these forward-looking statements to take into
account events or circumstances that occur after the date of this prospectus. As
a result of the foregoing and other factors, no assurance can be given as to the
future results, levels of activity or achievements and neither us nor any other
person assumes responsibility for the accuracy and completeness of such
statements.
ABOUT HOLLYWOOD MEDIA CORP.
THIS IS ONLY A SUMMARY AND DOES NOT CONTAIN ALL THE INFORMATION THAT
MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE MORE DETAILED INFORMATION,
INCLUDING THE FINANCIAL STATEMENTS AND THE RELATED FOOTNOTES, INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS, AS DISCUSSED IN THE "WHERE YOU CAN FIND MORE
INFORMATION" SECTION OF THIS PROSPECTUS.
OVERVIEW
Hollywood Media is a provider of entertainment-related information,
content and ticketing services to consumers and businesses. We manage a number
of integrated business units focused on Hollywood, Broadway, and the
entertainment industry. Hollywood Media derives a diverse stream of revenues
from this array of business units, including revenue from individual and group
Broadway ticket sales, business to business content syndication, subscription
fees, content licensing fees, advertising and book development. Due to a common
focus on the entertainment vertical, each of these business units supports the
others, with content shared between multiple business units and customers
cross-generated for one unit by another. For instance, our Hollywood.com
consumer content site funnels customers into our MovieTickets.com affiliate
while making use of movie listings supplied by our wholly owned CinemaSource
unit, which is the largest business to business supplier of movie showtimes, and
movie data supplied by our Baseline/FilmTracker business to business unit.
The mailing address of our principal executive office is 2255 Glades
Road, Suite 237W, Boca Raton, Florida 33431 and our telephone number is (561)
998-8000.
BUSINESS TO BUSINESS SYNDICATION DIVISIONS
CINEMASOURCE. CinemaSource is the largest supplier of movie showtimes
as measured by market share and compiles movie showtimes for every movie theater
in the United States and Canada, representing approximately 34,000 movie
screens. Since its start in 1995, CinemaSource has substantially increased its
operations and currently provides movie showtime listings to more than 200
newspapers, wireless companies, Internet sites, and other media outlets,
including newspapers, such as The New York Times and The Washington Post,
wireless companies such as Sprint PCS, AT&T Wireless, Verizon and Vindigo,
Internet companies including AOL's Digital City, Yahoo! and Lycos and other
media outlets. CinemaSource also syndicates entertainment news, movie reviews,
and celebrity biographies. In addition to charging fixed amounts for the data
that it provides to its customers, CinemaSource often shares in the advertising
revenue generated by its customers in connection with the data.
EVENTSOURCE. We launched the EventSource business in mid-1999 as an
expansion of the operations of CinemaSource. EventSource compiles and syndicates
detailed information on community events in cities around the country, including
concerts and live music, sporting events, festivals, fairs and shows on
Broadway, off-Broadway, touring companies, community playhouses and dinner
theaters throughout North America and in London's West End. EventSource entered
into an agreement with AOL's Digital City in April 2000 to provide event
listings for up to 200 cities nationwide. In addition to Digital City, other
EventSource customers include Vindigo and the web site of The New York Times.
10
ADSOURCE. We launched AdSource in January 2002, as yet another
expansion of the CinemaSource operations, requiring very little overhead.
AdSource leverages the movie theater showtimes from the CinemaSource data
collection systems and our relationship with various movie exhibitors to create
exhibitor paid directory ads for insertion in newspapers around the country. We
are providing this service nationally for our first customer, a major theater
chain.
BASELINE/FILMTRACKER. During January 2002 we merged Baseline, our
pay-per-use subscription service, with FilmTracker, a leading provider of
information services to professionals in the feature film and television
industries. The new combined service, which is targeted at studios, production
companies, distributors, agents, managers, producers, news organizations, and
financial analysts, incorporates all of Baseline's data into FilmTracker's
user-friendly interface. The result is a film and television database that
contains over 1.5 million records, including over one million listings of people
in the media industry, 7,000 entertainment personality biographies, credits for
over 45,000 released feature films dating back 50 years, nearly 35,000
television series, miniseries, movies of the week and specials, over 11,000 film
and television projects in every stage of development and production, 1,800
movie reviews, box office grosses going back nearly 20 years including over
5,800 feature films, 16,000 company rosters and representation for about 19,000
entertainment professionals.
In connection with the launch of the combined service, we signed
multi-year licensing agreements with two major film studios during the first
quarter of 2002. Baseline customers also include Bloomberg, Daily Variety,
People Magazine, Lexis-Nexis, NBC, HBO, ABC, Paramount Pictures, 20th Century
Fox, DreamWorks, Sony Pictures, MGM, E! Entertainment Television, and the
Directors Guild of America. In connection with the merger that occurred on
January 14, 2002, FilmTracker's parent company, Fountainhead Media Services
("FMS"), acquired a 20% equity interest in Baseline, Inc. for $4 million, with
consideration consisting of a $2 million promissory note payable to Hollywood
Media in installments over a five-year period with a final payment of
approximately $1.2 million, and the contribution of the FilmTracker database,
intellectual property rights, and all existing contracts with a stated value of
$2 million. The promissory note is secured by the 20% equity interest in
Baseline held by FMS. FMS will have the right to convert its 20% equity interest
in Baseline into common stock of Hollywood Media at any time during the two-year
period following the payment in full of the promissory note based upon a
multiple of Baseline's EBITDA (earnings before interest, taxes, depreciation and
amortization) for the year preceding the conversion. For purposes of any such
conversion, Hollywood Media's stock will be valued at the greater of (i) $7.50
per share, and (ii) the average closing price of the stock on the Nasdaq Stock
Market for the 15 trading days preceding the notice of conversion. Hollywood
Media will also have the right to cause the conversion of the equity interest in
Baseline to Hollywood Media common stock at any time after the earlier of the
payment in full of the promissory note and January 14, 2006. For accounting
purposes this transaction is treated as an acquisition of the FilmTracker assets
in exchange for (1) an issuance of a five year option on Baseline stock with a
$2 million exercise price and (2) the issuance of a put and call option on
Hollywood Media common stock.
