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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMUNITRONICS OF AMERICA, INC.
----------------------------------------------
(Name of Small Business Issuer in its charter)
UTAH 86-0285684B
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
27955 HIGHWAY 98, SUITE WWX
DAPHNE, ALABAMA 36526
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(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER: (334) 626-7650
SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT: NOT APPLICABLE
SECURITIES TO BE REGISTERED UNDER SECTION 12(g) OF THE ACT: COMMON STOCK, $.01
PAR VALUE
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PART I
Communitronics of America, Inc. (the " Company") is including the
following cautionary statement regarding any forward-looking statements made
by, or on behalf of, the Company. Forward-looking statements include
statements concerning plans, objectives, goals, strategies, expectations,
future events or performance and underlying assumptions and other statements
which are other than statements of historical facts. Certain statements
contained herein are forward- looking statements and, accordingly, involve
risks and uncertainties which could cause actual results or outcomes to
differ materially from those expressed in the forward-looking statements. The
Company's expectations, beliefs and projections are expressed in good faith
and are believed by the Company to have a reasonable basis, including without
limitations, management's examination of historical operating trends, data
contained in the Company's records and other data available from third
parties, but there can be no assurance that management's expectations,
beliefs or projections will result or be achieved or accomplished. In
addition to other factors and matters discussed elsewhere herein, the
following are important factors that, in the view of the Company, could cause
actual results to differ materially from those discussed in the
forward-looking statements: the ability of the Company to maintain its rights
in its intellectual property; the ability of the Company to obtain acceptable
forms and amounts of financing to fund planned acquisitions and operations,
technology development, marketing and other expansion efforts; and the global
market for its products and communications services. The Company has no
obligation to update or revise these forward-looking statements to reflect
the occurrence of future events or circumstances.
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL BACKGROUND
Communitronics of America, Inc. (formerly called Oneida General
Corporation) (the "Company"), is a Utah corporation incorporated on September
21, 1970. The name of the corporation was changed to Communitronics of America,
Inc. on October 26, 1998, and had been previously changed from Industrial Sales
and Marketing Corporation on February 16, 1979.
In October 1998, the Company acquired 100% of the issued and
outstanding stock of Communitronics Inc. and its directly and wholly owned
subsidiaries, Crescent Paging, Inc. and Radio Systems, Inc. in exchange for
5,500,000 shares of restricted Common Stock of the Company. In connection
with the transaction, the previous directors and officers of the Company
canceled 3,000,000 of their shares without consideration. Following the
acquisition, the pre-existing shareholders of the Company owned approximately
42.2% of its issued and outstanding common stock. Following the acquisition,
the directors and officers of the Company completely changed to its present
management, and the Company commenced its current business as a provider of
wireless message paging systems and information delivery systems.
Prior to acquiring Communitronics, Inc. and its subsidiaries, the
Company had not conducted any material operations since 1985.
Communitronics, Inc. engaged in a reorganization with the Company because the
common stock of the Company was public traded over-the-counter (Electronic
Bulletin Board), and it believed that a public market for its securities
would facilitate raising capital in future securities offerings and
facilitate the acquisition of other companies in the industries.
In December 1998, the Company acquired all of the issued and
outstanding stock of Data Paging, Inc. in exchange for 250,000 shares of
restricted Common Stock of the Company.
OPERATIONS
The Company is a provider of wireless message paging and information
delivery services. Wireless message paging is comprised of numeric paging
that permits a pager to register the telephone number of the caller to the
customer. Information delivery systems is comprised of both numeric paging
and text messaging services.
The Company has a network of 14 radio towers (one tower is owned by
the Company and 13 towers are leased) to deliver wireless messaging services
in the coastal regions of Alabama, Louisiana, Mississippi and the Florida
panhandle. The Company owns seven Certificates of Public Convenience and
Necessity issued by the Alabama Public Service Commission and 34 frequencies
licensed by the Federal Communications Commission. These certificates and
licenses allow the
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Company to provide wireless messaging services in these geographic areas.
The Company supports its operations from its executive offices in
Daphne, Alabama, and from its operation offices located in Foley, Alabama;
Metaerie, Louisiana; Gulfport, Mississippi; and Pascagoula, Mississippi.
The geographic areas served by the Company covers approximately
10,000,000 persons. In its markets, the Company presently serves
approximately 5,000 subscribers to its message paging and information
delivery services at June 30, 1999.
STRATEGY
Historically, the Company has focused on the acquisition and
operation of message paging systems in smaller cities and rural areas in the
southeastern United States. The Company's acquisition of licenses enables it
to significantly expand both its customer base and geographic coverage and to
offer enhanced paging and communications services. The Company's initial
focus with its licenses has been, and will continue to be, to commence
operations in the most densely populated areas within its systems. The
Company believes that it is the optimum technology for rural, less densely
populated areas because they are less susceptible to competition and have
greater capacity for future growth than most major markets because such areas
are generally considered by large competitors to be less desirable than large
metropolitan cities, and that its equipment has the optimum technology for
more densely populated urban areas where analog systems are more expensive to
deploy and face potential capacity constraints. The Company has entered its
markets at a relatively low cost.
Communitronics of America, Inc., "The Company" believes that the
price of its common stock has been adversely affected by it removal from the
trading privileges and advantages of being listed on the NASD's Electronic
Bulletin Board over-the-counter market, and thereafter being listed in the
pink-sheet over-the-counter market. This removal occurred because of a change
in the listing requirements of the NASD which currently requires listed
companies to be registered as public companies under the Securities Act of
1934. As a result, the trading price of the Company's common stock declined.
The Company has been unable to pay the selling stockholders of Crescent
Paging, Inc. the full consideration due under the purchase agreement. The
Company also believes that the selling stockholders have not performed their
services nor operated Crescent Paging, Inc. as required under the terms of
the purchase agreement. As a result, it may become necessary for the Company
to initiate an arbitration proceeding to resolve its dispute with the selling
stockholders of Crescent Paging, Inc.
Management believes that upon re-listing of its shares on the NASD
Electronic Bulletin Board, and when the shares begin trading in a fair
market, this dispute will be resolved.
In December 1998, the Company acquired all of the issued and
outstanding shares of capital stock of Data Paging, Inc., a Mississippi
corporation, from its sole shareholder in exchange for 250,000 restricted
shares of Common Stock of the Company at an agreed upon value of $500,000.
The selling stockholder retained a security interest in the stock of Data
Paging, Inc. until such time as he sells the Common Stock of the Company for
a minimum of $500,000 ($2.00 per share) in reliance upon Rule 144 under the
Securities Act of 1933 after a one-year holding period or registration of
such securities, whichever first occurs. In the event the stock is sold for
less than $500,000, the Company is obligated to pay the difference in stock to
the former stockholder of Data Paging, Inc. Communitronics of America,
Inc.'s management has addressed the agreement with Ken Smith of Data Paging
and has mutually agreed, should it be necessary, to amend the agreement that
any adjustment would be in the form of 144 stock.
The Company's operating strategy has been to (i) achieve a critical
time-to-market advantage by rapidly constructing and commencing operations of
tower systems in urban areas within selected markets; (ii) continue to expand
its operations through increased subscriber growth and usage; (iii) utilize its
centralized management and back office functions to support the needs of its
subscribers, thereby further improving operating efficiencies and generating
greater economies of scale; and (iv) selectively acquire paging properties
primarily in contiguous markets. The Company is implementing its strategy by
continuing to build its systems, offer a wide range of products and services at
competitive prices, continually upgrade the quality of its network, establish
strong brand recognition, create a strong sales and marketing program tailored
to local markets and provide a superior level of customer service.
PAGING SERVICES
Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as cellular telephone, PCS and Enhanced
Specialized Mobilized Radio ("ESMR") networks. Historically, each application
has been licensed and operates in a distinct radio frequency block.
The Company's paging systems are primarily digital based systems.
Digital technology has been introduced in numerous markets. Analog technology
currently has several limitations, including lack of privacy and limited
capacity. Digital systems convert voice or data signals into a stream of digits
that is compressed before transmission,
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enabling a single radio channel to carry multiple simultaneous signal
transmissions. This enhanced capacity, along with improvements in digital
signaling, allows digital-based wireless technologies to offer new and enhanced
services, such as greater call privacy, and robust data transmission features,
such as "mobile office" applications (including facsimile, electronic mail and
wireless connections to computer/data networks, including the Internet).
The Company competes directly with existing paging and specialized
mobile radio services. The Company's services are not generally offered by
cellular providers, such as data transmissions to and from portable computers,
advanced paging services, e-mail and facsimile services.
The Company, and the wireless communications industry in general, have
historically experienced significant subscriber growth during the fourth
calendar quarter. The Company has historically experienced highest usage and
revenue per subscriber during the fall and winter months. The Company expects
these trends to continue.
OPERATION OF WIRELESS COMMUNICATION SYSTEMS
Wireless communication system service areas are divided into
multiple transmitter sites. Due to the frequencies in which they operate,
transmitter sites generally have a wider transmission radius than PCS cells.
Each transmitter site contains a transmitter, a receiver and signaling
equipment (the "Paging Site"). The Paging Site is connected by microwave or
land line telephone lines to a switch that uses computers to control the
operation of the communications system for the entire service area. The
system controls the transfer of messages as a subscriber's pager travels.
Wireless communications providers establish interconnection agreements with
local exchange carriers and interexchange carriers, thereby integrating their
system with the existing landline communications system.
Pagers are functionally compatible with systems of the same
frequency in all markets within the United States. As a result, pagers may be
used wherever a subscriber is located, as long as a the system is operational
in the area. Paging system operators normally agree to provide service to
subscribers from other paging systems who are temporarily located in or
traveling through their service areas. Agreements among system operators
provide that the carrier that normally provides services to the roaming
subscriber pays the serving carrier at rates prescribed by the serving
carrier.
Although different systems utilize similar technologies and hardware,
they operate on different frequencies and use different technical and network
standards. As a result, it currently is not possible for users of one type of
system to "roam" on a different type of system outside their service area, or to
hand off calls from one type of system to another. This will also be true for
pager subscribers seeking to roam in a service area served by operators using
different frequencies.
PAGING OPERATIONS
The Company owns 100% of each of its frequency licenses. In its
coastal markets, the Company's systems cover large contiguous geographic
areas with multiple Paging Sites, incorporating cost efficient technology.
