General Statement of Beneficial Ownership — Schedule 13D Filing Table of Contents
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SC 13D — General Statement of Beneficial Ownership
(Date of
Event which Requires Filing of this Statement)
If the filing person has previously
filed a statement on Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e),
13d-1(f) or 13d-1(g), check the following box o.
Note: Schedules filed in paper
format shall include a signed original and five copies of the schedule,
including all exhibits. See Rule 13d-7 for other parties to whom
copies are to be sent.
(Page 1 of
6)
_____________________
*The
remainder of this cover page shall be filled out for a reporting person’s
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The
information required on the remainder of this cover page shall not be deemed to
be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934
or otherwise subject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the
Notes).
This
Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $.01
per share (the “Common Stock”), of Atrinsic, Inc., a Delaware corporation (the
“Company”), which has its principal executive offices at 469 7th Avenue, 10th
Floor, New York, NY10018.
This
statement is being filed individually by Brilliant Digital Entertainment, Inc.,
a Delaware corporation (“Brilliant Digital”). The principal business
of Brilliant Digital is the online distribution of licensed digital
content. The principal business address of Brilliant Digital is
12711 Ventura Boulevard, Suite 210,
Studio City, California91604.
During
the last five years, Brilliant Digital has not been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding, was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item
3. Source and Amount of Funds or Other Consideration.
On
October 13, 2010, the Company entered into amendments to its existing Marketing
Services Agreement and Master Services Agreement with Brilliant Digital and
entered into an agreement with Brilliant Digital and Altnet, Inc., a
wholly-owned subsidiary of Brilliant Digital (collectively, “BDE”), to acquire
all of the assets of BDE that relate to its Kazaa subscription based music
service business.
The
Marketing Services Agreement and Master Services Agreement govern the operation
of Brilliant Digital’s Kazaa subscription based music service business which is
jointly operated by the Company and BDE. Under the Marketing Services
Agreement, the Company is responsible for marketing, promotional, and
advertising services in respect of the Kazaa business. Pursuant to
the Master Services Agreement, the Company provides services related to the
operation of the Kazaa business, including billing and collection services and
the operation of the Kazaa online storefront. BDE is obligated to
provide certain other services with respect to the Kazaa business, including
licensing the intellectual property underlying the Kazaa business to the
Company, obtaining all licenses to the content offered as part of the Kazaa
business and delivering that content to subscribers. As part of the
agreements, the Company is required to make advance payments and expenditures in
respect of certain expenses incurred in order to operate the Kazaa
business. These advances and expenditures are recoverable on a dollar
for dollar basis against revenues generated by the business.
Among
other things, the amendments extend the term of each of the Marketing Services
Agreement and Master Services Agreement from three years to thirty years,
provide the Company with an exclusive license to the Kazaa trademark in
connection with the Company’s services under the agreements, and modify the
Kazaa digital music service profit share payable to the Company under the
agreements from 50% to 80%. In addition, the amendments remove BDE’s
obligation to repay up to $2,500,000 of advances and expenditures which are not
otherwise recovered from Kazaa generated revenues and remove the cap on
expenditures that the Company is required to advance in relation to the
operation of the Kazaa business. As consideration for entering into
the amendments, the Company issued 4,161,430 shares of its common stock to
Brilliant Digital on October 13, 2010 pursuant to the Asset Purchase Agreement
(as defined below).
3
SCHEDULE
13D
The
amendments to the Marketing Services Agreement and Master Services Agreement are
part of a broader transaction between the Company and BDE pursuant to which the
Company will acquire all of the assets of BDE that relate to its Kazaa digital
music service business in accordance with the terms of an asset purchase
agreement entered into between the parties on October 13, 2010 (the “Asset
Purchase Agreement”).
The
purchase price for the acquired assets includes (i) the issuance of the
4,161,430 shares of the Company’s Common Stock on October 13, 2010, (ii) the
issuance by the Company of an additional 7,125,665 shares of its common stock at
the closing of the transactions contemplated by the Asset Purchase Agreement as
well as (iii) the assumption of certain liabilities related to the Kazaa
business. The closing of the transactions contemplated by the Asset
Purchase Agreement will occur when all of the assets associated with the Kazaa
business, including the Kazaa trademark and associated intellectual property, as
well as Brilliant Digital’s content management, delivery and customer service
platforms, and licenses with third parties, have been transferred to the
Company. The closing of the transactions contemplated by the Asset
Purchase Agreement is subject to approval by the stockholders of the Company and
Brilliant Digital, receipt of all necessary third party consents as well as
other customary closing conditions. At the closing of the
transactions contemplated by the Asset Purchase Agreement, the Company has
agreed to appoint two individuals to be selected by Brilliant Digital to serve
on the Company’s Board of Directors. In addition, at the closing,
each of the Marketing Services Agreement and Master Services Agreement will
terminate.
Item
4. Purpose of Transaction.
Reference
is made to the disclosure set forth under Item 3 of this Schedule 13D, which
disclosure is incorporated herein by reference.
All of
the 4,161,430 shares of Common Stock of the Company held by Brilliant Digital,
and to which this Schedule 13D relates, are held by Brilliant Digital as an
investment. Brilliant Digital beneficially owns 16.6% of the issued
and outstanding shares of Common Stock of the Company, which is the only class
of voting security which the Company has issued and outstanding as of the date
hereof.
Other
than as described in this Schedule 13D, Brilliant Digital does not have any
plans or proposals which would result in the acquisition by any person of
additional securities of the Company or the disposition of securities of the
Company; any extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries; any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the Company's Board; any material
change in the present capitalization or dividend policy of the Company; any
other material change in the Company's business or corporate structure; any
changes in Company's charter, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Company by any
person; causing a class of securities of the Company to be delisted from
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association; a
class of equity securities of the Company becoming eligible for termination of
registration pursuant to section 12(g)(4) of the Act; or any action similar to
any of those enumerated above.
Item
5. Interest in Securities of the Issuer.
Reference
is made to the disclosure set forth under Items 3 and 4 of this Schedule 13D,
which disclosure is incorporated herein by reference.
4
SCHEDULE
13D
As of
October 13, 2010, BDE owned 4,161,430 shares of Common Stock of the Company (the
“BDE Shares”). Assuming a total of 25,077,311 shares of the Company’s
Common Stock outstanding on October 13, 2010 following the issuance of the BDE
Shares, the BDE Shares constitute approximately 16.6% of the shares of the
Company’s Common Stock issued and outstanding. BDE has the sole power
to vote and dispose of the BDE Shares.
Transactions
by the Reporting Person in the Company’s Common Stock effected in the past 60
days are described in Item 3 above.
Item
6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Reference
is made to the disclosure set forth under Items 3 and 4 of this Schedule 13D,
which disclosure is incorporated herein by reference.
Item
7. Material to be Filed as Exhibits.
1. Asset
Purchase Agreement dated October 13, 2010 between Atrinsic, Inc., a Delaware
corporation and Brilliant Digital Entertainment, Inc., a Delaware corporation
and its wholly-owned subsidiary, Altnet, Inc., a Delaware
corporation.
2.
Amendment No. 1 to Marketing Services Agreement dated October 13, 2010 between
Atrinsic, Inc. and Brilliant Digital Entertainment, Inc.
3.
Amendment No. 1 to Master Services Agreement dated October 13, 2010 between
Atrinsic, Inc. and Brilliant Digital Entertainment, Inc.
5
SCHEDULE
13D
SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this Schedule 13D is true, complete and
correct.
