10-K/A 1 bigstar10k_a1.txt FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K/A ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 Commission file number 000-26793 BIGSTAR ENTERTAINMENT, INC. (Exact name of registrant as specified in its charter) Delaware No. 13-339-5258 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 13-3995258 19 Fulton Street, 4th Floor New York, New York 10038-2100 (Address of principal executive offices) Registrant's telephone number, including area code: (212) 571-9276 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock on March 31, 2002 as reported on the OTC Bulletin Board, was approximately $623,815. Shares of common stock held by each officer and director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of March 31, 2002, the registrant had outstanding 7,797,693 shares of common stock. Documents Incorporated By Reference None PART III Item 10. Directors and Executive Officers of the Registrant The executive officers and directors of Bigstar, as of March 31, 2002 are as follows: Name Age Position -------------------------------------------------------------------------------- David Friedensohn 40 Chairman of the Board and Chief Executive Officer Daniel John Woods 41 Director DAVID FRIEDENSOHN, age 40 -- Mr. Friedensohn has served as Chairman and Chief Executive Officer of Bigstar since its formation in March 1998. Prior to joining Bigstar, Mr. Friedensohn served as the Chief Executive Officer of SonicNet, which was sold in December 1997 as part of Paradigm Music ___ Entertainment to TCI Music, an affiliate of Tele-Communications, Inc. Mr. Friedensohn previously held the positions of Vice President, Business Development and General Manager of the Wildflower Partners Fund at Prodigy from October 1995 until January 1997 and was Chairman of the Board and President of SonicNet from January 1996 to January 1997. Prior to working at Prodigy, Mr. Friedensohn served as the President of GB Investment Corp., a consulting company to the entertainment industry. Mr. Friedensohn received a Bachelor of Arts from Dartmouth College in 1983 and a Masters in Business Administration from Columbia University Graduate School of Business in 1987. DANIEL JOHN WOODS, age 41, has served as director of Bigstar since November, 2000. Mr Woods has been the Chief Technology Officer of CapitalThinking, Inc., a web-based financial services applications and technology company, since September 1999. From 1998 until September 1999, Mr. Woods served as the Vice President and Chief Technology Officer of TheStreet.com, a Nasdaq-traded web-based provider of original, timely, comprehensive and financial news, commentary and information aimed at helping readers make informed investment decisions. Previously, from 1996 until 1998, Mr. Woods served as a software applications manager for Pathfinder, a division of Time Warner, Inc. Mr. Woods has an MS degree from the Columbia University Graduate School of Journalism and a BS degree in Computer Science from the University of Michigan. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Section 16(a) of the Securities Act of 1934, as amended, requires Bigstar's executive officers, directors and holders of more than 10% of Bigstar's Common Stock, to file reports of ownership and changes in ownership with the SEC and the Nasdaq National Market. Such persons are required to furnish Bigstar with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or oral or written representation from certain reporting persons that no Forms 5 were required for those persons, Bigstar believes that, with respect to 2001, all filing requirements applicable to its executive officers, directors and greater than 10% beneficial owners were complied with. 2

(1) Options were granted under Bigstar's Stock Option Plan and generally vest 25% beginning one year subsequent to the date of grant with the remaining 75% vesting monthly during the following 36 months. (2) Mr. Friedensohn's options granted in 1999 were repriced in 2000.

(1) No other Named Executive Officer besides Mr. Friedensohn has been employed with Bibstar in the preceeding 30 days, and pursuant to the Stock Option Plan, owns any Bigstar options. OPTION / SAR GRANTS IN LAST FISCAL YEAR Bigstar's Board of Directors did not grant options during 2001 to any executive officers. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES There were no exercises of options by executive officers or directors during 2001. 3