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The Company's experience is that several inherent attributes of such
markets are attractive. Such attributes include high subscriber growth rates,
population bases of customers with substantial needs for wireless
communications, the ability to cover larger geographic areas with fewer
Paging Sites than is possible in urban areas, less intense competitive
environments and less vulnerability to competition.
PAGING MARKETS AND SYSTEMS
The Company presently owns approximately 60, FCC-licensed
frequencies of which 37 are presently operated by the Company, for its
wireless message paging services in the southeast and Gulf Coastal areas of
the United States. The Company intends to focus on the national frequency of
152.630. However, it also uses several other frequencies wherever necessary
in Alabama, Florida, Louisiana and Mississippi. The 152.630 frequency is a
nationally licensed frequency. The Company intends to expand its operations
in these and other states, and to install new state-of-the-art paging
equipment with e-mail capabilities. The Company recently purchased equipment
with e-mail capabilities at a cost of approximately $150,000 which is being
deployed in its New Orleans and Baton Rouge, Louisiana markets.
The Company also has traffic passing agreements with other paging
companies that own the 152.630 license for Tennessee, and for parts of Alabama
and Mississippi not owned by the Company.
The Company's goal is to achieve significant market penetration by
aggressively marketing competitively priced wireless messaging services under
its proprietary brand names, offering enhanced services not generally provided
by other paging operators and providing superior customer service. In addition,
the Company is structured to be a low-cost provider of paging services by taking
advantage of the existing business infrastructure and business experience
established in connection with its other operations, including centralized
management, marketing, billing and customer service functions, and by focusing
on efficient customer acquisition and retention.
SPECIALIZED MOBILE RADIO LTR TRUNKING
Specialized mobile radio (SMR) transmissions are broadcast over
either 400 MHZ, 800 MHZ or 900 MHZ frequencies. These frequencies have
limited spectrum which means a limited number of customers can be served
using the available frequencies. Because a majority of the 800 MHZ channels
in New Orleans, Louisiana have been acquired by Nextel, Nextel is in a unique
position to control the SMR market and telephone interconnect because of the
limited nature of the remaining frequencies. This limits the number of
customers that can be served by the Company.
During 1998, Nextel announced the discontinuance of providing analog
transmission (5 KHz). For their customers who currently use analog equipment,
this decision will require them to purchase new digital equipment at a
substantial cost and will raise their monthly recurring fee.
The Company has recently acquired eleven 800 MHZ channels. These
channels will allow the Company to provide the best quality in dispatch and
telephone interconnect communications to commercial and industrial users. The
advantage of the 800 MHZ over the newly granted 900 MHZ spectrum is full 5 KHz
deviation which translates into better quality and increased range. These eleven
channels can support approximately 2000 to 2500 users with many options not
available in conventional dispatch systems.
In addition to the 800 MHZ channels, the Company controls eight UHF
(450 MHZ) dispatch channels. These channels are presently conventional. Over the
next 3 to 4 months, the Company will convert these channels into LTR trunking
format. The conversion will allow the Company to provide existing as well as
future customers with the best quality communication available today.
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The Company plans to exploit these channels in New Orleans by offering
to customers the choice of continuing analog transmission. These customers'
equipment can easily be re-fitted to operate on the Company's channels thereby
eliminating the need to replace equipment. Because of limited spectrum, these
channels become more valuable as time passes.
The principal customers of the Company for its SMR transmission
services are small businesses such as taxi companies, delivery companies,
trade contractors and service companies that have fleets of vehicles.
TWO-WAY RADIO SALES AND SERVICE
The Company is an authorized dealer for Kenwood, ICOM, and
Yeasu/Standard. As a dealer, the Company is authorized to sell and service these
manufacturers two-way radios. The Company targets organizations that have their
own frequencies, such as governmental agencies, hospitals, etc., for two-way
radio sales. In addition, the Company has a fully-staffed service department
that repairs and maintains equipment sold.
MARKETING, SALES AND CUSTOMER SERVICE
The Company's sales and marketing strategy is to generate continued net
subscriber growth and increased subscriber revenues. In addition, the Company
targets a customer base which it believes is likely to generate higher monthly
service revenues, while attempting to achieve a low cost of adding new
subscribers. The Company markets its services under its proprietary brand names,
and sells its products and services through a combination of direct and indirect
distribution channels.
The Company markets its message paging services and products primarily
in the southeastern United States.
Initially, the Company intends to concentrate its marketing efforts
primarily on businesses and individuals "on- the-go", which would benefit from
integrated mobile voice, message and wireless data transmission capabilities,
who would most benefit from enhanced features and services.
SALES
The Company sells its products and services through a combination of
direct and indirect channels. The Company operates four sales offices (which
also serve as retail sales locations). The Company utilizes a direct sales force
of 12 persons based out of these offices, who are trained to educate new
customers on the features of its products. Sales commissions generally are
linked both to subscriber revenue and subscriber retention, as well as
activation levels.
The Company believes that its sales offices provide the physical
presence in local markets necessary to position the Company as a quality local
service provider, and give the Company greater control over both its costs and
the sales process. The Company also intends to utilize indirect sales through a
network of local merchant and specialty retailers. The Company intends to
continue to use a combination of direct and indirect sales channels, with the
mix depending on the demographics of each particular market.
In addition, the Company acts as a retail distributor of pagers and
radios, and maintains inventories.
CUSTOMER SERVICE
Customer service is a significant element of the Company's operating
philosophy. The Company is committed
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to attracting and retaining subscribers by providing consistently superior
customer service. At its headquarters in Daphne, Alabama, the Company maintains
a sophisticated monitoring and control system, a staff of customer service
personnel and a well-trained technical staff to handle both routine and complex
questions as they arise.
The Company believes that it helps manage customer retention and
attrition through an outreach program by its sales force and customer service
personnel. This program not only enhances subscriber loyalty, but also
increases add-on sales and customer referrals. The outreach program allows
the sales staff to check customer satisfaction, as well as to offer
additional services.
SUPPLIERS AND EQUIPMENT VENDORS
The Company does not manufacture any of the pagers or equipment used in
the Company's operations. The high degree of compatibility among different
manufacturer's models of pagers and Paging Site equipment allows the Company to
design, supply and operate its systems without being dependent upon any single
source of such equipment. The pagers and Paging Site equipment used in the
Company's operations are available for purchase from multiple sources, and the
Company anticipates that such equipment will continue to be available in the
foreseeable future. The Company currently purchases pagers primarily from
Motorola, Inc. and Ericsson Inc. The Company currently purchases Paging Site and
switching equipment primarily from Motorola, Inc. and Glenayre, Inc.
COMPETITION
Competition for subscribers among wireless licensees is based
principally upon the services and features offered, the technical quality of the
wireless system, customer service, system coverage, capacity and price.
The Company's business will directly competes with existing service
providers in its markets, many of which have been operational for a longer
period of time and have significantly greater financial technical resources than
those available to the Company and who may upgrade their systems to provide
comparable services in competition with the Company's systems.
In the future, in its markets the Company may face increased
competition from entities providing other communications technologies and
services. Although some of these technologies and services are currently
operational, such as mobile phones, telecopy services, and e-mail, other
technologies may be developed in the future.
Continuing technological advances in communications and FCC policies
that encourage the development of new technologies may result in additional
competition.
GOVERNMENTAL REGULATION
The FCC regulates the licensing, construction, operation, acquisition
and sale of message paging systems in the United States pursuant to the
Communications Act of 1934 (the "Communications Act"), as amended from time to
time, and the rules, regulations and policies promulgated by the FCC thereunder.
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All paging licenses will be granted for a 10-year period, at the end of
which they must be renewed.
TRANSFERS AND RENEWALS OF LICENSES
The Communications Act and FCC rules require the FCC's prior
approval of the assignment or transfer of control of a license for a system.
In addition, the FCC has established transfer disclosure requirements that
require licensees who transfer control of or assign a license within the
first three years of their license term to file associated contracts for
sale, option agreements, management agreements or other documents disclosing
the total consideration that the licensee would receive in return for the
transfer or assignment of its license. Non-controlling interests in an entity
that holds a license generally may be bought or sold without FCC approval.
Certain acquisitions or sales by the Company of its interests may also
require the prior approval of federal, state or local regulatory authorities
having competent jurisdiction.
Generally, the FCC has granted most applicants' renewal applications
upon a demonstration of compliance with FCC regulations and adequate service
to the public. The FCC has granted every renewal application that the Company
has filed, and all of the Company's licenses were renewed for a 10-year period
ending April 2008. Although the Company is unaware of any circumstances which
might prevent the grant of any future renewal applications, no assurance can
be given that any of the Company's licenses will be renewed by the FCC.
Furthermore, although revocation and involuntary modification of licenses are
extraordinary regulatory measures, the FCC has the authority to restrict the
operation of licensed facilities or to revoke or modify licenses. None of the
Company's licensees have ever been revoked or modified involuntarily by the
FCC.
The Communications Act requires licensees such as the Company to
obtain prior approval from the FCC for the assignment or transfer of control
of any construction permit or license or any rights thereunder, including in
the context of acquisition of other paging companies by the Company and
transfers by the Company of a controlling interest in any of its licenses or
construction permits or any rights thereunder. In addition, prior FCC
approval would be required in connection with any transfer of control of the
Company or, in certain circumstances, the acquisition of fifty percent (50%)
or more of the equity of the Company by a single entity or two or more
entities under common control. The FCC has approved each acquisition and
transfer of control for which the Company has sought approval in the past.
The Company also regularly applies for FCC authority to use
additional frequencies, modify the technical parameters of existing licenses,
expand its service territory and provide new services under existing FCC
Rules. Although there can be no assurance that future requests for approval
or applications filed by the Company will be approved or acted upon in a
timely manner by the FCC, or that the FCC will grant such requests or
applications, the Company knows of no reason to believe any such requests or
applications will not be approved or granted.
When FCC approval is required, whether in connection with a renewal
application, a transfer of control or assignment of license application or an
application for new or modified CMRS facilities for which prior FCC
authorization is required, any interested party may file a petition to
dismiss or deny the application. Pursuant to the Communications Act, such
application cannot be acted upon until the petition is dismissed or denied by
the FCC or withdrawn or dismissed by the petitioner. Moreover, any such FCC
approval or authorization is subject to the filing of petitions for
reconsideration and other administrative and judicial appeal processes.
Although the Company does not believe that any such petition or appeal will be
granted by the FCC that would result in a material adverse effect on the
Company, the Company can give no assurance that such petitions and/or appeals,
to be filed in the future, may not be granted by the FCC resulting in a
material adverse effect on the Company.
