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Brilliant Digital Entertainment Inc – ‘POS AM’ on 4/14/00

On: Friday, 4/14/00 · Accession #: 1011438-0-319 · File #: 333-78733

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/14/00  Brilliant Digital Entertainm… Inc POS AM                 2:67K                                    Akin Gump Str… Office/FA

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: POS AM      Post-Effective Amendment No. 1                        22     99K 
 2: EX-23.1     Consent of Independent Accountants                     1      5K

POS AM — Post-Effective Amendment No. 1
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Exhibits Experts Forward-Looking Statements Indemnification of Directors and Officers Legal Matters Other Expenses of Issuance and Distribution Plan of Distribution Prospectus Summary Risk Factors Selling Stockholder Undertakings Use of Proceeds Where You Can Find More Information
1	1st Page - Filing Submission
4	Prospectus Summary
5	Risk Factors
12	Forward-Looking Statements
"	Use of Proceeds
13	Selling Stockholder
15	Plan of Distribution
17	Where You Can Find More Information
"	Legal Matters
"	Experts
19	Item 14. Other Expenses of Issuance and Distribution
"	Item 15. Indemnification of Directors and Officers
20	Item 16. Exhibits
"	Item 17. Undertakings

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As filed with the Securities and Exchange Commission on April 14, 2000.         
                                                     Registration No.333-78733
=============================================================================== 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 1
TO
 FORM SB-2
ON
FORM S-3
 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 BRILLIANT DIGITAL ENTERTAINMENT, INC.
(Exact Name of Registrant as Specified in Its Charter)

       DELAWARE                                   95-4592204
(State or Other Jurisdiction                      (I.R.S. Employer
of Incorporation or Organization)                  Identification No.)

6355 TOPANGA CANYON BOULEVARD, SUITE 120
WOODLAND HILLS, CALIFORNIA 91367
(818) 346-3653
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)

MARK DYNE, CHIEF EXECUTIVE OFFICER
6355 TOPANGA CANYON BOULEVARD, SUITE 120
WOODLAND HILLS, CALIFORNIA 91367
(818) 346-3653
 (Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)

COPIES TO:

 Murray Markiles, Esq.
John J. McIlvery, Esq.
 Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East
 Los Angeles, California 90067
(310) 728-3000

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.                

    If the only securities on this form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]             

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of  
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]                                

 If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier        
effective registration statement for the same offering. [ ]                     

  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering. [ ]                                                      

   If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]                                        

 THIS POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT 333-78733
SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(C) OF THE         
SECURITIES ACT OF 1933 ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID  
SECTION 8(C), MAY DETERMINE.                                                    

EXPLANATORY NOTE

  Pursuant to Rule 401(e) of the Securities Act of 1933, the Registrant is
filing this post-effective amendment to Form SB-2 on Form S-3 to update the     
information contained in the Prospectus included in the Registrant's            
Registration Statement on Form SB-2, as amended (Registration Statement No.     
333-78733).                                                                     
=============================================================================== 

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  SUBJECT TO COMPLETION - APRIL 14, 2000

PROSPECTUS

 BRILLIANT DIGITAL ENTERTAINMENT, INC.

2,040,000 SHARES OF COMMON STOCK

     This prospectus may be used only in connection with the resale by St. Annes
Investments, Ltd. or its assigns of shares of the common stock of BRILLIANT     
DIGITAL ENTERTAINMENT as follows:                                               

   o    Up to 2,000,000 shares of common stock that may be sold by us to St.
Annes under a securities purchase agreement; and            

  o    Up to 40,000 shares of common stock that may be issued by us to St.
Annes as a fee under the securities purchase agreement; and 

   We will sell the shares of common stock to St. Annes at a discount to the
then current market price of the common stock, as follows:                      

  o    If the market price is $4.00 or less, then the price for the shares
shall be 86% of the market price; and                       

     o    If the market price is greater than $4.00, then the price shall be 88%
of the market price.                                        

     The shares of common stock offered using this prospectus may be resold from
time to time by St. Annes. We will not receive any of the proceeds from the sale
of the shares by St. Annes.                                                     

     BRILLIANT'S common stock is traded on the American Stock Exchange under the
symbol "BDE." On April 12, 2000, the closing sale price of the common stock on  
the American Stock Exchange was $8.375 per share.                               

SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR FACTORS THAT SHOULD BE     
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES.                      

   We have registered with the Securities and Exchange Commission the resale
by some of our stockholders of up to 4,942,011 shares of our common stock. The  
resale of the 4,942,011 shares may occur concurrently with the resale by the    
selling stockholder of the shares to be sold using this prospectus.             

 NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE   
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.                                                               

This prospectus is dated ___________, 2000

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 TABLE OF CONTENTS

                                                                          PAGE

PROSPECTUS SUMMARY..........................................................3   

RISK FACTORS................................................................4   

FORWARD-LOOKING STATEMENTS.................................................11   

USE OF PROCEEDS............................................................11   

SELLING STOCKHOLDER........................................................12   

PLAN OF DISTRIBUTION.......................................................14   

WHERE YOU CAN FIND MORE INFORMATION........................................16   

LEGAL MATTERS..............................................................16   

EXPERTS....................................................................16   

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PROSPECTUS SUMMARY

ABOUT BRILLIANT DIGITAL ENTERTAINMENT                                           

       Brilliant Digital Entertainment is a pioneering entertainment content
provider and 3D animation technology developer for the converging Internet and  
television markets. We have expanded our business to include the broadcast and  
webcast over the Internet and television, of live auctions through our          
subsidiary, The Auctionchannel, Inc.                                            

 We use our proprietary software tools to develop and distribute
digitally-animated interactive content for the Internet, including our          
Multipath(TM) Movies. We also develop technology and software tools for sale to 
others to be used by them in the development of content for the Internet. Our   
subsidiary, The Auction Channel, enables viewers to watch auction events on     
television or the Internet and use the Internet or their telephone to bid in    
real time against bidders present at an auction.                                

ABOUT THE OFFERING                                                              

       This prospectus may be used only in connection with the resale by the
selling stockholder, St. Annes Investments, Ltd., of up to 2,040,000 shares of  
our common stock.                                                               

        We will not receive any proceeds from the sale of the shares of common
stock offered by the selling stockholder using this prospectus. As of April 4,  
2000, we had 14,361,626 shares of common stock outstanding.                     

CORPORATE INFORMATION                                                           

      We are a Delaware corporation that was incorporated in July 1996. We
were formed through the combination of two businesses: Brilliant Interactive    
Ideas, Pty. Ltd., an entertainment software developer and producer, and Sega    
Australia New Developments, a research and development operation for leading    
edge software tools. We acquired Trojan Television Limited in July 1999, and are
in the process of transferring Trojan to our subsidiary, The Auctionchannel,    
Inc. Our executive offices are located at 6355 Topanga Canyon Boulevard, Suite  
120, Woodland Hills, California 91367, and our telephone number is (818)        
615-1500. Information on our websites, www.multipathmovies.com and              
www.theauctionchannel.com, does not constitute part of this prospectus.         

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RISK FACTORS

        YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE YOU DECIDE TO
BUY OUR COMMON STOCK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE THE       
MATERIAL ONES FACING OUR COMPANY. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, 
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER. 
IF THIS OCCURS, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY
LOSE ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.                 