TICKETING DIVISIONS
THEATRE DIRECT INTERNATIONAL, BROADWAY.COM AND 1-800-BROADWAY. We
acquired Theatre Direct International ("TDI") as of September 15, 2000. Founded
in 1990, TDI is a live theater ticketing wholesaler that provides groups and
individuals with access to theater tickets and knowledgeable service, covering
shows on Broadway, long running shows off-Broadway, shows in London's West End
theatre district and shows in Toronto. TDI sells tickets directly to travel
agents and tour groups. As a marketing agency, TDI represents numerous producers
and Broadway shows to the travel industry around the world. The Broadway shows
are Aida, Beauty and the Beast, Cabaret, Chicago, Contact, 42nd Street, Harlem
Song, Into the Woods, Les Miserables, Mamma Mia!, Oklahoma, Rent, The Full
Monty, The Graduate, The Lion King, The Phantom of the Opera, Urinetown and
Metamorphoses. In addition, TDI's education division, Broadway Classroom,
markets group tickets to schools across the country. We launched Broadway.com on
May 1, 2000. Broadway.com features the ability to purchase Broadway,
off-Broadway and London's West End theater tickets online. Our 1-800-BROADWAY
number, which we acquired in October 2001, is marketed in tandem by us with
Broadway.com. TDI's offline ticketing service complements the online ticketing
services available on our Broadway.com and our ticket sales through our
1-800-BROADWAY number. The combined businesses provide live theater ticketing
and related content for over 200 venues in multiple markets to a customer base
consisting of over 40,000 travel agencies, tour operators, corporations and
educational institutions, in addition to numerous newspapers and web sites.
MOVIETICKETS.COM, INC. MovieTickets.com is a leading destination for
the purchase of movie tickets through the Internet. Hollywood Media launched the
MovieTickets.com web site in May 2000 with several major theatre exhibitors.
Hollywood Media currently owns 26.4% of the equity of MovieTickets.com, Inc.
MovieTickets.com, Inc. entered into an agreement with Viacom Inc. effective
August 2000 whereby Viacom Inc. acquired a five percent interest in
MovieTickets.com, Inc. for $25 million of advertising and promotion over five
11
years. In addition to the Viacom advertising and promotion, MovieTickets.com is
promoted through on-screen advertising in each participating exhibitor's movie
screens. In March 2001, AOL purchased a non-interest bearing convertible
preferred equity interest in MovieTickets.com for $8.5 million in cash, which
can be converted into approximately 3% of the common stock of MovieTickets.com,
Inc. In connection with that transaction, MovieTickets.com's ticket inventory is
promoted throughout America Online's interactive properties and ticket inventory
of AOL's Moviefone is available on MovieTickets.com.
MovieTickets.com. Inc.'s current participating exhibitors include AMC
Entertainment Inc., National Amusements, Inc., Famous Players Inc., Hoyts
Cinemas, Marcus Theaters, and other regional exhibitors. A recent addition
includes theaters formerly owned by General Cinemas, which were acquired by AMC
Entertainment, Inc. These exhibitors operate theaters located in all of the top
20 markets and approximately 70% of the top 50 markets in the United States and
Canada and represent approximately 50% of the top 100 grossing theaters in North
America. The MovieTickets.com web site allows users to purchase movie tickets
and retrieve them at "will call" windows or kiosks at theaters. The web site
also features bar coded tickets that can be printed at home and presented
directly to the ticket taker at participating theaters. The web site contains
movie content from Hollywood Media's various divisions for all current and
future release movies, movie reviews and synopses, digitized movie trailers and
photos, and box office results. The web site generates revenues from service
fees charged to users for the purchase of tickets and the sale of advertising
which includes ads on the "print-at-home" ticket.
INTERNET DIVISIONS
HOLLYWOOD.COM. Hollywood.com is a premier entertainment related web
site featuring over one million pages of in-depth movie, television and other
entertainment content, including movie descriptions and reviews, digitized movie
trailers and photos, movie showtimes listings, entertainment news, box office
results, interactive games, movie soundtracks, television listings, concert
information, celebrity profiles and biographies, comprehensive coverage of
entertainment awards shows and film festivals and exclusive video coverage of
movie premieres.
We sell sponsorships and banner advertising on Hollywood.com through
relationships with advertising representative firms and through an internal
sales staff. Some of our recent advertisers include Disney, Fox Home
Entertainment, Verizon Wireless, The History Channel, The Sci-Fi Channel, HBO,
Purina, People Magazine, Verisign, VISA, Showtime and movie studios including
New Line, Universal, Warner Brothers and Sony.
Effective January 2000, we entered into a strategic, seven-year
relationship with CBS that provides for extensive promotion of the Hollywood.com
and Broadway.com web sites. Viacom has agreed to provide Hollywood.com and
Broadway.com with $105.5 million of promotion across certain of its media
properties, including the CBS television network, CBS owned and operated
television stations, the TNN and CMT cable networks, Infinity Broadcasting
Corporation's radio stations and Viacom Outdoor billboards and CBS syndicated
television and radio programs. The advertising provided by Viacom is valued
based upon the average price charged by Viacom for similar advertisements. To
supplement our internal sales efforts, we also have the right to reallocate a
portion of each year's advertising and promotion budget provided by Viacom and
require Viacom to sell up to $1.5 million of advertising on the Hollywood.com
and Broadway.com web sites. We have already exercised this right through 2003.
We will pay an 8% commission on any additional advertising revenues generated by
Viacom for us in excess of the $1.5 million guaranteed amount selected by us
each year.