FOREIGN OWNERSHIP
Under existing law, no more than 20% of an FCC licensee's capital stock
may be owned, directly or indirectly, or voted by non-US citizens or their
representatives, by a foreign government or its representatives or by a foreign
corporation. Because the Company itself does not hold any FCC license but
instead controls other companies which themselves hold the licenses (which is
the current and intended structure), up to 25% of the Company's capital stock
may be owned or voted by non-US citizens or their representatives, by a foreign
government or its representatives or by a foreign corporation. Alien ownership
above the 25% level may be allowed should the FCC find such higher levels not
inconsistent with the public interest. If foreign ownership of the Company were
to exceed the 25% level, the FCC could revoke the company's FCC licenses,
although the Company could seek a declaratory ruling from the FCC allowing the
foreign ownership or take other actions to reduce the Company's foreign
ownership percentage in order to avoid the loss of its licenses. The Company has
no knowledge of any percent foreign ownership in violation of these
restrictions.
TELECOMMUNICATIONS ACT OF 1996 AND OTHER INDUSTRY DEVELOPMENTS
On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecommunications Act") was signed into law, substantially revising the
regulation of communications. The goal of the Telecommunications Act is to
enhance competition and remove barriers to market entry, while deregulating the
communications industry to the greatest extent possible. To this end, local and
long-distance communications providers and paging companies will, for the first
time, be able to compete in other's market, and telephone and cable companies
will likewise be able to compete. To facilitate the entry of new carriers into
existing markets, the Telecommunications Act imposes certain interconnection and
equal access requirements on incumbent carriers. Additionally, all
communications carriers providing interstate communications services must
contribute to the federal universal service support mechanisms that the FCC will
establish. The Company cannot predict the outcome of the FCC's rulemaking
proceedings to promulgate regulations to implement the new law or the effect of
the new regulations and there can be no assurance that such regulations will not
adversely affect the Company's business or financial condition.
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At present, cellular providers, other than the regional Bell operating
companies, have the option of using only one designated long distance carrier.
The Telecommunications Act codifies the policy that CMRS providers will not be
required to provide equal access to long distance carriers. The FCC, however,
may require CMRS carriers to offer unblocked access (i.e., implemented by the
subscriber's use of a carrier identification code or other mechanisms at the
time of placing a call) to the long distance provider of a subscriber's choice.
The FCC has terminated its inquiry into the imposition of equal access
requirements on CMRS providers.
On August 1, 1996, the FCC released a Report and Order expanding the
flexibility of cellular, PCS and other CMRS providers to provide fixed as well
as mobile services. Such fixed services include, but need not be limited to,
"Wireless local loop" services, e.g., to apartment and office buildings, and
wireless backup to PVXs and local area networks, to be used in the event of
interruptions due to weather or other emergencies. The FCC has not yet decided
whether such fixed services should be subjected to universal service
obligations, or how they should be regulated, but it has proposed a presumption
that they be regulated as CMRS services.
On August 8, 1996, the FCC released its order implementing the
interconnection provisions of the Telecommunications Act of 1996. The FCC's
decision is lengthy and complex and is subject to petitions for reconsideration
and judicial review (as described below), and its precise impact is difficult to
predict with certainty. However, the FCC's order concludes that CMRS providers
are entitled to reciprocal compensation arrangements with local exchange
carriers ("LECs") and prohibits LECs from charging CMRS providers for
terminating LEC-originated traffic. The FCC's decision gives it broad authority
to regulate on the intrastate level, but states may impose additional
procompetitive rules beyond the minimum federal guidelines. Under these
guidelines, states must set arbitrated rates for interconnection and access to
unbundled elements based upon the LECs' long run incremental costs, plus a
reasonable share of forward-looking joint and common costs. In lieu of such
cost-based rates, the FCC has also established for use by states a benchmark
maximum range of 0.1-0.4 cents per minute for end office termination pending
further cost-based studies, and subject to a possible "true-up" payment later.
The FCC has also permitted states to impose "bill and keep" arrangements, under
which CMRS providers would make no payments for LEC termination of calls where
LECs and CMRS providers have symmetrical termination costs and roughly balanced
traffic flows. However, the FCC has found no evidence that these conditions
presently exist. The relationship of these charges to the payment of access
charges and universal service contributions has not yet been resolved by the
FCC. LECs and state regulators filed appeals of the interconnection order, which
have been consolidated in the US Court of Appeals for the Eight Circuit. The
Court has temporarily stayed the effective date of the pricing rules (including
the benchmark maximum of 0.2-0.4 cents described above) until more permanent
relief can be fashioned.
EMPLOYEES AND LABOR RELATIONS
The Company considers its labor relations to be good and, to the
Company's knowledge, none of its employees is covered by a collective bargaining
agreement. As of June 30, 1999, the Company employed a total of approximately
17 people in the following areas:
<TABLE>
<CAPTION>
Category Number of Employees
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<S> <C>
Sales and marketing ....................... 10
Engineering ............................... 4
General and administration, including
customer service ..................... 3
</TABLE>
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ITEM 2. PROPERTIES
The Company leases its principal executive offices (consisting of
approximately 3,000 square feet) located in Daphne, Alabama. The Company and its
subsidiaries and affiliates also lease three additional locations for local
operations and inventory storage, switching equipment and local sales and
administrative offices. The Company does not own any real property.
ANTICIPATED ACQUISITIONS
Given the size and highly fragmented composition of the industry,
the Company has identified the potential to acquire other companies and to
integrate their operations, management and marketing into the Company's
systems. Initially, the Company intends to expand its business through
selective, strategic acquisitions of other companies with complementary
businesses in a revenue range of $1 million to $3 million. Management
believes that companies in this range of revenues may be receptive to the
Company's acquisition program since often they are too small to be identified
as acquisition targets of larger public companies or to independently attempt
their own public offering. In particular, the Company intends to focus its
acquisition strategy on candidates which have a proven record of delivering
high-quality technical services and a customer base of mid-sized companies
that could benefit from the Company's access to anticipated sources of
financing and long-term growth strategy.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
RESULTS OF OPERATIONS
The following table sets forth certain operating information regarding
the Company:
<TABLE>
<CAPTION>
SIX MONTH
PERIOD ENDED
JUNE 30, 1999 YEAR ENDED YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
-------------- ----------------- -----------------
<S> <C> <C> <C>
Revenues $634,530 $1,156,731 $ -0-
Cost of Goods Sold $ 88,874 $ 256,790 $ -0-
Net Earnings (Loss) $ (2,443) $ (29,372) $37,719
Net Earnings (Loss) Per Share $ (.01) $ (.01) $ (.03)
</TABLE>
The following summary table presents comparative cash flows of the
Company for the fiscal years ended December 31, 1997 and December 31, 1998, and
for the six months ended June 30, 1999 (unaudited).
10
<PAGE>
<TABLE>
<CAPTION>
SIX MONTH
PERIOD ENDED
JUNE 30, 1999 YEAR ENDED YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998 DECEMBER 31, 1997
----------- ----------------- -----------------
<S> <C> <C> <C>
Net cash provided (used) in operating
activities $ 1,977 $ (132,179) $ 30,000
Net cash used in investing
activities $ (137,980) $ (143,792) $ 30,000
Net cash provided by financing
activities $ 118,055 $ 26,714 $ -0-
</TABLE>
The Company had cash balances totaling $31,865 at December 31, 1998,
and $13,917 at June 30, 1999.
CAPITAL EXPENDITURES
The Company has incurred capital expenditures for radio towers,
equipment and office furniture used in its operations. Capital expenditures at
December 31, 1998, totaled $661,069, and $780,425 at June 30, 1999, net of
accumulated depreciation.
CAPITAL RESOURCES
The Company's capital resources have been provided primarily by its
revenues from operations, and also from capital contributions and loans from its
stockholders. During fiscal 1998, the Company made an offering of its Common
Stock under Rule 504 of Regulation D under the Securities Act of 1933 which
realized $15,000 in cash subscriptions.
LIQUIDITY
The ability of Company to satisfy its obligations depend in part upon
its ability to reach a profitable level of operations.
ITEM 3. DESCRIPTION OF PROPERTY.
CORPORATE OFFICES
The Company currently leases its corporate offices located at 27955
Highway 98, Suite WW-X, Daphne, Alabama 36526. The lease agreement is for a five
year term and covers approximately 3,000 square feet. The monthly payments are
$1,650 which will increase 5% during the second and fifth year of the lease.
The Company also leases offices for three operation offices. In Foley,
Alabama, the Company leases approximately 600 square feet at $500 per month for
a two-year term. In Gulfport, Mississippi, the Company leases approximately 900
square feet at $675 per month for a one-year term. In New Metairie, Louisiana,
the Company leases approximately 2,000 square feet at $1,825 per month for a
three-year term.
11
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The total number of shares of Common Stock of the Company beneficially
owned by each of the officers and directors of the Company, and all of such
directors and officers as a group, and their percentage ownership of the
outstanding Common Stock of the Company as of June 30, 1999, are as follows:
<TABLE>
<CAPTION>
SHARES PERCENT OF
MANAGEMENT BENEFICIALLY COMMON
SHAREHOLDERS(1) OWNED(1) STOCK (1)
--------------- ------------ ----------
<S> <C> <C>
David R. Pressler.................................................. 5,240,500 (2) 66.9%
27955 Highway 98, Suite WW-X
Daphne, Alabama 36526
Samuel Mastrull.................................................... 286,000 (3) 3.7%
1118 Hatteras Circle
West Palm Beach, Florida 33413
James H. Flanagan.................................................. 5,000 .06%
3009 Artimese Avenue
Pascagoula, Mississippi
Charles H. Hillman................................................. 4,000 .01%
7190 Pullman Place
Mobile, Alabama 3669
Directors and officers as a group
(4 persons, including the above)................................ 5,535,500 70.7%
</TABLE>
- --------------------------------------
(1) Except as otherwise noted, it is believed by the Company that all
persons have full voting and investment power with respect to the
shares indicated. Under the rules of the Securities and Exchange
Commission, a person (or group of persons) is deemed to be a
"beneficial owner" of a security if he or she, directly or indirectly,
has or shares the power to vote or to direct the voting of such
security, or the power to dispose of or to direct the disposition of
such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security which that person has the right to
acquire within 60 days, such as options or warrants to purchase the
Common Stock of the Company.
(2) Includes 500,000 shares of Common Stock of the Company held by his wife
and his sons.