WE WILL NOT BE ABLE TO GENERATE REVENUES IF OUR MULTIPATH MOVIES DO NOT ACHIEVE 
MARKET ACCEPTANCE.                                                    

         Each Multipath Movie is an individual artistic work, and its ability to
generate revenues primarily will be determined by consumer reaction, which is   
unpredictable. To generate revenues, we must develop stories and characters that
capture the attention and imagination of consumers and license recognized       
characters and properties from third parties for use in our Multipath Movies. We
cannot be certain that we will be able to do so. Other factors that influence   
our ability to generate revenues from our Multipath Movies include:             

o    consumer reluctance to initiate time consuming downloads of data 
necessary to view our products;                             

o    our marketing strategies;                                        

o    the quality of our products and competing products;              

  o    our ability to enter into revenue share agreements with third party
web sites;                                                  

o    critical reviews; and                                            

 o    the availability of alternative forms of entertainment and leisure
time activities.                                            

WE HAVE EXPERIENCED, AND MAY CONTINUE TO EXPERIENCE, REDUCED REVENUES DUE TO    
DELAYS IN THE INTRODUCTION AND DISTRIBUTION OF OUR PRODUCTS.            

       We cannot be certain that we will be able to meet our planned release
dates for our new Multipath Movies. If we cannot release an important new       
product or webisodes during the scheduled quarter, our revenues would likely be 
reduced in that quarter. In the past, we have experienced significant delays in 
our introduction of some new products. For instance, delays in duplication,     
packaging and distribution caused our first Multipath Movies, CYBERSWINE, POPEYE
AND THE QUEST FOR THE WOOLLY MAMMOTH, NIGHT OF THE WEREWOLF and the HALLOWEEN   
PARTY to begin arriving at retailers at the end of December 1997, after the 1997
holiday selling season. Similarly, we experienced distribution delays in the    
fourth quarter of 1998 that caused our products to reach retail shelves only at 
the end of December, after the 1998 holiday selling season. As a result, we     
experienced fewer sales of these products than we would have if the products    
were in stores during the holiday selling seasons, which had a materially       
adverse effect on our operating results for the 1997 and 1998 fourth quarters.  
It is likely in the future that delays will continue to occur and that some new 
products will not be released in accordance with our internal development       
schedule or the expectations of public market analysts and investors.           

WE MAY NOT BE ABLE TO GENERATE SIGNIFICANT DEMAND FOR OUR PRODUCTS VIEWED ON    
 THE INTERNET UNLESS THERE IS A REDUCTION IN THE TIME IT TAKES TO DOWNLOAD
 THE LARGE AMOUNTS OF DATA NECESSARY TO VIEW OUR PRODUCTS ON THE INTERNET.

     Our revenue growth depends in part on our ability to distribute our
products for viewing on the Internet. We believe that without reductions in the 
time to download Multipath Movies over the Internet, our Multipath Movies may be
unable to gain consumer acceptance. This reduction in download time depends in  
part upon advances in compression technology. We have previously experienced    
delays in the development of compression technologies, which, we believe,       
materially and adversely affected our online sales and results of operations. We
believe that large, time-consuming downloads have previously deterred potential 
users of our products and have reduced the effectiveness of our marketing       
campaigns at that time. The development of these technologies continues to be a 
significant component of our business strategy and a primary focus of our       
research and development efforts.                                               

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IF WE ARE UNABLE TO RAISE ADDITIONAL FUNDS, WE MAY BE REQUIRED TO DEFER         
COMPLETION OF MULTIPATH MOVIE TITLES AND REDUCE OVERHEAD SIGNIFICANTLY. 

        We believe that our existing funds, cash generated from operations and
proceeds from our future sales of common stock to St. Annes Investments, Ltd.   
under the securities purchase agreement we entered into with St. Annes in March 
1999 will be sufficient to fund our working capital requirements for at least   
the next twelve months. After that period, we may need to raise additional funds
through debt or equity financing or by other means. We cannot be certain that   
additional financing will be available at the time we need additional funds or  
that, if available, it can be obtained on terms that we deem favorable. If      
necessary funds are not available, we may be required to defer completion of    
Multipath Movie titles and reduce overhead significantly, which could have a    
material adverse effect on our business. Additionally, our stockholders may be  
diluted if we raise additional funds through the sale of our stock.             

THIRD PARTY WEB SITES AND THE LICENSORS FROM WHOM WE OBTAIN RIGHTS TO OUR       
  STORIES AND CHARACTERS MAY CAUSE THE DELAY OF THE RELEASE OF OUR PRODUCTS,
WHICH MAY RESULT IN LOWER REVENUES THAN ANTICIPATED.                    

   Our distribution relationships with third party web sites and our
licensing arrangements with companies that own the stories or characters used in
many of our Multipath Movies, contain potentially burdensome provisions. These  
provisions may affect our ability to release our products, which would adversely
affect our revenues, for a number of reasons, such as:                          

   o    A software distributor or a licensor of a story or character may, in
    the exercise of its product approval rights, arbitrarily require
         expensive and time consuming changes to our products, which may cause
a delay in the release of the products; and                 

     o    A third party web site could delay the inclusion of our content on the
site, and thereby cause a delay in distribution.            

WE MAY NOT BE ABLE TO LICENSE STORIES AND CHARACTERS THAT APPEAL TO CONSUMERS   
    FOR USE IN OUR MULTIPATH MOVIES, WHICH IS NECESSARY FOR OUR MULTIPATH MOVIES
TO HAVE APPEAL IN THE MARKET.                                           

 We use stories and characters developed by third parties in our
Multipath Movies. If we cannot license stories and characters that appeal to    
consumers at prices or upon terms or conditions that we consider acceptable, we 
may not be able to develop Multipath Movies that consumers will watch. To have  
access to appealing stories and characters for use in our Multipath Movies, we  
will need to continue to develop new relationships and maintain existing        
relationships with the licensors of these stories and characters. Many licensors
are reluctant to grant broad licenses covering multiple formats, like the       
Internet and television, to companies without a proven track record in the      
particular industry. When rights are available, there is often significant      
competition for licenses.                                                       

IF THE VENDOR WE USE TO DELIVER MULTIPATH MOVIES THROUGH OUR INTERNET SITE      
EXPERIENCES AN INTERRUPTION IN SERVICE, WE WILL NOT BE ABLE TO DELIVER  
MOVIES THROUGH OUR INTERNET SITE UNTIL SERVICE RESUMES.                 

      We presently use a single vendor to deliver Multipath Movies through
our Internet site. Any significant interruption in service provided by this     
vendor could interrupt sales and delivery of Multipath Movies and adversely     
affect our ability to conduct this portion of our business and maintain customer
satisfaction.                                                                   

IF WE CANNOT OBTAIN CD-ROM AND DVD MANUFACTURING AND PACKAGING SERVICES ON A    
TIMELY BASIS, WE MAY NOT BE ABLE TO TIMELY DELIVER OUR CD-ROM AND DVD   
PRODUCTS TO DISTRIBUTORS AND RETAILERS AND OUR SALES WILL BE ADVERSELY  
AFFECTED.                                                               

    We use third party vendors to press CD-ROM and DVD disks, assemble
purchased product components, print product packaging and user manuals and      
package finished products in connection with the retail distribution of our     
Multipath Movies. We do not have contractual agreements with any of our third   
party vendors, which may result in our inability to secure adequate services in 
a timely manner. If we cannot obtain adequate manufacturing services, we will   
not be able to timely produce and deliver our CD-ROM and DVD products to        
distributors and retail stores for ultimate sale to consumers, which will       
adversely affect our sales and operating results.                               