BROADWAY.COM. We launched Broadway.com on May 1, 2000. Broadway.com
features the ability to purchase Broadway, off-Broadway and London's West End
theater tickets online; theater showtimes for professional live theater venues
throughout the U.S. as well as London's West End and hundreds of college and
local live theater venues; the latest theater news; interviews with stage actors
and playwrights; opening-night coverage; original theater reviews; and video
excerpts from selected shows. Broadway.com also offers current box office
results, show synopses, cast and crew credits and biographies, digitized show
previews, digitized showtunes, and an in-depth Tony Awards(R) area. Broadway.com
generates revenue from the sale of tickets and advertising.
INTELLECTUAL PROPERTIES BUSINESS
INTELLECTUAL PROPERTIES. Our intellectual properties division owns
the exclusive rights to intellectual properties, which are complete stories and
ideas for stories, created by best-selling authors and media celebrities. Some
examples of our intellectual properties are Anne McCaffrey's Acorna the Unicorn
Girl, Leonard Nimoy's Primortals, and Mickey Spillane's Mike Danger. We license
rights to our intellectual properties to companies such as book publishers, film
and television studios, multi-media software companies and producers of other
products. These licensees develop books, television series and other products
12
based on the intellectual properties licensed from us. We generally obtain the
exclusive rights to the intellectual properties and the right to use the
creator's name in the titles of the intellectual properties (e.g., Mickey
Spillane's Mike Danger and Leonard Nimoy's Primortals).
NETCO PARTNERS. In June 1995, Hollywood Media and C.P. Group Inc.
("C.P. Group"), entered into an agreement to form NetCo Partners. NetCo Partners
owns Tom Clancy's NetForce. Hollywood Media and C.P. Group are each 50% partners
in NetCo Partners. Tom Clancy is a shareholder of C.P. Group. At the inception
of the partnership, C.P. Group contributed to NetCo Partners all rights to Tom
Clancy's NetForce, and Hollywood Media contributed to NetCo Partners all rights
to Tad Williams' MirrorWorld, Arthur C. Clarke's Worlds of Alexander, Neil
Gaiman's Lifers, and Anne McCaffrey's Saraband. NetCo Partners licensed Tom
Clancy's NetForce to Putnam Berkley for a series of mass market paperbacks and
to ABC Television for a television mini-series and video distribution in
accordance with the terms of the partnership agreement, and the other properties
have reverted back to Hollywood Media.
BOOK DEVELOPMENT AND BOOK LICENSING. Our intellectual properties
division also includes a book development and book licensing business through
our 51% owned subsidiary, Tekno Books, that develops and executes book projects,
typically with best-selling authors. Tekno Books has worked with approximately
50 New York Times best-selling authors, including Tom Clancy, Jonathan
Kellerman, Dean Koontz, Tony Hillerman, Robert Ludlum and Scott Turow, and
numerous media celebrities, including David Copperfield, Louis Rukeyser and
Willard Scott. Our intellectual properties division has licensed books for
publication with more than 60 book publishers, including HarperCollins, Bantam
Doubleday Dell, Random House, Simon & Schuster, Penguin Putnum and Warner Books.
The book development and book licensing division has a library of more than
1,300 books. Another 2,620 foreign editions and other editions (audio,
paperback, etc.) of these books have been sold to 330 publishers around the
world, and published in 33 languages. Tekno Books has approximately 300
forthcoming books under contract. We believe the library of books is valuable as
many of the books can be resold and reissued in future years, and also moved
into various electronic formats. We are expanding into one of the largest areas
of publishing, which is romance fiction, and the fastest growing area of
publishing, which is the Christian book market. The Chief Executive Officer of
Tekno Books, Dr. Martin H. Greenberg, is also a director of Hollywood Media and
owner of the remaining 49% interest in Tekno Books.
PROCEEDS FROM SALE OF THE SHARES
We will receive no proceeds from the sale of any of or all of the
shares being offered by the selling shareholders under this prospectus. We will
receive an amount ranging from $1,820,002 to $1,988,325 upon the exercise of the
warrants, if exercised, as to which we are registering the underlying shares of
common stock. We estimate we will spend approximately $28,000 in registering the
offered shares.
SELLING SHAREHOLDERS
We are registering all 2,779,980 shares of common stock covered by
this prospectus on behalf of the selling shareholders named in the table below.
We issued the shares, the debentures convertible into shares, and the warrants
exercisable for shares to the selling shareholders in a private placement. We
have registered the shares to permit the selling shareholders and their
respective pledgees, donees, transferees or other successors-in-interest that
receive their shares from a selling shareholder as a gift, partnership
distribution or other non-sale related transfer after the date of this
prospectus to resell the shares when they deem appropriate.
The table below identifies the selling shareholders and other
information regarding the beneficial ownership of the common stock by each of
the selling shareholders. The second column lists the number and percentage of
shares of common stock beneficially owned by each selling shareholder as of June
19, 2002, based on each selling shareholder's ownership of debentures and
warrants and the ownership by certain of the selling shareholders of other
shares of common stock unrelated to the debentures or the warrants, and assumes
the conversion of all the debentures, the exercise of all warrants and the
payment of all interest on the debentures in the form of common stock ("Interest
Shares") rather than cash. Because the conversion price of the debentures is
subject to adjustment for anti-dilution protection, interest on the debentures
may be paid in cash or common stock, and the value attributed to any Interest
Shares paid to the investors varies based on 95% of the average closing price of
the common stock during the five-day period immediately preceding each issuance
of Interest Shares, the numbers and percentages listed in the second column may
change.
The third column lists each selling shareholder's portion, based on
agreements with us, of the 2,779,980 shares of common stock being offered by
this prospectus. The number of shares being offered by this prospectus was
determined in accordance with the terms of the registration rights agreements
with the selling shareholders, in which we agreed to register the resale of 120%
13
of the number of shares of common stock issuable upon conversion of the
debentures at the initial conversion price of $3.46, plus the number of shares
of common stock issuable upon exercise of the related warrants, plus an estimate
of the number of Interest Shares that may be issued to the selling shareholders
as interest payments on the debentures (assuming interest is paid exclusively in
Interest Shares over the full term of the debentures, rather than in cash), plus
20,673 shares of common stock currently held by Velocity Investment Partners
Ltd. Because the conversion price of the Debentures may be adjusted for
anti-dilution protection, the number of shares that will actually be issued may
be more or less than the 2,779,980 shares being offered by this prospectus.