EMPLOYMENT AGREEMENT In March 1999, Bigstar entered into an employment agreement with David Friedensohn. The agreement provides for Mr. Friedensohn to be employed as Chief Executive Officer of Bigstar for an unspecified period of time. As a result, either Bigstar or Mr. Friedensohn may terminate the employment relationship at any time. Pursuant to the agreement, Bigstar shall nominate Mr. Friedensohn to serve on the Board. The agreement obligates Bigstar to pay Mr. Friedensohn an annual salary of $200,000 in 2000 and $250,000 in 2001. Bigstar will also pay Mr. Friedensohn a guaranteed bonus of $40,000 in 2000 and $150,000 in 2001. In addition, Mr. Friedensohn was granted options to purchase 194,000 shares of Common Stock at an exercise price of $4.12 per share pursuant to the Plan. On July 17, 2000, the Compensation Committee of the Board approved an adjustment to the exercise price to be equal to the closing price of Bigstar's Common Stock on July 17, 2000 for all options held by Bigstar's employees, including Bigstar's executive officers and certain consultants. The closing price of Bigstar's Common Stock on July 17, 2000 was $1.00. The options vest in equal installments over 48 months and are exercisable until the earlier of five years or 90 days after Mr. Friedensohn's termination of employment. If terminated without cause, Mr. Friedensohn will be entitled to severance pay equal to two years of his then current base salary. COMPENSATION OF DIRECTORS Directors currently receive cash compensation from Bigstar for their service as members of the Board, are reimbursed for certain expenses in connection with their attendance at Board and committee meetings. Each Non-employee director receives the following compensation for his service as a director: (i) $20,000 per annum payable quarterly in arrears; (ii) $1,000 for attending any meeting for the Board plus reasonable out-of-pocket expenses incurred in connection with such meeting; (iii) $1,000 for attending any meeting of any committee of the Board plus reasonable out-of-pocket expenses incurred in connection therewith; and (iv) upon appointment to the Board, a one-time grant of options for 35,000 shares of Common Stock at an exercise price equal to the fair market value of the underlying Common Stock on the date of grant. These options shall vest monthly over one year subject to acceleration upon certain capital transactions and shall expire five (5) years from the date of grant. Additionally, from time to time, certain directors of Bigstar have received additional grants of options and warrants to purchase shares of Bigstar's Common Stock pursuant to the Plan. All options granted to directors after the date in which Bigstar has been traded on the OTC Bulletin Board shall have an exercise price equal to the closing bid price of Bigstar's Common Stock as quoted by the OTC Bulletin Board. During 2001, no options were granted to Board members. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION None 4

* Less than one percent of the outstanding Common Stock. (1) Unless otherwise indicated, the address for each listed director or officer is c/o Bigstar, 19 Fulton Street, 4th Floor, New York, New York 10038-2100. As used in this table, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from March 31, 2002 through the exercise of any option or warrant. Shares of Common Stock subject to options or warrants that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding such options or warrants, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based upon 7,797,593 shares of Common Stock outstanding as of March 31, 2002. (2) Includes 145,508 shares beneficially owned by Mr. Friedensohn issuable upon the exercise of options to purchase Common Stock. (3) Includes 35,000 shares of Common Stock beneficially owned by Mr. Woods issuable upon the exercise of options to purchase Common Stock. (4) Based solely on information contained in Schedule 13D/A dated December 12, 2001 filed with the Commission. Ruben Azrak is the sole managing member of BS Acquisition Group LLC, a Delaware limited liability company. Item 13. Certain Relationships and Related Transactions In February 2001, Bigstar repurchased the 1,428,571 shares of Common Stock from ValueVision, a former principal stockholder. 5 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. a. The following documents are filed as part of this report: (1) Financial Statements as of December 31, 2001, 2000 and 1999 together with Auditors' Report. See page F-1. (F) Financial Statement Schedule. See Page F-1. (3) Exhibits are incorporated herein by reference or are filed with this report as indicated below (numbered in accordance with Item 601 of regulation S-K). Exhibit Number Description and Method of Filing ------- ------------------------------------------------------- 3.1 Certificate of Incorporation.* 3.2 Certificate of Amendment to Certificate of Incorporation.* 3.3 Certificate of Amendment to Certificate of Incorporation.* 3.4 Form of Bigstar's Common Stock Certificate.* 10.1 Form of Indemnification Agreement.* 10.2 1998 Stock Option and Incentive Plan.* 10.3 Amended 1999 Stock Option and Incentive Plan.* 10.4 Employment Agreement dated March 15, 1999, by and between David Friedensohn and Bigstar.* 10.5 Distribution Agreement dated February 18, 1998 by and between Baker & Taylor and Bigstar.* 10.6 Strategic Marketing Agreement dated as of May 1999 by and between Baker & Taylor and Bigstar.* 10.7 Rights Agreement among Bigstar and each of the stockholders identified therein.* 10.8 Agreement of Lease dated February, 1999, between Seaport Associates, LP and Bigstar.* 10.9 1999 Employee Stock Purchase Plan.* 21.1 Subsidiaries.** 23.1 Consent of Arthur Andersen LLP, Independent Public Accountants** 23.2 Consent of Grant Thornton LLP, Independent Public Accountants ---------- * Incorporated by reference to Bigstar's registration statement on Form S-1, Registration No. 333-77963. ** Previously filed. b. On February 15, 2002, Bigstar filed a form 8-K to report that its Board of Directors had terminated the letter of intent with Athlete.com, Inc. and all further negotiations with respect to the previously announced merger transaction between the parties. 6 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized as of the 15th day of April 2002. Bigstar Entertainment, Inc. By: /s/ DAVID FRIEDENSOHN ------------------------------------- David Friedensohn Chief Executive Officer and Chairman of the Board and Principal Accounting Officer 7

BIGSTAR ENTERTAINMENT INC /NY 10-K/A