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IF WE ARE UNABLE TO DEVELOP A RETAIL SALES CHANNEL, EFFECTIVELY COMPETE FOR     
   RETAIL SHELF SPACE AND NEGOTIATE FAVORABLE TERMS WITH RETAILERS, OUR RETAIL
SALES AND OPERATING RESULTS WILL BE ADVERSELY AFFECTED.                 

         We anticipate that a certain amount of Multipath Movies will be made by
traditional retailers. We may not be able to achieve retail sales at prices     
favorable to us. We have no prior experience in developing or managing a retail 
sales channel or selling products in retail stores. We are currently expending  
resources to develop a retail sales channel, which expenditures must be made    
before we realize any significant retail sales. The competition for shelf space 
in retail stores is intense. We expect that our products will constitute a small
percentage of a retailer's sales volume, and we cannot be certain that retailers
will provide our products with adequate levels of shelf space and promotional   
support. Due to the increased competition for limited retail shelf space and    
promotional resources, retailers and distributors increasingly are in a better  
position to negotiate favorable terms of sale, including terms relating to price
discounts, product return rights and cooperative market development funds.      
Increased competition could result in loss of shelf space for our products at   
retail stores, as well as significant price competition, any of which could     
adversely affect our sales volume and the price we receive for our products.    

WE MAY ENCOUNTER PROBLEMS IN CONNECTION WITH OUR ACQUISITION OF THE AUCTION     
CHANNEL, WHICH MAY INCREASE THE COSTS OF THE ACQUISITION AND DISTRACT   
MANAGEMENT'S ATTENTION FROM OPERATING THE COMBINED BUSINESS.            

     In July 1999, we acquired Trojan Television Limited, a London-based
company doing business as The Auction Channel. The Auction Channel integrates   
live satellite, cable TV and Web broadcasts of auction events conducted by      
auction houses, allowing for participants to watch auction events on television 
and use the Internet or their telephone to bid simultaneously with people       
actually present at the auction house. We have very little experience in        
acquiring businesses and will likely encounter difficulties in integrating The  
Auction Channel's operations with our existing operations, which may result in  
unexpected costs and adversely affect our operating results. In addition, the   
integration will require the dedication of management resources, which may      
temporarily distract management's attention from the day-to-day operations of   
the two companies and adversely affect our operating results. Some of the       
difficulties we expect to encounter include, among others, those related to:    

   o    integrating Brilliant's and The Auction Channel's management staffs;

o    retaining The Auction Channel's key management and technical     
personnel; and                                              

   o    coordinating the operation of geographically separated organizations
with distinct cultures.                                     

THE AUCTION CHANNEL MAY NEVER BE PROFITABLE, WHICH WILL ADVERSELY AFFECT OUR    
CONSOLIDATED OPERATIONS.                                              

         The Auction Channel commenced operations in July 1996 and, accordingly,
has a limited operating history upon which to evaluate its future prospects.    
There can be no assurance that The Auction Channel will achieve profitability or
implement its business strategy. The Auction Channel had net losses of          
approximately $310,000 in fiscal 1997, $485,000 in fiscal 1998, $1,978,000 for  
the fiscal year ended June 30, 1999 and $958,000 for the six months ended       
December 31, 1999, and an accumulated deficit of $3,731,000 as of December 31,  
1999 relating to net losses from the period from July 1, 1996 through December  
31, 1999. We expect that The Auction Channel will continue to sustain losses at 
least for the next twelve months.                                               

IF THE AUCTION CHANNEL LOSES ITS LICENSE TO THE COMPUTER SOFTWARE AND HARDWARE  
    TECHNOLOGIES IT USES IN ITS BUSINESS, THE AUCTION CHANNEL MAY NOT BE ABLE TO
CONTINUE TO SELL ITS PRODUCTS AND SERVICES.                             

         Many of the underlying computer software and hardware technologies used
by The Auction Channel are licensed from Articulate UK Limited. The Auction     
Channel has, with respect to these technologies, a worldwide license, with      
rights to exploit and improve the software, patents, technology, documentation  
and know how developed or owned or licensable by Articulate UK. If The Auction  
Channel loses its rights to the computer software and hardware technologies it  
licenses from Articulate UK as a result of a dispute with Articulate UK or      
otherwise, The Auction Channel will not be able to continue to sell its products
and services. If this occurs, The Auction Channel's revenues will be            
substantially reduced.                                                          

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PRODUCT RETURNS THAT EXCEED OUR ANTICIPATED RESERVES COULD RESULT IN WORSE THAN 
EXPECTED OPERATING RESULTS.                                                     

 At the time we ship our products to retailers we will establish
reserves, including reserves that estimate the potential for future product     
returns. Product returns or price protection concessions that exceed our        
reserves could increase the magnitude of quarterly fluctuations in our operating
and financial results. Furthermore, if we incorrectly assess the                
creditworthiness of customers who receive our products on credit, we could be   
required to significantly increase the reserves previously established. We      
cannot be certain that any future write-offs will not occur or that amounts     
written off will not have a material adverse effect on our business and depress 
the market price of our common stock. Actual returns to date have been within   
management's estimates.                                                         

FLUCTUATIONS IN OPERATING RESULTS MAY RESULT IN UNEXPECTED REDUCTIONS IN REVENUE
AND STOCK PRICE VOLATILITY.                                                     

       We operate in an industry that is subject to significant fluctuations
in operating results from quarter to quarter, which may lead to unexpected      
reductions in revenues and stock price volatility. Factors that may influence   
our quarterly operating results include:                                        

     o    the introduction or enhancement of software products and technology by
us and our competitors;                                     

o    our ability to produce and distribute retail packaged versions of
Multipath Movies in advance of peak retail selling seasons; 

o    our ability to create appealing content which will generate      
advertising revenue; and                                    

  o    our ability to enter into revenue share agreements with third party
web sites.                                                  

    Additionally, a majority of the unit sales for a product typically
occurs in the quarter in which the product is introduced. As a result, our      
revenues may increase significantly in a quarter in which a major product       
introduction occurs and may decline in following quarters.                      

IF WE DO NOT IMPROVE OUR SOFTWARE TOOLS TO PRODUCE NEW, MORE ENHANCED MULTIPATH 
MOVIES, OUR REVENUES WILL BE ADVERSELY AFFECTED.                        

        The software tools that enable us to create Multipath Movies have been
developed over the past four years. Additional refinement of these tools are    
necessary to continue to enhance the Multipath Movie format. If we cannot       
develop improvements to these software tools, our Multipath Movies may not      
obtain or maintain market acceptance and our revenues will be adversely         
affected.                                                                       

ERRORS OR DEFECTS IN OUR SOFTWARE TOOLS AND PRODUCTS MAY CAUSE A LOSS OF MARKET 
ACCEPTANCE AND RESULT IN FEWER SALES OF OUR PRODUCTS.                   

       Our products are complex and may contain undetected errors or defects
when first introduced or as new versions are released. In the past, we have     
discovered software errors in some of our new products and enhancements after   
their introduction into the market. Because our products are complex, we        
anticipate that software errors and defects will be present in new products or  
releases in the future. While to date these errors have not been material,      
future errors and defects could result in adverse product reviews and a loss of,
or delay in, market acceptance of our products.                                 