(3) Includes 1,000 shares of Common Stock of the Company owned by his wife
and 10,000 shares held as custodian for his grandchildren.
12
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to
the beneficial ownership of the Company's Common Stock by each shareholder
who beneficially owns more than five percent (5%) of the Company's Common
Stock, the number of shares beneficially owned by each and the percent of
outstanding Common Stock so owned of record as of June 30, 1999. It is
believed by the Company that all persons listed have sole voting and
investment power with respect to their shares, except as otherwise indicated.
<TABLE>
<CAPTION>
SHARES PERCENT OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING
OF BENEFICIAL OWNER TITLE OF CLASS OWNED COMMON STOCK
------------------- -------------- ------------ ------------
<S> <C> <C> <C>
David R. Pressler Common Stock 5,240,500 (2) 66.9%
27955 Highway 98, Suite WW-X
Daphne, Alabama 36526
Cede & Co. Common Stock 997,724 12.7%
P.O. Box 222, Bowling Green Station
New York, New York 10274
</TABLE>
- --------------------------------------
(1) Except as otherwise noted, it is believed by the Company that all
persons have full voting and investment power with respect to the
shares indicated. Under the rules of the Securities and Exchange
Commission, a person (or group of persons) is deemed to be a
"beneficial owner" of a security if he or she, directly or indirectly,
has or shares the power to vote or to direct the voting of such
security, or the power to dispose of or to direct the disposition of
such security. Accordingly, more than one person may be deemed to be a
beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security which that person has the right to
acquire within 60 days, such as options or warrants to purchase the
Common Stock of the Company.
(2) Includes 500,000 shares of Common Stock of the Company held by his wife
and his sons.
(3) Cede & Co. is a nominee holder of shares of Common Stock of the Company
as a depository for brokerage firms and others.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --- --- --------
<S> <C> <C>
David R. Pressler 54 Chairman of the Board, Director, Chief Executive Officer and President
Samuel Mastrull 71 Director, Chief Financial Officer and Secretary
James H. Flanagan 70 Director
Charles H. Hillman 39 Director
</TABLE>
13
<PAGE>
There is no family relationship between or among the above directors
and officers.
Mr. Pressler became Chairman of the Board, Chief Executive Officer,
and President of the Company on October 26, 1998, following the Company's
acquisition of all of the issued and outstanding stock of Communitronics,
Inc. He founded and was the President of Communitronics, Inc. from 1975 until
its acquisition by the Company. Mr. Pressler holds an FCC Master Radio
Engineer Rating with radar endorsement. He is a certified engineer (EI-0216),
and is a senior member of the National Association of Radio and
Telecommunications Engineers.
Mr. Mastrull became a director and the Chief Financial Officer and
Secretary of the Company on October 26, 1998. From 1995 to 1997, he was a
registered representative with the securities firm of Joseph Charles
Investment Bankers. From 1987 to 1995, he was the owner and President of
Compliance Technology, Inc. which assisted companies seeking financing from
lending institutions. From 1976 to 1987, Mr. Mastrull was an ombudsman
employed by the State of News Jersey. From 1962 to 1976, Mr. Mastrull was a
registered representative employed by several securities brokerage firms. Mr.
Mastrull received a business administration degree from Drake College in
1995.
Mr. Flanagan became a director of the Company on October 26, 1998.
He is presently retired. From 1957 to 1997, he was the President and co-owner
of Pascagoula Drug Company, a pharmacy company in Pascagoula, Mississippi.
Mr. Flanagan received a pharmacy degree from the University of Mississippi in
1955.
Mr. Hillman became a director of the Company on October 26, 1998.
From July 1995 to the present, he has been a partner in the law firm of
Ulmer, Hilman, Ballard and Nikolakis, P.G., in Mobile, Alabama. From 1990 to
July 1995, he was an attorney in the law firm of Brown Hudgens P.C. From 1984
to 1990, Mr. Hillman was an attorney in the Judge Advocates General division
of the U.S. Army. Mr. Hillman graduated from Mississippi State University
with a B.S. degree in 1981, and graduated from the University of Mississippi
School of Law in 1984.
ITEM 6. EXECUTIVE COMPENSATION.
No executive officer or director of the Company received compensation
in excess of $100,000 during its fiscal year ended December 31, 1998. David R.
Pressler, the President of the Company, presently receives compensation of
approximately $21,000 per year.
The Company does not presently have any pension plan, profit sharing
plan, or similar plans for the benefit of its officers, directors or employees.
However, the Company reserves the right to establish any such plans in the
future.
Directors of the Company who do not serve as officers thereof are not
currently compensated by the Company for meeting attendance or otherwise, but
are entitled to reimbursement for their travel expenses. The Company does not
pay additional amounts for committee participation or special assignments of the
Board of Directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with the reorganization of the Company in October 1998
and the acquisition of Communitronics, Inc. and its subsidiaries, David R.
Pressler, a director and President of the Company, received 4,715,500 shares
of Common Stock of the Company; and Sam Mastrull, a director and Chief
Financial Officer of the Company, received 116,500 shares of Common Stock of
the Company.
At June 30, 1999, the Company had a note payable to David R.
Pressler, a director, President and majority stockholder of the Company in
the amount of $247,678. The note bears interest at 10% and is due on June 30,
2000.
14
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES.
The Company is authorized to issue 50,000,000 shares of Common
Stock, $.01 par value. At June 30, 1999, there were 7,829,936 shares of
Common Stock issued and outstanding.
There were 488 stockholders of record of the Common Stock of the
Company as of June 30, 1999.
COMMON STOCK
Holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors, out of funds legally
available, without any preference. Holders of Common Stock are entitled to
one vote per share. Cumulative voting is not allowed for purposes of the
election of directors. Thus, the holders of more than 50% of the shares
voting for directors can elect all directors. The holders of the Common Stock
of the Company have no preemptive rights to purchase new issues of the
securities of the Company. There are no redemption or conversion features
attached to the Common Stock.
At the present time, the Company does not intend to pay any
dividends on its Common Stock.
Upon liquidation or dissolution of the Company, holders of Common
Stock are entitled to receive pro rata, either in cash or in kind, all of the
assets of the Company after payment of debts.
WARRANTS AND OPTIONS
As of July 31, 1999, there were no outstanding warrants or options
to purchase shares of Common Stock of the Company.
UTAH CORPORATE LAW
The Company is a Utah corporation, and may become subject to the
anti-takeover provisions of the Utah Revised Business Corporation Act (the
"Utah Law"). In general, Utah Law prevents take-over offers to acquire equity
securities of a Utah corporation if the offeror would become a beneficial
owner of more than 20% of any class of outstanding equity securities, and
other similar provisions, subject to certain exceptions such as the written
approval of the board of directors. The existence of these provisions would
be expected to have an anti-takeover effect, including attempts that might
result in a premium over the market price for the shares of Common Stock held
by stockholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock of the Company
is Progressive Transfer Company, 1981 East Murray-Holladay Road, Suite 100,
Salt Lake City, Utah 84117-5126; telephone (801) 272-9294.
15
<PAGE>
REPORTS TO STOCKHOLDERS
The Company will furnish its shareholders with annual reports
containing the consolidated financial statements of the Company examined by
independent certified public accountants. The Company presently intends to
issue unaudited quarterly reports and may distribute other reports to the
stockholders as it deems appropriate.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
GENERAL
The Common Stock of the Company is presently traded in the
pink-sheet over-the-counter market, and is quoted under the symbol BEEP.
MARKET PRICE
When the trading price of the Company's Common Stock is below $5.00
per share, the Common Stock is considered to be "penny stocks" that are
subject to rules promulgated by the Securities and Exchange Commission (Rule
15g-1 through 15g-9) under the Securities Exchange Act of 1934. These rules
impose significant requirements on brokers under these circumstances,
including: (a) delivering to customers the Commission's standardized risk
disclosure document; (b) providing to customers current bid and offers; (c)
disclosing to customers the brokers-dealer and sales representatives
compensation; and (d) providing to customers monthly account statements.
The following table sets forth the range of high and low closing bid
prices per share of the Common Stock of the Company as reported by National
Quotation Bureau, L.L.C. for the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31, 1998 High Bid(1) Low Bid(1)
- ---------------------------- -------- -------
<S> <C> <C>
3rd Quarter.......................... Unpriced Unpriced
4th Quarter.......................... $3.0625 $2.00
Year Ending December 31, 1999
- -----------------------------
1st Quarter (1)...................... $3.00 $1.50
2nd Quarter.......................... $2.75 $.8125
</TABLE>
- -------------------------------------------
(1) The Company is unaware of the factors which resulted in the significant
fluctuations in the prices per share during the periods being
presented, although it is aware that there is a thin market for the
Common Stock, that there are frequently few shares being traded and
that any sales activity significantly impacts the market.
The closing bid and ask prices of the Common Stock of the Company on
August 11, 1999, were $.562 and $1.125, respectively.
16
<PAGE>
DIVIDENDS
The Company has not paid any dividends on its Common Stock and does
not expect to do so in the foreseeable future. The Company intends to apply
its earnings, if any, in expanding its operations and related activities.
The payment of cash dividends in the future will be at the
discretion of the Board of Directors and will depend upon such factors as
earnings levels, capital requirements, the Company's financial condition and
other factors deemed relevant to the Board of Directors. In addition, the
Company's ability to pay dividends may become limited under future loan
agreements of the Company which may restrict or prohibit the payment of
dividends.
ITEM 2. LEGAL PROCEEDINGS.
The Company may become subject to legal proceedings and claims which
arise in the ordinary course of business. The Company's management does not
expect that the results in any of these legal proceedings will have a
material adverse effect on the Company's financial condition or results of
operations.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On June 15, 1997, the Registrant authorized the issuance of 2,000,000
shares of Common Stock to Ken Kurtz, the President and Secretary of the
Registrant, for services in reliance upon Section 4(2) of the Securities Act
of 1933. These shares were canceled by agreement effective October 26, 1998.
Effective November 10, 1997, the Registrant issued 500,000 shares of
Common Stock to Carrie Kurtz, the Vice President of the Registrant, and
500,000 shares to Tammy Gehring, the Secretary and Treasurer of the
Registrant, as compensation for services in reliance upon Section 4(2) of the
Securities Act of 1933. These shares were canceled by agreement effective
October 26, 1998.