Under the terms of the debentures and the warrants, no selling
shareholder who owns debentures may convert such debentures or exercise its
warrants to the extent that the conversion or exercise would cause the selling
shareholder, together with its affiliates, to beneficially own more than 9.99%
of the outstanding shares of our then outstanding common stock following such
conversion or exercise. For purposes of making this determination, shares of
common stock issuable upon conversion of the debentures which have not been
converted and upon exercise of the related warrants which have not been
exercised are excluded. The number of shares in the second and third columns
does not reflect this limitation. The selling shareholders may sell all, some or
none of their shares in this offering. See "How The Shares May Be Distributed"
below.
OWNERSHIP OF COMMON NUMBER OF SHARES OWNERSHIP OF COMMON
STOCK BEFORE OFFERING BEING STOCK AFTER OFFERING
SELLING SHAREHOLDERS NUMBER PERCENTAGE OFFERED NUMBER PERCENTAGE
---------------------------------------- ------ ---------- ------- ------ ----------
Leonardo, L.P........................... 1,591,908(1) 5.2% 1,591,908 -- --
Federated Kaufmann Fund................. 1,928,036(2) 6.6% 530,636 1,397,400 4.8%
Portside Growth & Opportunity Fund
Ltd..................................... 530,636(3) 1.8% 530,636 -- --
Carpe Diem Long Short Fund, 150,787(4) * 106,127 44,660 *
LLC.....................................
Velocity Investment Partners Ltd........ 198,197(5) * 20,673 177,524 *
-------------------------
*Less than 1%.
(1) Represents (a) up to 1,288,439 shares of common stock issuable upon
conversion of the Debentures and as payment of interest thereon and
(b) up to 303,469 shares of common stock issuable upon exercise of
the Warrants. Angelo, Gordon & Co., L.P. ("Angelo, Gordon") is the
sole director of the general partner of Leonardo, L.P. ("Leonardo")
and consequently has voting control and investment discretion over
securities held by Leonardo. Angelo, Gordon disclaims beneficial
ownership of the shares held by Leonardo. Mr. John M. Angelo, the
Chief Executive Officer of Angelo, Gordon, and Mr. Michael L.
Gordon, the Chief Operating Officer of Angelo, Gordon, are the sole
general partners of AG Partners, L.P., the sole general partner of
Angelo, Gordon. As a result, Messrs. Angelo and Gordon may be
considered beneficial owners of any shares deemed to be beneficially
owned by Angelo, Gordon. Messrs. Angelo and Gordon disclaim
beneficial ownership of these securities.
(2) Represents (a) 1,397,400 shares that are outstanding, (b) up to
429,480 shares of common stock issuable upon conversion of the
Debentures and as payment of interest thereon and (c) up to 101,156
shares of common stock issuable upon exercise of the Warrants. Hans
P. Utsch and Lawrence Auriana are the portfolio managers of
Federated Kaufmann Fund, which is a mutual fund. The individuals
identified in the foregoing sentence disclaim beneficial ownership
of the securities.
(3) Represents (a) up to 429,480 shares of common stock issuable upon
conversion of the Debentures and as payment of interest thereon and
(b) up to 101,156 shares of common stock issuable upon exercise of
the Warrants. Ramius Capital Group, LLC ("Ramius Capital") is the
investment adviser of Portside Growth & Opportunity Fund, Ltd.
("Portside") and consequently has voting control and investment
discretion over securities held by Portside. Ramius Capital
14
disclaims beneficial ownership of the shares held by Portside. Peter
A. Cohen, Morgan B. Stark and Thomas W. Strauss are the sole
managing members of C4S& Co., LLC, the sole managing member of
Ramius Capital. As a result, Messrs. Cohen, Stark and Strauss may be
considered beneficial owners of any shares deemed to be beneficially
owned by Ramius Capital. Messrs. Cohen, Stark and Strauss disclaim
beneficial ownership of these securities.
(4) Represents (a) 44,660 shares that are outstanding, (b) up to 85,896
shares of common stock issuable upon conversion of the Debentures
and as payment of interest thereon and (c) up to 20,231 shares of
common stock issuable upon exercise of the Warrants. John D.
Ziegelman, as president of CD Capital Management LLC, the investment
manager to Carpe Diem Long Short Fund, LLC, may be deemed to have
beneficial ownership of the shares of Hollywood Media common stock
owned by Carpe Diem Long Short Fund, LLC. Mr. Ziegelman disclaims
beneficial ownership of these shares.
(5) Represents (a) 20,673 shares of common stock that are outstanding
and (b) 177,524 shares of common stock issuable upon exercise of a
warrant. John D. Ziegelman, as president of Velocity Asset
Management LLC, the investment manager to Velocity Investment
Partners Ltd., may be deemed to have beneficial ownership of the
shares of Hollywood Media common stock owned by Velocity Investment
Partners Ltd. Mr. Ziegelman disclaims beneficial ownership of these
shares.
The selling shareholders have not been employed by, held office in,
or had any other material relationship with us or any of our affiliates within
the past three years except as described below.
MAY 2002 ISSUANCE OF 6% SENIOR CONVERTIBLE DEBENTURES DUE MAY 2005.
On May 22, 2002, Hollywood Media issued an aggregate of $5.7 million in
principal amount of 6% Senior Convertible Debentures due May 2005 to a group of
investors in a private placement. The investors include Federated Kaufman Fund,
Portside Growth & Opportunity Fund Ltd., Leonardo, L.P., Carpe Diem Long Short
Fund, LLC and Mitchell Rubenstein and Laurie S. Silvers. Mitchell Rubenstein,
the Chairman and Chief Executive Officer of Hollywood Media, and Laurie S.