TO DEVELOP PRODUCTS THAT CONSUMERS DESIRE, WE MUST MAKE SUBSTANTIAL INVESTMENTS 
IN RESEARCH AND DEVELOPMENT TO KEEP UP WITH THE RAPID TECHNOLOGICAL     
DEVELOPMENTS THAT ARE TYPICAL IN OUR INDUSTRY.                          

      The entertainment software market and the PC industry are subject to
rapid technological developments. To develop products that consumers desire, we 
must continually improve and enhance our existing products and technologies and 
develop new products and technologies that incorporate these technological      
developments. We cannot be certain that we will have the financial and technical
resources available to make these improvements. We must make these improvements 
while remaining competitive in terms of performance and price. This will require
us to make substantial investments in research and development, often times well
in advance of the widespread release of the products in the market and any      
revenues these products may generate.                                           

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OUR PROPRIETARY TECHNOLOGY MAY NOT BE ADEQUATELY PROTECTED FROM UNAUTHORIZED USE
 BY OTHERS, WHICH COULD INCREASE OUR LITIGATION COSTS AND ADVERSELY AFFECT
OUR SALES.                                                              

    Our ability to compete with other entertainment software companies
depends in part upon our proprietary technology. Unauthorized use by others of  
our proprietary technology could result in an increase in competing products and
a reduction in our sales. We rely on trademark, trade secret and copyright laws 
to protect our technology, and require all employees and third-party developers 
to sign nondisclosure agreements. We cannot be certain, however, that these     
precautions will provide meaningful protection from unauthorized use by others. 
We do not copy-protect our software, so it may be possible for unauthorized     
third parties to copy our products or to reverse engineer or otherwise obtain   
and use information that we regard as proprietary. Our customers may take       
inadequate precautions to protect our proprietary information. If we must pursue
litigation in the future to enforce our intellectual property rights, to protect
our trade secrets or to determine the validity and scope of the proprietary     
rights of others, we may not prevail and will likely make substantial           
expenditures and divert valuable resources. In addition, many foreign countries'
laws may not protect us from improper use of our proprietary technologies       
overseas. We may not have adequate remedies if our proprietary rights are       
breached or our trade secrets are disclosed.                                    

IF OUR PRODUCTS INFRINGE ANY PROPRIETARY RIGHTS OF OTHERS, A LAWSUIT MAY BE     
BROUGHT AGAINST US THAT COULD REQUIRE US TO PAY LARGE LEGAL EXPENSES AND
JUDGMENTS AND REDESIGN OR DISCONTINUE SELLING OUR PRODUCT.              

    We believe that our products, including our software tools, do not
infringe any valid existing proprietary rights of third parties. Any            
infringement claims, however, whether or not meritorious, could result in costly
litigation or require us to enter into royalty or licensing agreements. If we   
are found to have infringed the proprietary rights of others, we could be       
required to pay damages, redesign the products or discontinue their sale. Any of
these outcomes, individually or collectively, could have a material adverse     
effect on our business and financial condition.                                 

OUR STOCK PRICE AND TRADING VOLUME FLUCTUATE WIDELY AND MAY CONTINUE TO DO SO IN
    THE FUTURE. AS A RESULT, WE MAY EXPERIENCE SIGNIFICANT DECLINES IN OUR STOCK
PRICE.                                                                  

       The market price and trading volume of our common stock, which trades
on the American Stock Exchange, has been subject to substantial volatility,     
which is likely to continue. This volatility may result in significant declines 
in the price of our common stock. Factors that may cause these fluctuations     
include:                                                                        

o    variations in quarterly operating results;                       

o    the gain or loss of significant contracts;                       

o    changes in management;                                           

  o    announcements of technological innovations or new products by us or
our competitors;                                            

o    recommendations by securities industry analysts;                 

o    dilution to existing stockholders resulting from the issuance of 
additional shares of common stock; and                      

o    short sales and hedging of our common stock.                     

  Additionally, the stock market has experienced extreme price and
trading volume fluctuations that have affected the market price of securities of
many technology companies. These fluctuations have, at times, been unrelated to 
the operating performances of the specific companies whose stock is affected.   
The market price and trading volume of our stock may be subject to these        
fluctuations.                                                                   

IF OUR STOCK DOES NOT SUSTAIN A SIGNIFICANT TRADING VOLUME, STOCKHOLDERS MAY BE 
UNABLE TO SELL LARGE POSITIONS IN OUR COMMON STOCK.                     

       In the past, our common stock has not experienced significant trading
volume on a consistent basis and has not been actively followed by stock market 
analysts. The average trading volume in our common stock may not increase or    
sustain its current levels. As a result, we cannot be certain that an adequate  
trading market will exist to permit stockholders to sell large positions in our 
common stock.                                                                   

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BECAUSE OUR OFFICERS AND DIRECTORS OWN A SIGNIFICANT PORTION OF OUR COMMON      
    STOCK, THEY MAY BE ABLE TO INFLUENCE STOCKHOLDER VOTES AND DISCOURAGE OTHERS
FROM ATTEMPTING TO ACQUIRE US.                                          

   As of March 10, 2000, our officers and directors owned, in total,
approximately 15% of the outstanding shares of our common stock. As a result,   
our officers and directors may be able to exert influence over the outcome of   
all matters submitted to a vote of the holders of our common stock, including   
the election of our Board of Directors. The voting power of these officers and  
directors could also discourage others from seeking to acquire control of us    
through the purchase of our common stock, which might depress the price of our  
common stock.                                                                   

WE HAVE ADOPTED A NUMBER OF ANTI-TAKEOVER MEASURES THAT MAY DEPRESS THE PRICE OF
OUR COMMON STOCK.                                                               

         Our adoption of a stockholders' rights plan, our ability to issue up to
700,000 shares of preferred stock and some provisions of our certificate of     
incorporation and bylaws and of Delaware law could make it more difficult for a 
third party to make an unsolicited takeover attempt of us. These anti-takeover  
measures may depress the price of our common stock by making third parties less 
able to acquire us by offering to purchase shares of our stock at a premium to  
its market price. Our board of directors can issue up to 700,000 shares of      
preferred stock and determine the price, rights, preferences, privileges and    
restrictions, including voting rights, of those shares without any further vote 
or action by our stockholders. Our board of directors could issue the preferred 
stock with voting, liquidation, dividend and other rights superior to the rights
of our common stock. The rights of holders of our common stock will be subject  
to, and may be adversely affected by, the rights of holders of the share        
purchase rights and of any preferred stock that may be issued in the future. The
issuance of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could make it more     
difficult for a third party to acquire a majority of our outstanding voting     
stock.                                                                          

OUR SALE OF SHARES TO ST. ANNES AT A PRICE BELOW THE MARKET PRICE OF OUR COMMON 
STOCK WILL HAVE A DILUTIVE IMPACT ON OUR STOCKHOLDERS.                  