In September 1998, the Registrant issued 1,303,500 shares of
Common Stock for $.10 per share in the aggregate amount of $130,350
(including the forgiveness of contract obligations) to three persons in
reliance upon Rule 504 of Regulation D under the Securities Act of 1933.
These three persons were Type Investment Holdings, Ltd. (435,000 shares),
Lexington Sales Corporation Limited (435,000 shares), and Samuel and Carol
Mastrull (433,500 shares).
In October 1998, the Company issued a total of 5,500,000 shares of
its Common Stock in exchange for all of the issued and outstanding common
stock of Communitronics, Inc., an Alabama corporation, which became a wholly
owned subsidiary of the Company. The following stockholders received common
stock of the Company in this stock exchange: David R. Pressler (4,715,500
shares), Ron Scalise (250,000 shares), R. Allen Gallagher (167,200 shares),
Sam and Carol Mastrull (116,500 shares), Clayton Daigle (125,000 shares), and
J. Cody Pressler (125,000 shares). The exchange was made in reliance upon
Section 4(2) of the Securities Act of 1933.
In December 1998, the Company issued 250,000 shares of its
Common Stock to Mr. Kenneth E. Smith, the sole stockholder of Data Paging,
Inc. for all of its issued and outstanding stock and its assets in reliance
upon Section 4(2) of the Securities Act of 1933. Mr. Smith is an experienced
and sophisticated businessman and investor.
In fiscal 1998, the Company issued 150,000 shares of its Common
Stock to Arthur Malone for $15,000 in a limited offering made in reliance
upon Rule 504 of Regulation D under the Securities Act of 1933. The Company
filed Form D with the Securities and Exchange Commission regarding this
transaction.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The provisions of the Utah Revised Business Corporation Act provides
for the indemnification of the directors and officers of the Company. These
provisions generally permit indemnification of directors and officers against
certain costs, liabilities and expenses of any threatened, pending or
completed action, suit or proceeding that any such person may incur by reason
of serving in such positions if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such persona had been
adjudged to be liable to the corporation, unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application
17
<PAGE>
that, despite the adjudication of liability but in view of all the
circumstance of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which a court shall deem proper. Any
determination that indemnification of a director or an officer, unless
ordered by the court, must be made by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though less than a
quorum; or by a committee of such directors designated by majority vote of
such directors even though less than a quorum; or if there are no such
directors, or if such directors so direct, by independent legal counsel in a
written opinion; or by the stockholders.
18
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
- -------
<S> <C> <C>
2............................................................. Reorganization Agreement dated October 1,
1998, between Oneida General Corporation
and Communitronics, Inc. is incorporated
by reference to Exhibit 10(a) to Form 10-SB
Registration Statement of the Registrant
3(i) Articles of Incorporation of the Registrant....... Incorporated by reference to Exhibit 3(i)
of the Form 10-SB Registration Statement of
the Registrant
3(ii) Amendments to Articles of Incorporation........... Incorporated by reference to Exhibit 3(ii)
of the Form 10-SB Registration Statement of
the Registrant
3(iii) By-Laws of the Registrant......................... Incorporated by reference to Exhibit 3(iii)
of the Form 10-SB Registration Statement of
the Registrant
6 Material Contracts
10(a)......................................................... Purchase Agreement dated November 23, 1998,
to acquire Data Paging, Inc. is incorporated
by reference to Exhibit 10(b) to Form 10-SB
Registration Statement of the Registrant
10(b)......................................................... Stock Exchange Agreement between the Registrant
and Ronald Scalise and Allson Gallagher dated
March 23, 1998 to acquire 100% of Crescent Paging,
Inc., excluding exhibits
11 Statement re: computation of per share earnings... Reference is made to the Consolidated
Statements of Operations of the Registrant
for its fiscal years ended December 31,
1998, and 1997, which are incorporated
herein by reference.
21 A description of the subsidiaries of the
Registrant........................................ Incorporated by reference to Exhibit 21
of the Form 10-SB Registration Statement
of the Registrant
23............................................................ Consent of Independent Accountants
27 Financial Data Schedule........................... Incorporated by reference to Exhibit 27
of Amendment No. 1 to the Form 10-SB
Registration Statement of the Registrant
</TABLE>
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this Post-Effective Amendment No. 1 to the
registration statement to be signed on its behalf by the undersigned,
hereunto duly authorized.
COMMUNITRONICS OF AMERICA, INC.
Date: December 28, 1999
By: S/S David R. Pressler S/S James H. Flanagan
---------------------------------- ----------------------------------
David R. Pressler James H. Flanagan
Director, President Director
And Chairman of the Board of
Directors
S/S Samuel Mastrull S/S Charles H. Hillman
---------------------------------- ----------------------------------
Samuel Mastrull Charles H. Hillman
Director, Secretary and Director
principal accounting officer
20
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Financial Statements
and Accompanying
Information
for the year ended
December 31, 1998
and
for the three months ended
March 31, 1999
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report F-2
Consolidated Balance Sheets F-3 - 4
Consolidated Statements of Operations F-5
Consolidated Statements of Stockholders' Equity F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8 - F-15
Accompanying Information
Independent Auditors' Report on Accompanying Information F-17
Schedule 1 - Consolidated Services, Rent and Maintenance Expenses F-18
Schedule 2 - Consolidated General and Administrative Expenses F-19
</TABLE>
With respect to the unaudited financial statements of the Company at
June 30, 1999, appearing herein, such statements have not been audited or
reviewed by Garner Prichard & Middleton, P.C., and that firm does not express
an opinion on them. Because the unaudited financial statements of the Company
as of June 30, 1999, included herein where prepared by management of the
Company, there is no assurance that material differences will not occur in
such information upon audit, although the Company believes such information
is correct and complete to the best of its knowledge and belief. The Company
has made all adjustments which in the opinion of management are necessary in
order to make the unaudited financial statements not misleading.
F-1
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Stockholders
Communitronics of America, Inc.
Spanish Fort, Alabama
We have audited the accompanying consolidated balance sheet of Communitronics
of America, Inc. as of December 31, 1998, and the related consolidated
statements of income, stockholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted audited
standards. These standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatements. An audit includes examining on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Communitronics of America, Inc. as of December 31, 1998, and the results of
its operations and its cash flows for the eight months then ended in
conformity with generally accepted accounting principles.
Garner Prichard & Middleton P.C.
February 26, 1999
Mobile, Alabama
F-2
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1999 1998
----------- -----------
<S> <C> <C>
Assets
Current assets
Cash $ 13,917 $ 31,865
Accounts receivable - trade, less allowance
for doubtful accounts of $1,045 for
1998 and 1999 (note 2) 103,578 130,778
Inventory 163,129 70,524
Due from stockholder 5,574 45,857
----------- -----------
Total current assets 286,198 279,024
Property and equipment, at cost, net of
accumulated depreciation (note 3) 780,475 661,069
Acquisition earnest deposits 336,305 -
Deposits 4,054 4,054
----------- -----------
$ 1,407,032 $ 944,147
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt (note 5) $ 68,707 $ 53,942
Accounts payable - trade 115,145 42,796
Payroll and sales taxes payable 9,595 9,790
Acquisition purchase price liability - 15,000
Due to officer - 7,500
----------- -----------
Total current liabilities 193,447 129,028
Long-term debt, less current maturities (note 5) 236,890 37,473
Note payable to stockholder 247,678 -
----------- -----------
Total liabilities 678,015 166,501
----------- -----------
</TABLE>
Commitments and contingencies (notes 5,6 and 12)
(continued)
F-3
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Balance Sheet (continued)
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1999 1998
----------- -----------
<S> <C> <C>
Liabilities and Stockholders' Equity (continued)
Stockholders' equity
Common stock, $.01 par value; 50,000,000 shares
authorized, 7,705,236 shares issued and outstanding
at June 30, 1999 and 6,987,936 shares issued and
outstanding at December 31, 1998 77,052 69,879
Common stock subscribed, $.01 par value; 717,300
shares pending issuance - 7,173
Additional paid-in capital 551,592 551,592
Retained earnings (note 7) 100,373 149,002
----------- -----------
Total stockholders' equity 729,017 777,646
----------- -----------
$ 1,407,032 $ 944,147
=========== ===========
</TABLE>
See accompanying notes to consolidated financial
statements and accountants' report
F-4
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Statement of Operations
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended June 30 December 31
1999 1998
------------ -----------
<S> <C> <C>
Services, rent and maintenance revenues $ 497,801 $ 761,980
Product sales 136,729 394,751
----------- -----------
Total revenues 634,530 1,156,731
Less cost of product sales 88,874 256,790
----------- -----------
Gross profit 545,656 899,941
----------- -----------
Operating expenses
Services, rent and maintenance 149,673 252,642
General and administrative 354,569 409,926
Depreciation 43,857 62,019
----------- -----------
Total operating expenses 548,099 724,587
----------- -----------
Operating income (loss) (2,443) 175,354
----------- -----------
Other expenses
Non-recurring charges (note 9) 42,707 200,354
Interest expense 3,479 4,372
----------- -----------
Total other expenses 46,186 204,726
----------- -----------
Net loss $ (48,629) $ (29,372)
=========== ===========
Net loss per share (note 10) $ (0.01) $ (0.01)
=========== ===========
</TABLE>
See accompanying notes to consolidated financial
statements and accountants' report
F-5
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Statement of Stockholders' Equity
For the Year Ended December 31, 1998
and
Six Months Ended June 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Common Additional Retained
Common Stock Paid-in Earnings Stockholders'
Stock Subscribed Capital (Deficit) Equity
--------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $ 31,844 $ -- $ 538,723 $(166,354) $ 404,213
Quasi-reorganization (note 7) -- -- (344,728) 344,728 --
Issuance of 1,303,500 shares of
common stock 13,035 -- 117,315 -- 130,350
Issuance of 5,500,000 shares of
common stock in connection
with acquisitions 55,000 -- -- -- 55,000
Cancellation of 3,000,000 shares
of common stock (30,000) -- -- -- (30,000)
Common stock subscribed -- 7,173 240,282 -- 247,455
Net loss -- -- -- (29,372) (29,372)
--------- ------- --------- --------- ---------
Balance, December 31, 1998 69,879 7,173 551,592 149,002 777,646
Issuance of 717,300 shares of
common stock 7,173 (7,173) -- -- --
Net loss -- -- -- (48,629) (48,629)
--------- ------- --------- --------- ---------
Balance, June 30, 1999 $ 77,052 $ -- $ 551,592 $ 100,373 $ 729,017
========= ======= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial
statements and accountants' report
F-6
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
Six Months Year Ended
Ended June 30 December 31
1999 1998
------------- -----------
<S> <C> <C>
Operating activities
----------- -----------
Net loss $ (48,629) $ (29,372)
----------- -----------
Adjustments to reconcile net loss to net
cash provided (used) by operating activities
Depreciation 43,857 62,019
Extinguishment of debt - (35,748)
(Increase) decrease in
Accounts receivable 27,200 (78,050)
Inventory (92,605) (16,577)
Increase (decrease) in
Bank overdraft - (19,416)
Accounts payable 72,349 (21,099)
Accrued expenses (195) 6,064
----------- -----------
Total adjustments 50,606 (102,807)
----------- -----------
Net cash provided (used) by operating activities 1,977 (132,179)
----------- -----------
Investing activities
Purchase of property and equipment (163,263) (112,935)
Acquisition liability (15,000) 15,000
Repayments (loans) of stockholder loans 40,283 (45,857)
----------- -----------
Net cash used by investing activities (137,980) (143,792)
----------- -----------
Financing activities
Proceeds (repayments) from stockholder loans 240,178 7,500
Proceeds from sale of common stock - 244,805
Acquisition earnest deposits (336,305) -
Borrowing of long-term debt 233,063 60,598
Repayments of long-term debt (18,881) (10,218)
----------- -----------
Net cash provided by financing activities 118,055 302,685
----------- -----------
Increase (decrease) in cash (17,948) 26,714
Cash
Beginning of period 31,865 5,151
----------- -----------
End of period $ 13,917 $ 31,865
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 3,479 $ 4,372
=========== ===========
</TABLE>
See accompanying notes to consolidated financial
statements and accountants' report
F-7
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
Communitronics of America, Inc. (formerly Oneida General Corporation) (the
Company) is a provider of wireless messaging and information delivery
services. The Company maintains an extensive network of radio towers
positioned to deliver wireless messaging services throughout the coastal
regions of Alabama, Louisiana, Mississippi and the Florida Panhandle. The
consolidated financial statements include the accounts of all the Company's
wholly-owned subsidiaries. All intercompany transactions have been eliminated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
STATEMENT OF CASH FLOWS
The Company defines cash and cash equivalents as cash on hand, demand
deposits and short-term (three months or less) highly liquid investments.