Silvers, the Vice Chairman and President of Hollywood Media, participated in the
financing with a $500,000 cash investment. The Debentures mature on May 22, 2005
and bear interest at 6% per annum, payable quarterly in cash or common stock.
Any shares of common stock issued to the investors as payment of interest shall
be valued at 95% of the average closing price of the common stock during a
five-day period preceding their issuance. The investors also have the right to
purchase an aggregate of $1 million in principal amount of additional Debentures
on the same terms at any time through May 22, 2003.
The Debentures are convertible at the option of the investors at any
time through May 22, 2005 into shares of common stock, par value $0.01 per
share, of Hollywood Media at a price of $3.46 per share. The conversion price
under the Debentures is fixed at $3.46 per share unless Hollywood Media issues
common stock or securities convertible or exchangeable into common stock at a
price less than the conversion price then in effect other than issuances
pursuant to (1) stock option plans, (2) the Debentures or the Warrants issued in
connection with the Debentures, (3) options or warrants outstanding on the date
preceding the issuance of the Debentures, which are not amended, (4)
underwritten registered offerings, (5) acquisitions by Hollywood Media of any
business, assets or technologies, and (6) arrangements with strategic investors,
vendors, customers, lessors or similar parties, the primary purpose of which is
not to raise equity capital. Except for these excluded issuances, the Debentures
contain anti-dilution protection that provides that if Hollywood Media issues
common stock or securities convertible or exchangeable into common stock at any
time during the one-year period ending May 22, 2003 at a price less than the
conversion price then in effect, the conversion price under the Debentures will
be reduced to a price equal to the price at which the common stock or other
securities are issued. Except for these excluded issuances, the anti-dilution
protection provides that if Hollywood Media issues common stock or securities
convertible or exchangeable into common stock at any time during the two-year
period ending May 22, 2005 at a price less than the conversion price then in
effect, the conversion price under the Debentures will be reduced to a price
equal to the product of (A) the conversion price in effect prior to such
issuance and (B) the quotient determined by dividing (1) the sum of (a) the
product of the conversion price in effect prior to such issuance and the
fully-diluted number of shares of common stock outstanding prior to such
issuance plus (b) the consideration, if any, received by Hollywood Media upon
such issuance by (2) the product of (a) the conversion price in effect prior to
such issuance and (b) the fully-diluted number of shares of common stock
outstanding following such issuance.
The investors also received fully vested Warrants to acquire at any
time through May 22, 2007 an aggregate of 576,590 shares of common stock at a
price of $3.78 per share. If on May 22, 2003, an investor holds at least
seventy-five percent of such investor's shares of common stock issued or
issuable to such investor under the Debentures, then the exercise price of the
warrants held by such investor will decrease to $3.46 per share. The exercise
15
price under the Warrants is also subject to anti-dilution adjustments for
issuances of common stock or securities convertible or exchangeable into common
stock at a price less than the lesser of the exercise price then in effect and
$3.29 per share. The terms of the anti-dilution adjustments and the issuances as
to which they are not applicable are the same as the terms described above for
the Debentures.
Hollywood Media entered into a registration rights agreement with the
investors in connection with the issuance of the Debentures and the Warrants.
The registration rights agreement requires that we register the shares of common
stock covered by this registration statement. In addition, if the investors
exercise their option to purchase up to an additional $1 million in principal
amount of additional Debentures, we are required to file an additional
registration statement covering any shares issuable upon conversion of the
additional Debentures or as payment of interest thereon. If either of the
registration statements is not filed within the time period required by the
agreements, not declared effective within the time period required by the
agreements or, after it is declared effective and subject to certain exceptions,
sales of all shares required to be registered thereon can not be made pursuant
thereto, then Hollywood Media will be required to pay to the investors their pro
rata share of $2,850 for each day any of the above conditions exist with respect
to this registration statement and up to $500 for each day any of the above
conditions exist with respect to any registration statement for the additional
Debentures.
MAY 2001 INVESTMENT BY VELOCITY INVESTMENT PARTNERS LTD. In May 2001,
Velocity Investment Partners Ltd. invested $1,650,000 in Hollywood Media as part
of an aggregate $5,650,000 private placement of common stock by Hollywood Media
with several investors. Hollywood Media issued an aggregate of 365,858 shares of
common stock to Velocity at a purchase price of $4.51 per share for a total
purchase price of $1,650,000 in cash. The purchase price per share represents
105% of the "Market Price" of the common stock, which is defined as the average
volume weighted average price for the 20 business days prior to the closing
date. Velocity also received a series A warrant to acquire an aggregate of
177,524 shares of common stock at a price of $6.44 per share (150% of the Market
Price at closing). The series A warrant is exercisable by Velocity during the
five-year period ending on May 1, 2006. In May 2002, the parties amended the
series A warrant to reduce the exercise price to $5.25 per share in exchange for
the cancellation of the series B warrant described below.
Velocity also received a series B warrant to acquire additional
shares of common stock from time to time under certain conditions for no
additional consideration. In November 2001, Hollywood Media issued an additional
220,402 shares to Velocity pursuant to the series B warrant. The series B
warrant was cancelled in May 2002 and no additional shares are issuable
thereunder.
In November 2001, Hollywood Media registered with the Securities and
Exchange Commission all of the shares acquired by Velocity in the May 2001
financing, including the shares issuable upon exercise of the series A and
series B warrants. The shares are registered on a shelf registration statement,
which will generally allow Velocity to sell the shares in open market
transactions from time to time. The registration statement was declared
effective by the Securities and Exchange Commission after the time period
specified in the registration rights agreement between the parties, which
resulted in Hollywood Media issuing to Velocity 20,673 shares of common stock,
all of which are registered in this registration statement.