     We have entered into a securities purchase agreement with St. Annes
Investments, Ltd. that allows us to sell to St. Annes up to $6,000,000 worth of 
shares of our common stock at a discount to the then-prevailing market price of 
our common stock. If the market price is $4.00 or less, St. Annes will receive a
discount equal to 14% of the market price, and if the market price is greater   
than $4.00, St. Annes will receive a discount equal to 12% of the market price. 
Additionally, we have agreed to issue to St. Annes as a fee shares of common    
stock having an aggregate market price equal to 2% of the purchase price of the 
shares of common stock that are issued and sold to St. Annes under the          
securities purchase agreement. Accordingly, the issuance of shares under the    
securities purchase agreement will have a dilutive impact on our stockholders.  
As a result, our net income or loss per share could be materially impact future 
periods, and the market price of our common stock could be materially and       
adversely affected. As of March 10, 2000, we have sold 230,075 shares of our    
common stock for gross proceeds of $1,000,000. We also have issued 4,049 shares 
of our common stock to St. Annes as a fee.                                      

        The table below sets forth the number of shares and the percentages of
our common stock that St. Annes would own if we elected to sell the remaining   
$5,000,000 worth of stock under the purchase agreement. The share amounts and   
the percentages include 234,124 shares already issued to St. Annes under the    
securities purchase agreement and shares St. Annes will receive as a fee under  
the securities purchase agreement. The share amounts and the percentages are    
based on our closing share price of $12.63 on March 10, 2000, and on assumed    
closing share prices of $9.47, $6.32 and $3.16, which prices represent a 25%,   
50% and 75% decline, respectively, in our March 10, 2000 closing share price.   
The percentages are also based on 14,251,626 shares of our common stock         
outstanding on March 10, 2000.                                                  

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                                                                [Download Table]

PERCENTAGE DECLINE IN                                       PERCENTAGE OF 
MARCH 10, 2000 CLOSING      ASSUMED      SHARES OF COMMON    OUTSTANDING  
        PRICE            CLOSING PRICE         STOCK        COMMON STOCK  
----------------------   -------------   ----------------   --------------
                                                                          
         --                 $12.63            691,908           4.7%      
         25%                 $9.47            844,665           5.7%      
         50%                 $6.32           1,148,969          7.6%      
         75%                 $3.16           2,105,629         13.1%      

WE MAY NOT BE ABLE TO SELL THE ENTIRE $6,000,000 WORTH OF SHARES OF OUR COMMON  
    STOCK TO ST. ANNES WITHOUT OBTAINING STOCKHOLDER APPROVAL, WHICH MAY REQUIRE
  THAT WE SEEK ALTERNATIVE SOURCES OF FINANCING THAT MAY NOT BE AVAILABLE ON
TERMS FAVORABLE TO US.                                                  

       Under the rules of the American Stock Exchange, we cannot sell to St.
Annes under our securities purchase agreement more than 1,881,800 shares of     
common stock unless we obtain stockholder approval of the issuance of shares in 
excess of this amount. Accordingly, if the average price at which we sell our   
stock to St. Annes under the securities purchase agreement is less than $3.19   
per share, we will not be able to sell the entire $6,000,000 worth of shares of 
our common stock to St. Annes without first obtaining stockholder approval. If  
we are unable to obtain stockholder approval, or if we choose not to pursue     
stockholder approval, we may be required to seek alternative sources of         
financing to fund our working capital requirements. We cannot guarantee that    
additional financing will be available or that, if available, it can be obtained
on terms favorable to our stockholders and us.                                  

DECREASES IN THE PRICE OF OUR COMMON STOCK COULD INCREASE SHORT SALES OF OUR    
  COMMON STOCK BY THIRD PARTIES, WHICH COULD RESULT IN FURTHER REDUCTIONS IN
THE PRICE OF OUR COMMON STOCK.                                          

    Our sales of common stock to St. Annes at a discount to the market
price of our common stock could result in reductions in the market price of our 
common stock. Downward pressure on the price of our common stock could encourage
short sales of the stock by third parties. Material amounts of short selling    
could place further downward pressure on the market price of the common stock. A
short sale is a sale of stock that is not owned by the seller. The seller       
borrows the stock for delivery at the time of the short sale, and buys back the 
stock when it is necessary to return the borrowed shares. If the price of the   
common stock declines between the time the seller sells the stock and the time  
the seller subsequently repurchases the common stock, then the seller sold the  
shares for a higher price than he purchased the shares and may realize a profit.

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FORWARD-LOOKING STATEMENTS

     This prospectus contains statements that constitute forward-looking
statements within the meaning of Section 21E of the Exchange Act of 1934 and    
Section 27A of the Securities Act of 1933. The words "expect," "estimate,"      
"anticipate," "predict," "believe" and similar expressions and variations       
thereof are intended to identify forward-looking statements. Such statements    
appear in a number of places in this prospectus and include statements regarding
our intent, belief or current expectations regarding our strategies, plans and  
objectives, our product release schedules, our ability to design, develop,      
manufacture and market products, our intentions with respect to strategic       
acquisitions, and the ability of our products to achieve or maintain commercial 
acceptance. Any forward-looking statements are not guarantees of future         
performance and involve risks and uncertainties. Actual results may differ      
materially from those projected in this prospectus, for the reasons, among      
others, described in the Risk Factors section beginning on page 4. You should   
read the Risk Factors section carefully, and should not place undue reliance on 
any forward-looking statements, which speak only as of the date of this         
prospectus. We undertake no obligation to release publicly any updated          
information about forward-looking statements to reflect events or circumstances 
occurring after the date of this prospectus or to reflect the occurrence of     
unanticipated events.                                                           

 USE OF PROCEEDS

        We will not receive any proceeds from the sale of the shares of common
stock offered by the selling stockholder under this prospectus. We will,        
however, receive from St. Annes the purchase price for the shares of common     
stock that we sell to St. Annes under the securities purchase agreement. If the 
market price of our common stock, as determined under the securities purchase   
agreement, is $4.00 or less, the purchase price is equal to 86% of the market   
price. If the market price of our common stock is greater than $4.00, the       
purchase price is equal to 88% of the market price. We have already received    
gross proceeds of $1,000,000 from St. Annes in connection with our sale of      
230,075 shares to St. Annes under the securities purchase agreement. We may     
receive up to an additional $5,000,000 from St. Annes, depending upon how many  
additional shares we sell under the securities purchase agreement. See          
"Securities Purchase Agreement." We intend to use all proceeds from the sale of 
common stock under the securities purchase agreement for working capital and    
general corporate purposes.                                                     

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 SELLING STOCKHOLDER

         On March 29, 1999, we entered into a securities purchase agreement with
St. Annes pursuant to which, subject to the satisfaction of conditions, we may  
issue and sell, from time to time, up to an aggregate of $6,000,000 of our      
common stock to St. Annes.                                                      

Until October 2002, we may from time to time and in our sole
discretion, sell (or put) shares of our common stock to St. Annes. The price    
that St. Annes will pay for our stock will be at a discount to the market price 
of our common stock on the date we deliver a put notice to St. Annes, as        
follows:                                                                        

  o    If the market price is $4.00 or less, then the price for the shares
shall be 86% of the market price; and                       

     o    If the market price is greater than $4.00, then the price shall be 88%
of the market price.                                        

       The market price of our common stock, for purposes of calculating the
purchase price under the securities purchase agreement, is the lowest volume    
adjusted price during the ten trading days immediately preceding the date that  
we deliver a put notice to St. Annes. The volume adjusted price on a trading day
is equal to the total dollar value of all shares of our common stock traded on  
the American Stock Exchange on the trading day, divided by the total volume of  
our common stock traded on the American Stock Exchange on the trading day.      