ACCOUNTS RECEIVABLE
An allowance for doubtful accounts is computed based on specific receivables
deemed uncollectible by management of the Company and historical experience.
INVENTORY
Inventory, consisting primarily of certain types and brands pagers held for
resale, is carried at the lower of cost or market.
F-8
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 1 - THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. When retired or otherwise
disposed of, the related carrying value and accumulated depreciation are
removed from the respective accounts and the net difference, less any amount
realized from the disposition, is recorded as gain or loss on disposition of
assets. Maintenance and repairs are charged to operating expenses. Costs of
significant improvements and renewals are capitalized.
DEPRECIATION
Property and equipment are being depreciated over their estimated useful
lives using straight-line method. The estimated useful lives of significant
assets are as follows: radio towers, 30 years; transmission equipment, 7
years; computer equipment, 5 years; vehicles, 5 years; and, furniture and
fixtures, 7 years.
REVENUE RECOGNITION
Services, rent and maintenance revenues are recognized in the month the
related services are performed. Product sales are recognized upon delivery of
product to the customer.
INCOME TAXES
In accordance with Statement of Financial Accounting Standards No. 109,
ACCOUNTING FOR INCOME TAXES, income taxes are provided for the tax effects of
transactions reported in the financial statements and consist of taxes
currently due plus deferred taxes resulting primarily from the use of
accelerated depreciation methods for tax purposes.
NOTE 2 - CONCENTRATION OF CREDIT RISK
The Company operates from locations in Daphne and Foley, Alabama, Metaerie
Louisiana and Gulfport and Pascagoula, Mississippi. The Company grants credit
(accounts receivable) to customers, substantially all of whom are
individuals, located in the vicinity of the operating locations. In order to
reduce the credit risk relative to subscriber services, the Company requires
all subscribers to execute a one-year service contract which allows the
Company to charge a $200 fee upon early cancellation of service.
F-9
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1999 1998
------------- -------------
<S> <C> <C>
Radio towers $ 469,031 $ 464,003
Transmission equipment 807,683 643,512
Computer equipment 99,535 99,535
Vehicles 46,288 45,269
Furniture and fixtures 32,843 39,797
------------- -------------
1,455,380 1,292,116
Less accumulated depreciation 674,905 631,047
------------- -------------
Net property and equipment $ 780,475 $ 661,069
============= =============
</TABLE>
NOTE 4 - ACQUISITION EARNEST DEPOSITS (UNAUDITED)
In January 1999, the Company entered into an agreement with its majority
stockholder to assume certain obligations related to the acquisition of
Beepers Network, Inc., a Tennessee corporation. The terms of the acquisition
required an initial deposit of $200,000 and the acquisition of certain
equipment to be used by Beepers Network, Inc. in the amount of $136,305.
These payments were made to preclude Beepers Network, Inc. from pursuing
other acquisition opportunities until such time the Company and Beepers
Network, Inc. could negotiate final acquisition terms. As of June 30, 1999,
final acquisition terms had not been completed and the balance of the
deposits totaled $336,305.
NOTE 5 - INTANGIBLE ASSETS
The Company owns seven Certificates of Public Convenience and Necessity
issued by the Alabama Public Service Commission and thirty-four frequencies
licensed by the Federal Communications Commission. These certificates and
licenses allow the Company to provide wireless messaging services in certain
cities in Alabama, Florida, Mississippi, Louisiana, Georgia, Tennessee,
Arkansas and Texas.
At December 31, 1998, the original costs of intangible assets were fully
amortized. The information relative to original costs and accumulated
amortization at August 31, 1998 was not available. Based on appraisals, the
approximate fair market value of the certificates and licenses is in excess
of $10,000,000.
F-10
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 6 - LONG-TERM DEBT
The Company's long-term debt consists of the following:
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1999 1998
------------- -----------
<S> <C> <C>
Union Planters Bank, 10%, due in equal monthly principal and interest
installments of $270 through May 1999 and a final payment of $17,846 due
June 1999, secured by real property $ 45,787 $ 18,280
Union Planters Bank, 10%, due in equal monthly principal and interest
installments of $233 through August 2000, unsecured 4,265 4,265
Union Planters Bank, 7%, 180-day note, principal and interest due January
8, 1999, secured by personal property 20,035 20,035
Union Planters Bank, 7.8%, due in equal monthly principal and interest
installments of $708 through December 2003, secured by vehicle 30,035 35,035
Corporation, 10%, due in annual principal payments equal to 10% of
outstanding principal balance through June 2019, unsecured 192,875 -
Non-interest bearing note payable to a stockholder of Crescent Radio
Electronics, Inc. (the predecessor company of Crescent Paging, Inc., a
wholly-owned subsidiary of the Company), due in equal monthly principal
installments of $600 through February 2005, unsecured 12,600 13,800
------------- -----------
</TABLE>
F-11
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 6 - LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1999 1998
------------ -----------
<S> <C> <C>
Total long-term debt 305,597 91,415
Less current maturities 68,707 53,942
------------ -----------
Long-term debt, less current maturities $ 236,890 $ 37,473
============ ===========
</TABLE>
Maturities of long-term debt at June 30, 1999, are as follows:
<TABLE>
<S> <C>
Year ending June 30,
2000 (included in current liabilities) $ 100,978
2001 31,257
2002 22,870
2003 21,897
2004 14,704
Thereafter 113,891
-----------
$ 305,597
===========
</TABLE>
NOTE 7 - COMMITMENTS
The Company is committed to several operating leases of radio towers and office
facilities. Approximate future minimum lease payments of all non-cancelable
operating leases for the next five years are as follows:
<TABLE>
<S> <C>
For the year ending June 30,
2000 $ 62,682
2001 34,178
2002 18,242
2003 12,250
2004 7,660
Thereafter 13,200
------------
$ 148,212
============
</TABLE>
Rental expense under these operating leases for the six months ended
June 30, 1999 (unaudited) and for the year ended December 31, 1998, amounted
to $50,186 and $40,809, respectively.
The Company may be required to pay the former stockholder of Data
Paging, Inc. an amount up to $500,000 if the value of the Company's common
stock is selling for less than $2 per share after a one year holding period
from the date of acquisition.
NOTE 8 - RELATED PARTY TRANSACTIONS
At June 30, 1999 and December 31, 1998, the Company had outstanding
a note due from its majority stockholder in the amount of $5,574 and $45,857,
respectively. The note bears interest at the rate of 10.0% and is due upon
demand.
At June 30, 1999 (unaudited), the Company had a note payable to its
majority stockholder in the amount of $247,678. The note bears interest at
10.0% and is due on June 30, 2000.
F-12
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 9 - RETAINED EARNINGS
On October 26, 1998, the Company merged with Communitronics, Inc. (as more
fully discussed in note 11 below). As of the date of the merger, the Company
had an accumulated deficit in the amount of $344,728 which resulted from
losses incurred during its years of active operations between 1970 and 1985.
From 1985 to the date of merger, the Company has had no material operations
or assets.
With the majority consent of the shareholders subsequent to the date of
merger, management has elected to eliminate the Company's accumulated deficit
as of January 1, 1998, by reducing additional paid-in capital. Management
believes that the elimination is necessary in order to 1) fairly present the
accumulated results of operations of the active subsidiaries of the Company
and 2) eliminate the accumulated deficit resulting from operations unrelated
to the Company's current operations. The adjustment had no effect on the
results of operations for the year ended December 31, 1998.
NOTE 10 - INCOME TAXES
For the six months ended June 30, 1999 and the year ended December 31, 1998,
the Company had no provision or benefit for income taxes because the deferred
tax liability was offset by an increase (decrease) in the valuation allowance
of ($9,248) and $5,655, respectively. The change in the valuation allowance
at June 30, 1999 and December 31, 1998, had no effect on operations.
Significant components of the Company's deferred tax assets and liabilities
are as follows:
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
1999 1998
----------- -----------
<S> <C> <C>
Deferred tax asset
Net operating loss carryforwards $ 61,767 $ 46,269
----------- -----------
Deferred tax liabilities
Depreciation (83,495) (77,245)
Valuation allowance 21,728 30,976
----------- -----------
Net deferred tax liabilities (61,767) (46,269)
----------- -----------
$ - $ -
=========== ===========
</TABLE>
F-13
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 10 - INCOME TAXES (CONTINUED)
At June 30, 1999 and December 31, 1998, the Company has net operating loss
carryforwards of approximately $30,000 and $77,000 that will expire in 2014
and 2013 respectively.
