SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest
event reported):
September 15, 2003
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 0-23396 11-3182335
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State of Commission IRS Employer
Incorporation File Number I.D. Number
350 Fifth Avenue, New York, New York 10118
Address of principal executive offices
Registrant's telephone number: (212) 564-2224
Item 1. Changes in Control of Registrant
On September 15, 2003, Skyride Associates, LLC, a Delaware
limited liability company ("Skyride"), acquired from their respective holders
(the "Sellers") for the total purchase price of $6,000,000 (1) all of the
outstanding Series A Convertible Participating Preferred Stock ("Series A
Preferred") (a total of 1,090,909 shares) of Skyline Multimedia Entertainment,
Inc. (the "Company") and (2) all of the Company's outstanding promissory notes
(including interest accrued thereon) (the "Notes"), and Common Stock purchase
warrants ("Warrants") issued in connection with the Notes, which Notes and
Warrants are described in the Company's latest Quarterly Report on Form 10-QSB
(for the quarter ended March 31, 2003) and latest Annual Report on Form 10-KSB
(for the fiscal year ended June 30, 2002) under the captions "SENIOR CREDIT
AGREEMENT", "SENIOR SECURED CREDIT AGREEMENT" and "OTHER NOTES PAYABLE". Under
the Notes, the Company owes the principal amount of $7,735,000 and accrued
interest which, as of June 30, 2003, was approximately $8,365,605. The
Securities Purchase Agreement also provided that the Acquiror automatically
acquired all other securities of the Company owned by the Sellers as of
September 15, 2003. Such other securities include 290,000 shares of the
Company's Common Stock ("Common Stock") which are issuable in exchange for
290,000 shares of Class A Common Stock.
On September 24, 2003, Skyride transferred 60% (or 654,546
shares) of the Series A Preferred to Mr. Fredrick Schulman, retaining ownership
of 436,363 shares of Series A Preferred which are convertible into 3,015,268
shares of Common Stock. The 1,090,909 outstanding shares of Series A Preferred
may be converted at any time into a total of 7,538,181 shares of Common Stock
(or one share of Series A Preferred into 6.91 shares of Common Stock). The
Warrants consist of (1) warrants, expiring on December 20, 2006, to purchase a
total of 434,143 shares of Common Stock at the exercise price of $4.25 per
share, and (2) warrants which may be exercised at $0.375 per share into such
number of shares of Common Stock as would equal 94.334% of the total outstanding
shares of Common Stock on a fully-diluted basis (after taking into account the
full exercise of such warrants). The $0.375 per share warrants provide for
"cashless exercise", provide that the exercise price may be paid by surrender of
debt or equity securities of the Company having a value equal to the exercise
price, do not have a stated expiration date and are currently estimated to be
convertible into a total of up to 172,440,487 shares of Common Stock. Assuming
the full exercise of the Warrants and the conversion of the shares of Series A
Preferred owned by Skyride (but not the shares of Series A Preferred owned by
Mr. Schulman), Skyride beneficially owns approximately 176,179,898 shares of
Common Stock, or 98.8% of the Common Stock outstanding.
The Senior Secured Credit Agreement, dated May 20, 1998, which
the Company and its subsidiaries entered into with The Bank of New York as
Trustee for the Employment Retirement Plan of Keyspan Energy Corp. ("Keyspan")
and Propect Street NYC Discovery Fund, L.P. ("Prospect Street Discovery")
provides that, "[u]pon notice to the Company, Keyspan shall have the right to
designate two members to the Company's Board of Directors, provided, however,
that such designees shall be subject to the approval of the Company, which
approval shall not be unreasonably withheld." Through its acquisition of the
Notes, Skyride acquired this right to designate two members of the Board of
Directors. In addition, the Company's
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Certificate of Amendment to its Certificate of Incorporation relating to the
Series A Preferred grants the majority holder of the Series A Preferred the
right to elect by written consent of the Series A Preferred up to two members of
the Company's Board of Directors. Such Certificate of Amendment states that the
Company's Board shall be limited to six members unless the Series A Preferred
otherwise agrees. By transferring 60% of the outstanding Series A Preferred to
Mr. Schulman, Skyride transferred to Mr. Schulman the right of the majority of
the Series A Preferred to elect two members of the Company's Board.
Mr. Walter Threadgill beneficially owns, either directly or
indirectly through entities which he controls, 50% of the outstanding membership
interests of Skyride and Mr. Zindel Zelmanovitch beneficially owns, either
directly or indirectly through an entity which he controls, the other 50% of the
outstanding membership interests of Skyride. Messrs. Threadgill and Zelmanovitch
each disclaims beneficial ownership of the Company's securities which are
beneficially owned by Skyride. Skyride disclaims beneficial ownership of the
Company's securities owned by Mr. Schulman.
Simultaneously with Skyride's acquisition on September 15,
2003 of the Series A Preferred, the Notes and the Warrants, three out of the
five members of the Company's Board of Directors resigned and were replaced by
three new directors. Richard Stewart, the member of the Board who was the
designee of the Series A Preferred holder, designated Fredrick Schulman to
replace him as a member of the Board and Mr. Schulman's appointment was ratified
by the Board. Upon the resignations from the Board of Anne Jordan and Joseph
Bodanza, who were the Board designees of Keyspan, the Board, excluding Mr.
Schulman, elected Alan D. Segars and Renwick Day as replacement members of the
Board. After the acquisition referred to above, the Company's Board consisted of
Steven Vocino, Michael Leeb, Fredrick Schulman, Alan D. Segars and Renwick Day.
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Item 7. Exhibits
(c) Exhibits
Exhibit Nos.
10.1 Securities Purchase Agreement, dated as of
September 15, 2003, by and among Skyride
Associates, LLC, as Purchaser, and the following
Sellers: US Small Business Administration, as
Receiver for Prospect Street NYC Discovery Fund,
L.P., The Bank of New York as Trustee for the
Employees' Retirement Plan of Keyspan Corporation,
The Bank of New York as Trustee for the Keyspan
Corporation Non-Bargaining Health VEBA and Prospect
Street NYC Co-Investment Fund, L.P. (Incorporated
herein by reference to Exhibit 10.1 to the Schedule
13D of Skyride Associates, LLC, filed on September
29, 2003, with respect to the Common Stock of
Skyline Multimedia Entertainment, Inc.)
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: September 30, 2003
SKYLINE MULTIMEDIA ENTERTAINMENT, INC.
By:Michael Leeb
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Michael Leeb
President
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