     Some conditions must be satisfied before we can put shares to St.
Annes, including, but not limited to, the following:                            

     o    The market price of our common stock may not be less than $1.00 on the
date we deliver a put notice to St. Annes;                  

   o    We must sell at least $100,000 of our common stock to St. Annes upon
each put of shares;                                         

 o    The closing date with respect to any put of shares shall not occur
within 15 business days of any other put closing date;      

o    Our representations and warranties to St. Annes set forth in the 
         securities purchase agreement must be accurate as of the date of each
        put and we must not be in breach of any of our obligations under the
securities purchase agreement;                              

  o    The number of shares of common stock that we put, when added to all
       other shares of common stock previously acquired by St. Annes under
         the securities purchase agreement and still owned by St. Annes at the
time of the put, shall not exceed 9.99% of our common stock 
outstanding on the date of the put notice; and              

   o    The aggregate number of shares of common stock that we may issue and
     sell to St. Annes under the securities purchase agreement may not
        exceed 1,881,800 shares of common stock unless we obtain stockholder
approval of the issuance of shares in excess of this amount.

      We have agreed to put to St. Annes at least $1,000,000 of our common
stock during the 36 month term of the securities purchase agreement.            

  We have agreed to pay to St. Annes a cash fee equal to 3% of the
purchase price paid to us by St. Annes at any put closing, and issue to St.Annes
shares of common stock having an aggregate market price equal to 2% of the      
purchase price paid to us by St. Annes at any put closing.                      

  On January 31, 2000, we issued our first put notice to St. Annes
Investments, Ltd., under the securities purchase agreement dated March 29, 1999 
discussed above. By delivering this notice to St. Annes, we elected to sell     
$1,000,000 in aggregate traded value of our common stock to St. Annes under the 
pricing formula set forth in the securities purchase agreement. On February 2,  
2000, St. Annes purchased 230,075 shares of our common stock at a purchase price
of $4.94 per share. This purchase resulted in aggregate proceeds of $970,000    
paid to us on February 2, 2000. Additionally, in connection with this sale of   
share, we issued 4,049 shares of our common stock to St. Annes as a fee.        

     We have agreed to register the resale by St. Annes of the shares of
common stock we put to St. Annes under the securities purchase agreement. We    
have filed a registration statement, of which this prospectus forms a part, to  
satisfy our registration obligation. If the 2,040,000 shares of common stock    
included in the registration statement are less than the total number of shares 
we actually issue to St. Annes under the securities purchase agreement, we will 
file another registration                                                       

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statement to include these additional shares. We have agreed to prepare and file
amendments and supplements to the registration statement as necessary to keep it
effective as long as registrable securities are outstanding. We have agreed to  
bear some expenses, other than any broker discounts and commissions of the      
selling stockholders, in connection with the registration statement.            

St. Annes and its representatives have the right to review the
registration statement and our records and properties to obtain information     
about us and the accuracy of the registration statement and this prospectus.    

       The securities purchase agreement will automatically terminate on the
earliest of:                                                                    

   o    the date on which St. Annes has purchased an aggregate of $6,000,000
of our common stock under the securities purchase agreement;

o    36 months after the effective date of the initial registration   
          statement filed under the securities purchase agreement; or o June 29,
2002.                                                       

SELLING STOCKHOLDER'S TABLE                                                     

The following table contains information about the selling    
stockholder's beneficial ownership of our common stock as of April 4, 2000. On  
April 4, 2000, there were 14,361,626 shares of our common stock outstanding. We 
do not know if, when, or in what amounts the selling stockholders will sell     
shares of the common stock. Therefore, we cannot estimate how many shares the   
selling stockholder will hold after completion of the offering.                 

                                                                [Download Table]

                                              SHARES                           
                                       BENEFICIALLY OWNED                      
                                        PRIOR TO OFFERING                      
                                       -------------------         NUMBER OF   
NAME AND ADDRESS                       NUMBER      PERCENT       SHARES OFFERED
                                       ------      -------      ---------------
                                                                               
St. Annes Investmenst, Ltd. (1)........   0          0%            2,040,000   
   c/o Dr. Batliner & Partners                                                 
   Aeulestrasse 74                                                             
   FI-9490                                                                     
   Vaduz, Liechtenstein                                                        

-------------------------------                                                
<FN>                                                                           
(1)  Under the securities purchase agreement, St. Annes will not be required to
     purchase a number of shares of our common stock, which when added to all  
     other shares previously acquired by St. Annes and still owned by St. Annes
     would exceed 9.99% of the number of shares of our common stock outstanding
     on the applicable purchase date.                                          
</FN>                                                                          

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PLAN OF DISTRIBUTION

         St. Annes and any of its pledgees, assignees and successors-in-interest
may, from time to time, sell any or all of their shares of common stock on any  
stock exchange, market or trading facility on which the shares are traded or in 
private transactions. These sales may be at fixed or negotiated prices. The     
selling stockholder may use any one or more of the following methods when       
selling shares:                                                                 

o    ordinary brokerage transactions and transactions in which the    
broker-dealer solicits purchasers;                          

o    block trades in which the broker-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-dealer as principal and resale by the      
broker-dealer for its account;                              

o    an exchange distribution in accordance with the rules of the     
applicable exchange;                                        

o    privately negotiated transactions;                               

o    short sales;                                                     

o    broker-dealers may agree with the selling stockholders to sell a 
   specified number of the shares at a stipulated price per share;

o    a combination of any of these methods of sale; and               

o    any other method permitted pursuant to applicable law.           

        St. Annes is an "underwriter" within the meaning of the Securities Act
of 1933 in connection with its sale of our common stock pursuant to this        
prospectus. Broker-dealers who act in connection with the sale of the common    
stock may also be deemed to be underwriters. Profits on any resale of the common
stock as a principal by these broker-dealers and any commissions received by the
broker-dealers may be deemed to be underwriting discounts and commissions under 
the Securities Act of 1933.                                                     

If required, the following information will be disclosed in a 
prospectus supplement or, if necessary, an amendment to the registration        
statement:                                                                      

o    the names of any of agent, dealer or underwriter;                

o    the price at which the common stock is to be sold;               

o    the number of shares of common stock involved; o any applicable  
commissions or discounts; and                               

o    other facts material to the transaction.                         

      Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in a distribution of our common stock may not   
simultaneously engage in market making activities with respect to the common    
stock for a period beginning when the person becomes a distribution participant 
and ending upon the person's completion of participation in a distribution,     
including stabilization activities in the common stock to effect covering       
transactions, to impose penalty bids or to effect passive market making bids. In
addition and without limiting the foregoing, in connection with transactions in 
our common stock, we and the selling stockholder will be subject to applicable  
provisions of the Securities Exchange Act of 1934 and the rules and regulations 
thereunder, including, without limitation, Rule 10b-5 and, insofar as we and the
selling stockholders are distribution participants, Regulation M and Rules 100, 
101, 102, 103, 104 and 105 thereof. All of the foregoing may affect the         
marketability of our common stock.                                              

    St. Annes has agreed that it will not engage in short sales of our
common stock except during periods of time determined by us when the prohibition
on short sales will not apply.                                                  

       St. Annes will pay all commissions and some other expenses associated
with their sale of our common stock. We are registering the common stock issued 
hereby pursuant to our contractual obligations under the securities purchase    
agreement, and we have agreed to pay the costs of registering the shares        
hereunder. We have also agreed to pay legal fees incurred by St. Annes up to a  
maximum of $7,500. We have agreed to indemnify St. Annes with respect to the    
common stock subject to this offering against some types of liabilities,        
including, without limitation, some liabilities under the Securities Act of     
1933, or, if the indemnity is unavailable, to contribute toward amounts required
to be paid in respect of these liabilities.                                     