Velocity may be deemed to be affiliated with Carpe Diem Long Short
Fund, LLC. Carpe Diem Long Short Fund, LLC participated in the Debenture
financing described above and is a selling shareholder in this registration
statement.
HOW THE SHARES MAY BE DISTRIBUTED
The shares to be sold in this offering have been listed on the Nasdaq
National Market, subject to official notice of issuance. The selling
shareholders may sell their shares of common stock from time to time in various
ways and at various prices. The common stock may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices.
These sales may be effected in transactions that may involve crosses or block
transactions. Some of the methods by which the selling shareholders may sell the
shares include:
o on any national securities exchange or quotation service on which
the securities may be listed or quoted at the time of sale,
o in the over-the-counter market,
o in transactions otherwise than on these exchanges or systems or in
the over-the-counter market,
o through the writing of options, whether such options are listed on
an options exchange or otherwise,
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o ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
o privately negotiated transactions;
o block trades in which the broker or dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by that
broker or dealer for the selling shareholder's account under this
prospectus;
o sales under Rule 144 rather than by using this prospectus;
o through the settlement of short sales;
o a combination of any of these methods of sale; or
o any other legally permitted method.
In connection with sales of the common stock or otherwise, the
selling shareholders may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the common stock in the course of
hedging in positions they assume. The selling shareholders may also sell shares
of common stock short and deliver shares of common stock to close out short
positions, provided that the selling shareholders may not close out short
positions entered into prior to the effective date of the registration statement
of which this prospectus is a part with any shares of common stock included in
this prospectus. The selling shareholders may also pledge their shares as
collateral for a margin loan under their customer agreements with their brokers.
If there is a default by the selling shareholders, the brokers may offer and
sell the pledged shares from time to time under this prospectus or an amendment
to this prospectus under Rule 424(b)(3) or other applicable provisions of the
Securities Act amending the list of selling shareholders to include the pledgee,
transferee or other successors in interest as selling shareholders under this
prospectus.
Brokers or dealers may receive commissions or discounts from the
selling shareholders (or, if the broker-dealer acts as agent for the purchaser
of the shares, from that purchaser) in amounts to be negotiated. These
commissions may exceed those customary in the types of transactions involved.
We cannot estimate at the present time the amount of commissions or
discounts, if any, that will be paid by the selling shareholders in connection
with sales of the shares.
The selling shareholders and any broker-dealers or agents that
participate with the selling shareholders in sales of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales. In that event, any commissions received by the broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act. The
selling shareholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of the shares of common stock. There is no
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling shareholders. In addition, each of the investors has
advised us that:
o it purchased the shares in the ordinary course of business; and
o at the time of the purchase of the shares to be resold, it had no
agreements or understandings, directly or indirectly, with any
person to distribute the shares.
Under the securities laws of certain states, the shares may be sold
in those states only through registered or licensed broker-dealers. In addition,
the shares may not be sold unless the shares have been registered or qualified
for sale in the relevant state or unless the shares qualify for an exemption
from registration or qualification.
We do not know whether any selling shareholder will sell any or all
of the shares of common stock registered by the shelf registration statement of
which this prospectus forms a part.
We have agreed to pay all fees and expenses incident to the
registration of the shares, including certain fees and disbursements of counsel
to the selling shareholders. We have agreed to indemnify the selling
shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
Certain of the selling shareholders have also agreed to indemnify us,
our directors, officers, agents and representatives against certain liabilities,
including certain liabilities under the Securities Act.
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The selling shareholders and other persons participating in the
distribution of the shares offered under this prospectus are subject to the
applicable requirements of Regulation M promulgated under the Exchange Act in
connection with sales of the shares.
We have agreed with the selling shareholders to keep the registration
statement of which this prospectus is a part effective until all the shares
registered under the registration statement have been resold.
Each share of common stock is sold together with certain stock
purchase rights pursuant to a shareholders' rights plan (or "poison pill").
These rights are described in the Amended and Restated Rights Agreement that we
filed with the SEC on October 20, 1999 as an exhibit to a Current Report on Form
8-K. See "Where You Can Find More Information" below.
OUR CAPITAL STOCK
SHARES AUTHORIZED AND OUTSTANDING
Our third amended and restated articles of incorporation authorize us
to issue up to 100,000,000 shares of common stock, par value $.01 per share, and
1,000,000 shares of preferred stock, par value $.01 per share. As of June 19,
2002, 28,813,161 shares of common stock were outstanding and no shares of
preferred stock were outstanding. The transfer agent for our common stock is
American Stock Transfer & Trust Company, New York, New York.
RIGHTS OF HOLDERS OF OUR COMMON STOCK
Each share of common stock entitles the holder to one vote on all
matters submitted to a vote of the shareholders. The holders of common stock are
entitled to receive dividends, when, as and if declared by the Board of
Directors in its discretion, from legally available funds. Upon our liquidation
or dissolution, the holders of common stock will be entitled to share
proportionately in our legally available assets, after all our debts and
liabilities and the liquidation preference of any outstanding shares of our
preferred stock are paid.
The common stock has no preemptive rights and no subscription,
redemption or conversion privileges. The common stock does not have cumulative
voting rights, which means that the holders of a majority of the outstanding
shares of common stock voting for the election of directors will be able to
elect all members of the Board of Directors. A majority vote will also be
sufficient for other actions that require the vote or concurrence of
shareholders. All of our outstanding shares of common stock are, and the shares
to be sold in this offering will be, when issued and paid for, fully paid and
nonassessable.
PREFERRED STOCK ISSUABLE WITHOUT APPROVAL BY HOLDERS OF OUR COMMON STOCK
AUTHORITY OF BOARD OF DIRECTORS TO ISSUE PREFERRED STOCK. Without any
further vote or action by our shareholders, the Board of Directors has the
authority to issue up to 1,000,000 shares of preferred stock in one or more
series and to determine the number of shares in a series and the voting powers,
preferences and relative rights and restrictions of each series, including the
dividend rights and dividend rate, the terms of redemption (including sinking
fund provisions), redemption price or prices, the conversion rights, and the
liquidation preferences of the shares of each series.