NOTE 11 - NON-RECURRING CHARGES
During the six months ended June 30, 1999 and the year ended December 31,
1998, Communitronics, Inc., one of the Company's wholly-owned subsidiaries,
incurred significant costs (i.e., professional fees, travel, etc.) in
connection with its "going public" efforts. Such costs, amounting to
approximately $43,000 and $200,000, respectively, have been charged to
operations in the period incurred.
NOTE 12 - NET LOSS PER SHARE
As of June 30, 1999 and December 31, 1998, the Company has 50.0 million of
authorized shares, all of which are Common Stock. There are no additional
rights or privileges other than those afforded to a common stock shareholder.
NOTE 13 - BUSINESS COMBINATIONS
On September 28, 1998, the Company entered into a letter of intent for the
acquisition of 100% of the issued and outstanding shares of Communitronics,
Inc. and its wholly-owned subsidiaries, Crescent Paging, Inc. and Radio
Systems, Inc. (the Acquisition). As part of the transaction, the Company
agreed to issue to the shareholders of the Acquisition 5,500,000 shares of
its restricted common stock. The Acquisition was accounted for under the
requirements of Accounting Principles Board Opinion No. 16, whereby the
Acquisition was treated as a pooling of interest. Accordingly, all assets and
liabilities of the Acquisition were recognized at historical cost and the
historical financial statements of the Acquisition became a component of the
historical financial statements of the Company. The current directors of the
Company agreed to cancel an aggregate 3,000,000 shares of the Company's
restricted common stock owned by them. The acquisition became effective
October 26, 1998. At closing, the current board of directors of the Company,
consisting of Mr. Ken Kurtz, Ms. Carrie Kurtz and Ms. Tammy Gehring, resigned
and were replaced by a board consisting of Mr. David R. Pressler, Mr. Samuel
Mastrull, Mr. James H. Flanagan and Mr. Charles H. Hillman. In addition, Mr.
Kurtz has resigned as President of the Company and has been replaced by Mr.
F-14
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 13 - BUSINESS COMBINATIONS (CONTINUED)
Pressler. Ms. Kurtz has resigned as Vice-president and Ms. Gehring has
resigned as Secretary and Treasurer. Mr. Mastrull has replaced Ms. Gehring as
Secretary. The Vice-president and Treasurer positions remain unfilled.
The combination of Oneida General Corporation and Communitronics, Inc.
resulted in no adjustments of net assets to adopt the same accounting
practices and had no effect on net income reported previously by the separate
enterprises. In addition, there were no reconciliations of amounts of revenue
and earnings previously reported by Oneida General Corporation who issued the
stock to effect the combination.
On December 22, 1998, the Company acquired all of the outstanding common
stock of Data Paging, Inc. in a stock-for-stock, tax free exchange. The
acquisition was accounted for under the requirements of Accounting Principles
Board Opinion No. 16, whereby the acquisition was treated as a business
combination by the purchase method. Accordingly, principles were followed
that are normally applicable under historical cost accounting to recording
acquisitions of assets and issuances of stock and to accounting for assets and
liabilities after acquisition.
Details of the results of operations of the previously separate companies for
the year ended December 31, 1998 (period before consummation of combination)
that are included in the current combined net income are as follows:
<TABLE>
<CAPTION>
Crescent Radio Data
Communitronics, Paging, Systems, Paging,
Inc. Inc. Inc. Inc.
--------------- --------------- ---------------- ------------
<S> <C> <C> <C> <C>
Revenue $ 436,516 $ 359,775 $ 38,514 $ 321,926
Expenses 362,854 356,238 21,832 228,579
--------------- --------------- ---------------- ------------
Operating income 73,662 3,537 16,682 93,347
Other expenses (204,726) - - -
--------------- --------------- ---------------- ------------
Net income (loss) $ (131,064) $ 3,537 $ 16,682 $ 93,347
--------------- --------------- ---------------- ------------
=============== =============== ================ ============
</TABLE>
NOTE 14 - SEGMENT INFORMATION
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (SFAS 131). The Company
has adopted SFAS 131 in its 1998 annual financial statements. SFAS 131
requires that a public company report annual and interim financial
descriptive information about its reportable operating segments pursuant to
criteria that differ from current accounting practice. Operating segments, as
defined, are components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating
decision-maker in deciding how to allocate resources and in assessing
performance.
The Company has determined that it has no reportable segments. The Company's
basis for the segments relates to the types of products and services each
segment provides. The Company's core operations, which includes the
traditional one-way display and alphanumeric services, are the only
reportable financial information is available that is evaluated regularly by
the chief operating decision-maker in deciding how to allocate resources and
in assessing performance.
NOTE 15 - YEAR 2000 ISSUE
The year 2000 issue is the result of shortcomings in many electronic data
processing systems and other equipment that may adversely affect the
Company's operations beginning January 1, 2000. The Company has conducted an
inventory of computer systems and other equipment necessary to conducting
Company operations. Management has contacted the manufacturers of such
systems and equipment and has received assurances that the Company's systems
and equipment are year 2000 compatible.
F-15
<PAGE>
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Notes to Consolidated Financial Statements (continued)
June 30, 1999 and December 31, 1998
(See Accountants' Report)
NOTE 15 - YEAR 2000 ISSUE (CONTINUED)
Because of the unprecedented nature of the year 2000 issue, its effects will
not be fully determinable until the year 2000 and thereafter. Management
cannot assure that parties with whom the Company does business will be year
2000 ready.
F-16
<PAGE>
Accompanying Information
F-16
<PAGE>
INDEPENDENT AUDITORS' REPORT
ON ACCOMPANYING INFORMATION
The Stockholders
Communitronics of America, Inc.
Daphne, Alabama
Our report on our audit of the basic consolidated financial statements of
Communitronics of America, Inc. (formerly Oneida General Corporation) for the
year ended December 31, 1998 appears on page 2. That audit was conducted for
the purpose of forming an opinion on the basic consolidated financial
statements taken as a whole. The accompanying information on pages 17-19 is
presented for purposes of additional analysis and is not a required part of
the basic consolidated financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements, and, in our opinion, the information is
fairly stated in all material respects in relation to the basic consolidated
financial statements taken as a whole.
February 26, 1999
Mobile, Alabama
F-17
<PAGE>
Schedule 1
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
and Subsidiaries
Consolidated Services, Rent and Maintenance Expenses
For the Year Ended December 31, 1998
<TABLE>
<S> <C>
Airtime charges $ 30,933
Freight 2,965
General insurance 31,571
Licenses 2,091
Repairs and maintenance 24,914
Telephone 111,359
Tower rent 48,809
--------
$252,642
========
</TABLE>
F-18
<PAGE>
Schedule 2
COMMUNITRONICS OF AMERICA, INC.
(Formerly Oneida General Corporation)
And Subsidiaries
Consolidated General and Administrative Expenses
For the Year Ended December 31, 1998
<TABLE>
<S> <C>
Advertising $ 9,487
Auto 9,672
Bank charges 2,034
Contract labor 10,304
Dues and subscriptions 638
Insurance - group 7,895
Legal and accounting 38,670
Licenses 9,336
Office expense 14,830
Office rent 43,822
Outside services 939
Postage 7,769
Salaries 205,067
Supplies 8,354
Taxes - other 3,128
Taxes - payroll 17,927
Telephone 4,860
Travel and entertainment 2,869
Utilities 12,325
---------
$ 409,926
=========
</TABLE>
F-19
<PAGE>
ADDENDUM TO STOCK PURCHASE AGREEMENT
AUGUST 31, 1996
The parties hereto agree that Ronald Scalise is the current holder
of several F.C.C. licenses which Communitronics, Inc. wishes to acquire.
These licenses are identified in the attached Exhibit "A".
The parties additionally agree that Ronald Scalise is the
holder/owner of several additional licenses which Communitronics, Inc. wishes
to acquire, which said licenses are identified in the attached Exhibit "B"
Ronald Scalise agrees to enter into a management contract with
Communitronics, Inc., wherein Communitronics, Inc. will manage the aforesaid
licenses as identified in Exhibit "A" for and in further consideration of the
terms and conditions contained within the Stock Purchase Agreement, executed
this date, between Communitronics, Inc., Ronald Scalise and R. Allen
Gallagher.
Ronald Scalise and Commununitronics, Inc., further agree that upon
the occurrence of either of the following:
1) The sale by Ronald Scalise and R. Allen Gallagher of all of
their stock in Communitronics, Inc. or its successor in
interest; or,
2) The expiration of 72 hours following the time upon which the
shares of Communitronics, Inc. may be traded pursuant to IRS
Rule 144 and/or such other IRS and/or SEC rules and regulation
as may be applicable,
Ronald Scalise will execute any and all documents required to legitimately
transfer the aforesaid licenses to Communitronics or to any other entity that
Communitronics, Inc., may so direct.
The Parties hereto additionally agree that upon the payment by
Communitronics, Inc. of $28,500.00 in cash and an additional 15,000.
<PAGE>
Ronald Scalise agrees to enter into a management contract with
Communitronics, Inc., wherein Communitronics, Jnc. will manage the aforesaid
licenses as identified in Exhibit "A" for and in further consideration of the
terms and conditions contained within the Stock Purchase Agreement, executed
this date, between Communitronics, Inc., Ronald Scalise and R. Allen
Gallagher.
Ronald Scalise and Communitronics, Inc., further agree that upon the
occurrence of either of the following:
1) The sale by Ronald Scalise and R. Allen Gallagher of all of
their stock in Communitronics, Inc. or its successor in
interest; or,
2) the expiration of 72 hours following the time upon which the
shares of Communitronics, Inc. may be traded pursuant to IRS
Rule 144 and/or such other IRS and/or SEC rules and regulation
as may be applicable,
Ronald Scalise will execute any and all documents required to
legitimately transfer the aforesaid licenses to Communitronics or to any other
entity that Communitronics, Inc., may so direct.
The Parties hereto additionally agree that upon the payment by
Communitronics, Inc. of $28,500.00 in cash and an additional 15,000 shares of
Communitronics, Inc. stock to Ronald Scalise, individually and/or to any other
party he may so identify, Ronald Scalise will transfer and/or cause to be
transferred to Communitronics, Inc., the licenses identified in Exhibit "B".