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    As an additional fee, we will pay to St. Annes at each put closing
under the securities purchase agreement cash equal to 3% of the purchase price  
we receive from St. Annes at the put closing, and we will issue to St. Annes    
common stock with an aggregate market price equal to 2% of the purchase price   
paid by St. Annes at the put closing. See "Securities Purchase Agreement."      

        We will issue the shares of common stock to St. Annes at a discount to
the then current market price of the common stock, as defined in the securities 
purchase agreement, as follows:                                                 

  o    If the market price is $4.00 or less, then the price for the shares
shall be 86% of the market price; and                       

     o    If the market price is greater than $4.00, then the price shall be 88%
of the market price.                                        

       The market price of our common stock, for purposes of calculating the
purchase price under the securities purchase agreement, is the lowest volume    
adjusted price during the ten trading days immediately preceding the date that  
we deliver a put notice to St. Annes. The volume adjusted price on a trading day
is equal to (i) the total dollar value of all shares of our common stock traded 
on the American Stock Exchange on the trading day, divided by (ii) the total    
volume of our common stock traded on the American Stock Exchange on the trading 
day.                                                                            

       As of March 10, 2000, we have sold 230,075 shares of our common stock
for gross proceeds of $1,000,000. We also have issued 4,049 shares of our common
stock to St. Annes as a fee.                                                    

        The table below sets forth the number of shares and the percentages of
our common stock that St. Annes would own if we elected to sell the remaining   
$5,000,000 worth of stock under the purchase agreement. The share amounts and   
the percentages include 234,124 shares already issued to St. Annes under the    
securities purchase agreement and shares St. Annes will receive as a fee under  
the securities purchase agreement. The share amounts and the percentages are    
based on our closing share price of $12.63 on March 10, 2000, and on assumed    
closing share prices of $9.47, $6.32 and $3.16, which prices represent a 25%,   
50% and 75% decline, respectively, in our March 10, 2000 closing share price.   
The percentages are also based on 14,251,626 shares of our common stock         
outstanding on March 10, 2000. Under the rules of the American Stock Exchange,  
we cannot sell to St. Annes under the purchase agreement more than 1,881,800    
shares of common stock unless we obtain stockholder approval of the issuance of 
shares in excess of this amount.                                                

                                                                [Download Table]

PERCENTAGE DECLINE IN                                         PERCENTAGE OF
   MARCH 10, 2000          ASSUMED       SHARES OF COMMON      OUTSTANDING 
    CLOSING PRICE       CLOSING PRICE          STOCK          COMMON STOCK 
---------------------   -------------    -----------------    -------------
                                                                           
         --                $12.63             691,908             4.7%     
         25%                $9.47             844,665             5.7%     
         50%                $6.32           1,148,969             7.6%     
         75%                $3.16           2,105,629            13.1%     

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 WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can read and 
copy these documents at the SEC's Public Reference Room, located at 450 Fifth   
Street, NW, Room 1024, Washington D.C. 20549. Please call the SEC at            
1-800-SEC-0330 for further information on the public reference room. Our SEC    
filings are also available on the SEC's website at "http://www.sec.gov." You can
also read our SEC filings at the American Stock Exchange, 86 Trinity Plaza, New 
York, New York.                                                                 

         The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by       
referring to those documents. The information incorporated by reference is an   
important part of this prospectus, and information that we file later with the  
SEC will automatically update and supersede the information in this prospectus. 
We incorporate by reference the documents listed below and any future filings   
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities    
Exchange Act of 1934 until the selling stockholders sell all of the shares:     

 o    Annual Report on Form 10-KSB for the year ended December 31, 1999.

o    Description of our capital stock contained in our Registration   
       Statement on Form 8-A, filed on October 29, 1996, as amended by our
     Registration Statement on Form 8-A/A, filed on November 20, 1996.

       This prospectus is part of a registration statement we filed with the
SEC. You may request a copy of the above information incorporated by reference, 
at no cost, by writing to or calling:                                           

Michael Ozen                                
Chief Financial Officer                     
Brilliant Digital Entertainment, Inc.       
6355 Topanga Canyon Boulevard, Suite 120    
Woodland Hills, California 91367            
(818) 615-1500                              

 LEGAL MATTERS

         Troop Steuber Pasich Reddick & Tobey, LLP, Los Angeles, California, has
rendered to Brilliant Digital Entertainment, Inc. a legal opinion as to the     
validity of the common stock covered by this prospectus.                        

 EXPERTS

         The financial statements of Brilliant Digital Entertainment, Inc. as of
December 31, 1999 and for each of the two years in the period ended December 31,
1999 incorporated in this prospectus by reference to the Annual Report on Form  
10-KSB of Brilliant Digital Entertainment, Inc. for the fiscal year ended       
December 31, 1999 have been incorporated in this prospectus in reliance on the  
report of PricewaterhouseCoopers LLP, independent accountants, given on their   
authority as experts in auditing and accounting.                                

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--------------------------------------------------------------------------------
      You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have not   
authorized anyone else to provide you with different information. The selling   
stockholders should not make an offer of these shares in any state where the    
offer is not permitted. You should not assume that the information in this      
prospectus or any supplement to this prospectus is accurate as of any date other
than the date on the cover page of this prospectus or any supplement.           
--------------------------------------------------------------------------------

--------------------

 BRILLIANT DIGITAL ENTERTAINMENT, INC.

PROSPECTUS

--------------------

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 PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.   OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.                         

         The following table itemizes the expenses incurred by the Registrant in
connection with the offering. All the amounts shown are estimates except the    
Securities and Exchange Commission registration fee.                            

   Registration fee - Securities and Exchange Commission.....    $ 3,383
   American Stock Exchange fee...............................     17,500
   Accounting fees and expenses..............................      5,000
   Legal fees and expenses (other than blue sky).............     21,500
   Blue sky fees and expenses, including legal fees..........         --
   Printing; stock certificates..............................        250
   Transfer agent and registrar fees.........................        300
   Miscellaneous.............................................        500
                                                                --------
            Total............................................    $48,433

ITEM 15.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.                           