EFFECTS OF ISSUANCE OF PREFERRED STOCK ON HOLDERS OF OUR COMMON
STOCK. The issuance of preferred stock by the Board of Directors could result in
a class of securities outstanding that has preferences with respect to voting
rights and dividends, and/or in liquidation, over our common stock. These shares
may also be convertible into common stock, and then would enjoy all of the
rights of common stock. The specific preferential rights of our various current
types of preferred stock are described below.
PREVIOUSLY ISSUED SERIES OF PREFERRED STOCK. We previously designated
various series of preferred stock, including Series A, Series B, Series C,
Series D-1 and Series D-2. All of the previously issued shares of Series A,
Series B, Series C, Series D-1 and Series D-2 Preferred Stock have been
converted into shares of our common stock and therefore are no longer
outstanding.
In conjunction with the original issuance of the Series A Preferred
Stock, we and certain holders of our common stock (Mitchell Rubenstein, Laurie
S. Silvers, Martin H. Greenberg and Gannett Co., Inc. (as successor to Asbury
Park Press, Inc.)) agreed that one nominee of Tekno Simon, LLC, the holder of
the Series A Preferred Stock, would be appointed to the Board of Directors.
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These shareholders agreed to vote their shares for election of this nominee. The
current nominee is Deborah J. Simon, who was first appointed to the Board of
Directors in November 1996.
ANTI-TAKEOVER PROVISIONS
We have various measures in place that could discourage, delay or
prevent a change in control even if the holders of our common stock would prefer
a change. These measures include:
o POWER TO ISSUE BLANK CHECK PREFERRED STOCK. Our Third Amended and
Restated Articles of Incorporation authorize the issuance of "blank
check" preferred stock with designations, rights and preferences as
may be determined from time to time by our Board of Directors.
o SHAREHOLDERS' RIGHTS PLAN. In August 1996, we adopted a
shareholders' Rights Plan entitling each share of our common stock
to certain rights. On October 18, 1999, we amended the shareholders'
Rights Plan. Pursuant to the terms of the original shareholders'
Rights Plan, the Board of Directors of Hollywood Media declared a
dividend of one right for each share of common stock outstanding as
of September 4, 1996. Pursuant to the terms of the shareholders'
Rights Plan, as amended, each Right now entitles the registered
holder to purchase from us one one-thousandth (1/1,000) of a share
of a new series of preferred shares, designated as Series E Junior
Preferred Stock, at a price of $100.00 per one one-thousandth
(1/1,000) of a share, subject to certain adjustments. The
description and terms of the Rights and the shareholders' Rights
Plan, as amended, are set forth in an Amended and Restated Rights
Agreement between Hollywood Media and American Stock Transfer &
Trust Company, as Rights Agent, dated as of August 23, 1996. The
Series E Junior Preferred Stock is non-redeemable and, unless
otherwise provided in connection with the creation of a subsequent
series of preferred stock, subordinate to any other series of
Hollywood Media's preferred stock. The Series E Junior Preferred
Stock may not be issued except upon exercise of Rights. Each share
of the Series E Junior Preferred Stock will be entitled to receive
when, as and if declared, a quarterly dividend in an amount equal to
the greater of $0.001 per share and 1,000 times the cash dividends
declared on Hollywood Media's common stock. In addition, the Series
E Junior Preferred Stock is entitled to 1,000 times any non-cash
dividends (other than dividends payable in equity securities)
declared on the common stock, in like kind. In the event of
liquidation, the holders of Series E Junior Preferred Stock will be
entitled to receive for each share, a liquidation payment in an
amount equal to the greater of $1,000 or 1,000 times the payment
made per share of common stock. Each share of Series E Junior
Preferred Stock will have 1,000 votes, voting together with the
common stock. In the event of any merger, consolidation or other
transaction in which common stock is exchanged, each share of Series
E Junior Preferred Stock will be entitled to receive 1,000 times the
amount received per share of common stock. The rights of Series E
Junior Preferred Stock as to dividends, liquidation and voting are
protected by anti-dilution provisions. Fractions of shares of Series
E Junior Preferred Stock (other than fractions that are integral
multiples of one one-thousandth (1/1,000) of a share) may, at the
election of Hollywood Media, be evidenced by depositary receipts.
Hollywood Media may also issue cash in lieu of fractional shares
which are not integral multiples of one one-thousandth (1/1,000) of
a share. The terms of the amended shareholders' Rights Plan grant
Hollywood Media's Board of Directors the option, after any person or
group acquires beneficial ownership of 15% or more of the voting
stock but before there has been a 50% acquisition, to exchange each
then valid Right (which would exclude Rights held by the Acquiring
Person (as defined in the Amended and Restated Rights Agreement)
that have become void) for that number of shares of Hollywood
Media's common stock having a fair market value on the date of such
15% acquisition equal to the excess of (i) the value of the shares
of Preferred Stock issuable upon exercise of the Right in the event
of such acquisition over (ii) the exercise price of the Right, in
each case as adjusted. These rights may cause substantial dilution
to a person or group that attempts to acquire us in a manner or on
terms not approved by the Board of Directors. The shareholders'
Rights Plan is intended to encourage a person interested in
acquiring us to negotiate with, and to obtain the approval of, the
Board of Directors. The shareholders' Rights Plan, however, may
discourage a future acquisition of us, including an acquisition in
which our shareholders might otherwise receive a premium for their
shares.