      The Registrant's Certificate of Incorporation and its Bylaws provide
for the indemnification by the Registrant of each director, officer and employee
of the Registrant to the fullest extent permitted by the Delaware General       
Corporation Law, as the same exists or may hereafter be amended. Section 145 of 
the Delaware General Corporation Law provides in relevant part that a           
corporation may indemnify any person who was or is a party or is threatened to  
be made a party to any threatened, pending or completed action, suit or         
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or  
is or was serving at the request of the corporation as a director, officer,     
employee or agent of another corporation, partnership, joint venture, trust or  
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person  
in connection with such action, suit or proceeding if such person acted in good 
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action 
or proceeding, had no reasonable cause to believe such person's conduct was     
unlawful.                                                                       

        In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any         
threatened, pending or completed action or suit by or in the right of the       
corporation to procure a judgment in its favor by reason of the fact that such  
person is or was a director, officer, employee or agent of the corporation, or  
is or was serving at the request of the corporation as a director, officer,     
employee or agent of another corporation, partnership, joint venture, trust or  
other enterprise against expenses (including attorneys' fees) actually and      
reasonably incurred by such person in connection with the defense or settlement 
of such action or suit if such person acted in good faith and in a manner such  
person reasonably believed to be in or not opposed to the best interests of the 
corporation and except that no indemnification shall be made in respect of any  
claim, issue or matter as to which such person shall have been adjudged to be   
liable to the corporation unless and only to the extent that the Delaware Court 
of Chancery or the court in which such action or suit was brought shall         
determine upon application that, despite the adjudication of liability but in   
view of all the circumstances of the case, such person is fairly and reasonably 
entitled to indemnity for such expenses which the Delaware Court of Chancery or 
such other court shall deem proper. Delaware law further provides that nothing  
in the above described provisions shall be deemed exclusive of any other rights 
to indemnification or advancement of expenses to which any person may be        
entitled under any bylaw, agreement, vote of stockholders or disinterested      
directors or otherwise.                                                         

        The Registrant's Certificate of Incorporation provides that a director
of the Registrant shall not be liable to the Registrant or its stockholders for 
monetary damages for breach of fiduciary duty as a director. Section 102(o)(7)  
of the Delaware General Corporation Law provides that a provision so limiting   
the personal liability of a director shall not eliminate or limit the liability 
of a director for, among other things: breach of the duty of loyalty; acts or   
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law; unlawful payment of dividends; and transactions from which
the director derived an improper personal benefit.                              

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  The Registrant has entered into separate but identical indemnity
agreements (the "Indemnity Agreements") with each director of the Registrant and
certain officers of the Registrant (the "Indemnitees"). Pursuant to the terms   
and conditions of the Indemnity Agreements, the Registrant indemnified each     
Indemnitee against any amounts which he or she becomes legally obligated to pay 
in connection with any claim against him or her based upon any action or        
inaction which he or she may commit, omit or suffer while acting in his or her  
capacity as a director and/or officer of the Registrant or its subsidiaries,    
provided, however, that Indemnitee acted in good faith and in a manner          
Indemnitee reasonably believed to be in or not opposed to the best interests of 
the Registrant and, with respect to any criminal action, had no reasonable cause
to believe Indemnitee's Conduct was unlawful.                                   

ITEM 16.  EXHIBITS.                                                             

EXHIBIT                                                                       
NUMBER                             EXHIBIT DESCRIPTION                      
--------                             -------------------                        
   1.1    Securities Purchase Agreement, dated as of March 29, 1999, between the
        Registrant and St. Annes Investments, Ltd. Incorporated by reference
        to Exhibit 10.52 to Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998.                                    

   1.2    Registration Rights Agreement, dated as of March 29, 1999, between the
        Registrant and St. Annes Investments, Ltd. Incorporated by reference
        to Exhibit 10.53 to Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998.                                    

5.1    Opinion and Consent of Troop Steuber Pasich Reddick & Tobey, LLP.* 

23.1    Consent of PricewaterhouseCoopers LLP.                              

23.3    Consent of Troop Steuber Pasich Reddick & Tobey, LLP (included in   
Exhibit 5.1).*                                              

24.1    Power of Attorney (included on signature page).*                    

----------------------------                                                    
* Previously filed.                                                             

ITEM 17. UNDERTAKINGS.                                                          

The undersigned Registrant hereby undertakes:                 

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any        
material information with respect to the plan of distribution not previously    
disclosed in the Registration Statement or any material change to such          
information in the Registration Statement;                                      

         (2) That, for the purpose of determining liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such  
securities at that time shall be deemed to be the initial bona fide offering    
thereof; and                                                                    

        (3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.                                                                   

    The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the          
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange   
Act (and, where applicable, each filing of an employee benefit plan's annual    
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by   
reference in the registration statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such  
securities at that time shall be deemed to be the initial BONA FIDE offering    
thereof.                                                                        

         Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the      
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant   
has been advised that in the opinion of the Commission such indemnification is  
against public policy as expressed in the Securities Act and is, therefore,     
unenforceable. In the event that a claim for indemnification against such       
liabilities (other than the                                                     

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payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,   
suit or proceeding) is asserted by such director, officer or controlling person 
in connection with the securities being registered, the Registrant will, unless 
in the opinion of its counsel the matter has been settled by controlling        
precedent, submit to a court of the appropriate jurisdiction the question       
whether such indemnification by it is against public policy as expressed in the 
Securities Act and will be governed by the final adjudication of such issue.    

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SIGNATURES

 Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and authorized this Registration     
Statement to be signed on its behalf by the undersigned, in the City of Los     
Angeles, State of California, on April 14, 2000.                                

                             BRILLIANT DIGITAL ENTERTAINMENT, INC.

             By:  /S/ MICHAEL OZEN
                                 ---------------------------------
                                     Michael Ozen, Chief Financial Officer

  Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the          
capacities and on the dates stated.                                             

                                                        [Enlarge/Download Table]

        SIGNATURE                                TITLE                           DATE    
        ---------                                -----                           ----    
                                                                                         
          *                  Chief Executive Officer and Chairman          April 14, 2000
---------------------------  of the Board of Directors                                   
        Mark Dyne                                                                        

          *                  President and Director                        April 14, 2000
---------------------------                                                              
     Kevin Bermeister                                                                    

  /S/ MICHAEL OZEN           Chief Financial Officer (Principal Financial  April 14, 2000
---------------------------  and Accounting Officer) and Secretary                       
       Michael Ozen                                                                      

          *                  Vice President, Operations and Production     April 14, 2000
---------------------------  and Director                                                
       Mark Miller                                                                       

          *                  Director                                      April 14, 2000
---------------------------                                                              
      Diana Maranon                                                                      

          *                  Director                                      April 14, 2000
---------------------------                                                              
        Ray Musci                                                                        

          *                  Director                                      April 14, 2000
---------------------------                                                              
      Garth Saloner                                                                      

          *                  Director                                      April 14, 2000
---------------------------                                                              
     Jeff Scheinrock                                                                     

* By:    /S/ MICHAEL OZEN                                                     
-----------------------                                           
Michael Ozen                                            
As Attorney-In-Fact                                             

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘POS AM’ Filing	Date	First	Last	Other Filings

	6/29/02	14
Filed on:	4/14/00	1	22	S-3
	4/12/00	2
	4/4/00	4	14
	3/10/00	10	16	SC 13G
	2/2/00	13
	1/31/00	13
	12/31/99	7	17	10KSB
	6/30/99	7		10QSB
	3/29/99	13	20
	12/31/98	20		10KSB, 10KSB/A, NT 10-K, S-3
	11/20/96	17		8-A12B/A, S-1/A
	10/29/96	17		8-A12B, 8-A12G
	7/1/96	7
				List all Filings

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Filing Submission 0001011438-00-000319 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Brilliant Digital Entertainment Inc – ‘POS AM’ on 4/14/00

On: Friday, 4/14/00 · Accession #: 1011438-0-319 · File #: 333-78733

Post-Effective AmendmentFiling Table of Contents

POS AM — Post-Effective Amendment No. 1Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Post-Effective Amendment
Filing Table of Contents

POS AM — Post-Effective Amendment No. 1
Document Table of Contents