o FLORIDA LAWS. Florida has enacted legislation that may deter or
frustrate takeovers of Florida corporations. We are subject to
several anti-takeover provisions under Florida law that apply to
public corporations organized under Florida law unless the
corporation has elected to opt out of those provisions in its
articles of incorporation or its bylaws. We have not elected to opt
out of these provisions. The Florida Business Corporation Act
prohibits the voting of shares in a publicly held Florida
corporation that are acquired in a "control share acquisition"
unless the board of directors approves the control share acquisition
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or the holders of a majority of the corporation's voting shares
approve the granting of voting rights to the acquiring party. A
"control share acquisition" is defined as an acquisition that
immediately thereafter entitles the acquiring party, directly or
indirectly, to vote in the election of directors within any of the
following ranges of voting power: (i) 1/5 or more but less than 1/3;
(ii) 1/3 or more but less than a majority; and (iii) a majority or
more. There are some exceptions to the "control share acquisition"
rules. The Florida Business Corporation Act also contains an
"affiliated transaction" provision that prohibits a publicly held
Florida corporation from engaging in a broad range of business
combinations or other extraordinary corporate transactions with an
"interested shareholder" unless (i) the transaction is approved by a
majority of disinterested directors before the person becomes an
interested shareholder; (ii) the corporation has not had more than
300 shareholders of record during the past three years; (iii) the
interested shareholder has owned at least 80% of the corporation's
outstanding voting shares for at least five years; (iv) the
interested shareholder is the beneficial owner of at least 90% of
the outstanding voting shares (excluding shares acquired directly
from the corporation in a transaction not approved by a majority of
the disinterested directors); (v) consideration is paid to the
holders of the corporation's shares equal to the highest amount per
share paid by the interested shareholder for the acquisition of the
corporation's shares in the last two years or fair market value, and
other specified conditions are met; or (vi) the transaction is
approved by the holders of two-thirds of the voting shares other
than those owned by the interested shareholder. An "interested
shareholder" is defined as a person who, together with affiliates
and associates, beneficially owns more than 10% of a company's
outstanding voting shares. The Florida Business Corporation Act
defines "beneficial ownership" in more detail.
LEGAL OPINION
Jerrold Wish, General Counsel of Hollywood Media, is giving an
opinion regarding the validity of the offered shares.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus from Hollywood Media's Annual Report on Form 10-K for the year ended
December 31, 2001 have been audited by Arthur Andersen LLP, independent
certified 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 giving said report. In May 2002 the audit partner and manager primarily
responsible for the audited financial statements incorporated by reference in
this prospectus, as well as other personnel of Arthur Andersen's Miami, Florida
office, left Arthur Andersen. On May 28, 2002, we filed a Current Report on Form
8-K indicating that we had terminated Arthur Andersen as our auditors and
engaged a new auditing firm. Arthur Andersen has advised us that the Securities
and Exchange Commission will not allow it to consent to the inclusion of their
audit report in a prospectus if the audit partner and manager responsible for
the audit are no longer with Arthur Andersen. Accordingly, Arthur Andersen LLP
has not consented to the inclusion of their report in this prospectus, and we
have dispensed with the requirement to file their consent in reliance on Rule
437a under the Securities Act. Because Arthur Andersen LLP has not consented to
the inclusion of their report in this prospectus, you will not be able to
recover against Arthur Andersen LLP under Section 11 of the Securities Act for
any untrue statements of a material fact contained in the financial statements
audited by Arthur Andersen LLP incorporated by reference in this prospectus or
any omissions to state a material fact required to be stated therein.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (SEC). You may
read and copy any report or document we file at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference room. Our SEC filings are also available to
the public at the SEC's web site located at http://www.sec.gov.
Quotations for the prices of our common stock appear on the Nasdaq
National Market, and reports, proxy statements and other information about us
can also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The SEC allows us to "incorporate by reference" some of the documents
we file with it into this prospectus, which means that we can disclose important
information to you by referring you to those documents. The documents
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incorporated by reference are considered to be part of this prospectus, and
later information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the following filings into this
prospectus:
(a) Our Annual Report on Form 10-K for the fiscal year ended December
31, 2001;
(b) Our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2002;
(c) Our Current Report on Form 8-K filed on May 23, 2002;
(d) Our Current Report on Form 8-K filed on May 28, 2002; and
(e) All other reports filed by the Registrant pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, since the end of the fiscal year covered by the Annual
Report referred to in (a) above.
We also incorporate by reference into this prospectus any future
filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended:
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act with respect to the common stock covered by this prospectus.
This prospectus, which is a part of the registration statement, does not contain
all the information set forth in, or annexed as exhibits to, the registration
statement, as permitted by the SEC's rules and regulations. For further
information with respect to us and the common stock offered under this
prospectus, please refer to the registration statement, including the exhibits.
Copies of the registration statement, including exhibits, may be obtained from
the SEC's public reference facilities listed above upon payment of the fees
prescribed by the SEC, or may be examined without charge at these facilities.
Statements concerning any document filed as an exhibit are not necessarily
complete and, in each instance, we refer you to the copy of the document filed
as an exhibit to the registration statement. You should assume that the
information appearing in this prospectus is accurate as of the date of this
prospectus only. Our business, financial position and results of operations may
have changed since that date.
We will provide, without charge, to each person to whom a copy of
this prospectus is delivered, upon written or oral request, a copy of any or all
of the information incorporated by reference in this prospectus. Exhibits to any
of the documents, however, will not be provided unless such exhibits are
specifically incorporated by reference into such documents. The requests should
be addressed to: Investor Relations Department, Hollywood Media Corp., 2255
Glades Road, Suite 237 West, Boca Raton, Florida 33431, telephone number (561)
998-8000.
Prospective investors should only rely on the information
incorporated by reference or provided in this prospectus or any supplement. We
have not authorized anyone else to provide prospective investors with different
or additional information. This prospectus is not an offer to sell nor is it
seeking an offer to by these securities in any jurisdiction where the offer or
sale is not permitted. You should not assume that the information in this
prospectus or any supplement is accurate as of any date other than the date on
the front of those documents, regardless of the time of the delivery of this
prospectus or any sale of these securities. Our business, financial position and
results of operations may have changed since that date.
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