This addendum supersedes entirely any provision of the Stock Purchase
Agreement, executed this date, in contravention thereof.
WITNESSES:
/s/ David R. Pressler
- ------------------------ ------------------------
COMMUNITRONICS, INC.
BY:
/s/ Ronald Scalise
- ------------------------ ------------------------
RONALD SCALISE
<PAGE>
Commission expires
---------------
STATE OF
---------------
COUNTY OF
--------------
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that ALLEN GALLAGHER, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of said Stock
Exchange Agreement, he executed the same voluntarily on the day the same
bears date.
Given under any hand this the ____ day of ____________ 1998.
---------------------------------
Notary Public
Commission expires
---------------
<PAGE>
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that DAVID PRESSLER, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of said Stock
Exchange Agreement, he executed the same voluntarily on the day the Same
bears date.
Given under my hand this the ____ day of ____________ 1998.
-----------------------------------
Notary Public
Commission expires
-----------------
STATE OF
----------------
COUNTY OF
---------------
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that SAMUEL MASTRULL, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of said Stock
Exchange Agreement, he executed the same voluntarily on the day the same
bears date.
Given under my hand this the ____ day of ____________ 1998.
----------------------------------
Notary Public
Commission expires
----------------
STATE OF
----------------
COUNTY OF
---------------
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that RONALD SCALISE, whose name is signed to the foregoing
Stock Exchange Agreement and who is known to me, acknowledged before me on this
day that, being informed of the contents of said Stock Exchange Agreement, he
executed the same voluntarily on the day the same bears date.
Given under my hand this the ____ day of ____________ 1998.
----------------------------------
Notary Public
<PAGE>
STOCK EXCHANGE AGREEMENT
This agreement is made and entered into this 27th Day of August,
1998 between Communitronics, Inc. an Alabama Corporation and Ronald Scalise
(60%), and H. Allen Gallagher (40%) owners respectively of Crescent Paging,
Inc. (Shareholders) a Louisiana Corporation ("Licensee").
WITNESSETH
WHEREAS. Shareholders owns all of the issued and outstanding stock
of Licensee ("the Licensee Shares"); and,
WHEREAS, Licensee holds numerous licenses authorized by the FCC for
the provision of communication services ("The System") which are more fully
described on Exhibit A attached hereto; and,
WHEREAS. Communitronics, Inc., is developing various types of
communication systems located in major markets through the United States; and,
WHEREAS. Shareholders desires to assign to Communitronics, Inc. and,
Communitronics, Inc. desires to acquire from Shareholder the Licensee shares,
on the terms and conditions as set forth herein; and,
WHEREAS, Communitronics and Shareholders intend that such
transaction shall qualify for treatment under Section 368(a)(1B) of the
Internal Revenue Code; and now therefore in consideration of these premises
and mutual promises and covenants contained herein, Communitronics, Inc. and
Licensees and Shareholders agree as follows:
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ARTICLE I
Exchange of stock (a) in accordance with terms set forth in the
"Definitive Agreement" executed between the parties, dated March 28, 1998 and
as set forth herein, Communitronics, Inc., agrees to acquire from
Shareholders.
The Shareholders agree to assign to Communitronics, Inc. 100% of all
issued and outstanding voting stock of Crescent Paging, Inc. in exchange for
418,000 shares of Communitronics 144 Restricted Stock at $3.00 per share for
an agreed value of $1,254,000.00
1.1. DISTRIBUTION OF COMMUNITRONICS, INC., SHARES: The distribution
of Communitronics, Inc. shares in this transaction will be as follows: Ronald
Scalise (60%) owner of Crescent Paging, Inc., will receive Two Hundred Fifty
Thousand Eight Hundred shares (250,800), R. Allen Gallagher (40%) owner of
Crescent Paging, Inc., will receive One Hundred Sixty Seven Thousand Two
Hundred shares (167,200).
1.2 SHARES: Shares will be in compliance with Rule 144. After 1 year
required by regulation, the stock will cease to be restricted and will be
free trading shares.
1.3 COMMUNITRONICS, INC.: Communitronics, Inc. hereby guarantees
that its shares provided in payment for shares of stock in Crescent Paging
will be worth no less than $3.00 per share in price up to an including 72
hours following the time at which the Communitronics shares transferred
herein
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may be traded pursuant to IRS Rule 144 and/or such other IRS and/or SEC rules
and regulations as may be applicable.
1.4 CRESCENT PAGING, INC.: Crescent Paging, Inc. is to become a
wholly owned subsidiary of Communitronics, Inc. subject to a mortgage on all
shares of Crescent Paging, Inc. stock, transferred to Communitronics, Inc.
herein, in favor of Ronald Scalise and R. Allen Gallagher, until such time as
Ronald Scalise and R. Allan Gallagher sell all of their said shares of stock
in Communitronics, Inc or up to and including 72 hours following the time
upon which the shares of Communitronics, Inc. transferred herein may be
traded pursuant to IRS Rule 144 and/or such other IRS and/or SEC rules and
regulations as may be applicable, whichever occurs first.
Should the Communitronics shares transferred to Ronald Scalise and R. Allan
Gallagher be worth less than $3.00 per share during the time period described
above, Communitronics does hereby agree to pay Ronald Scalise and R. Allan
Gallagher the difference between the $3.00 guaranteed price and the sale
price of the stock or return the "System" to Cresent Paging, Inc. along with
all issued shares of stock in Crescent Paging, Inc.
1.5 PAYMENT FOR SALE AND TRANSFER: The agreement for sale and transfer
of Crescent Paging, Inc., shall be completed within ten (10) days of a grant by
FCC final order (as defined in Section 5.7 herein) and any other necessary
governmental authorities of an application for consent to the transfer of
contract of the system from Crescent Paging, Inc. to Communitronics, Inc.
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1.6 EMPLOYMENT CONTRACT: Upon Crescent Paging, Inc. becoming a
wholly owned subsidiary of Communitronics, Inc., Communitronics, Inc., and
Shareholders Ronald Scalise and R. Allen Gallagher will enter into a five
year employment contract whereby Ronald Scalise will serve as President of
Cresent Paging, Inc. and R. Allan Gallagher will serve as Director of
Operations of Crescent Paging, Inc. and each will receive remuneration
according to each party's employment agreement. Both will be members of the
Communitronics Advisory Board, representing the Louisiana's interests of
Communitronics, Inc.
Both will commence their employment immediately upon execution of
this agreement. Their employment contracts will go into effect 30 days or
sooner at the rate of pay as agreed to in their personal employment
agreements. This period will be treated as a transitional period.
1.7 CLOSING: The closing transaction provided for in this agreement
("closing") shall take place at the corporate offices of Communitronics, Inc.
in Daphne, Alabama, within 5 business days of the receipt by Communitronics of
all government consents to transfer of control of The System by final order
(as defined in Section 5.7 herein) or such other place and time as mutually
agreed to by both parties.
ARTICLE II
2.1 Representations and Warranties of Shareholder: Shareholders
hereby represent and warrant to Communitronics, Inc. the following material
representations as set forth in the following paragraphs of this Article II.
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2.2 INSTRUMENTS OF CONVENIENCE TRANSFER AND CANCELLATION: Subject to
the other terms and provision herein, Shareholders will at closing execute or
cause to be executed and delivered to Communitronics, Inc.;
(a) A Stock Certificate ("certificate") representing a total of
100% of the issued and outstanding shares of common voting stock of Crescent
Paging, Inc. which certificate or certificates (or accompanying assignment
separate from Certificate) shall be in negotiable form, duly endorsed for
transfer to Communitronics, Inc., subject to the mortgage established herein
in Section 1.4
(b) Copies of minute books, stock books and all other corporate
and business records or documents of Crescent Paging, Inc.;
(c) At least ten (10) business days prior to the closing date
the Shareholders will cause to be delivered to Communitronics, Inc. an
opinion of counsel for the Licensee that
(1) the Licensee is duly incorporated and legally existing
in good standing under the laws in Louisiana, and has full corporate power
and authority to carry on its present business;
(2) The transfer documents to be delivered to
Communitronics, Inc. at the closing are fully authorized, executed and
delivered by Shareholders and are valid and binding in accordance with their
terms;
(3) The execution and deliverv 0f this Stock Purchase
Agreement and the consummation of the transactions contemplated herein and
permissible under the Articles of Incorporation and By Laws of Crescent
Paging, Inc.
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(4) This Stock Purchasing Agreement is a valid and legal
obligation of Shareholders, enforceable by its terms.
(5) Any and all requisite fees and state regulatory
approvals of the consummation of the transactions contemplated herein are
granted by final order (as defined in the Section 5.7 herein) and are in full
force and effect and have not been suspended, modified or revoked;
(6) Unless otherwise disclosed herein, the Shareholders
represent that neither they or Cresent Paging, Inc. is a party to or affected
by any pending or threatened proceedings, claims or investigations relating
to the stock being transferred to Communitronics, Inc.; and,
(7) The Shareholders represent that Cresent Paging, Inc.,
is not subject to any restrictions in it's Article of Incorporation or By
Laws which materially and adversely affect its business, property prospects,
assets or condition, financial or otherwise which adversely affects its
ability to carry out its obligations under this agreement.
(d) Shareholders shall attach as schedules to this agreement
copies of all contracts, either in force or executory, pertaining to the
Licensee's business, and all other documents called for in this agreement.
2.3 STATUS OF STOCK WITH RESPECT TO THE SHARES OF STOCKS BEING
TRANSFERRED TO COMMUNITRONICS, INC.:
(a) Such shares of stock have been lawfully issued, and are
fully paid and not assessable;
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(b) Such shares represent a total of 100% of the issued common
voting stock in Licensee.
(c) Such shares are owned free and clear of any pledges, liens,
encumbrances and claims, and are not subject to any restrictions or
limitations prohibiting or restricting transfer to Communitronics, Inc.
except as maybe disclosed in this agreement
(d) Shareholders have full right, power and authority to sell
and transfer such shares pursuant to this agreement.
(e) The certificates for the shares to be transferred to
Communitronics, Inc. will be genuine and together with any supporting papers
shall be in such form as to enable the shares of stocks represented thereby
to be immediately transferred to Communitronics, Inc. on the stock transfer
books of the Licensee.
2.4 AVAILABILITY: Shareholders hereby agree that, from time to time
after the closing at Communitronics, Inc.'s request and without flarther
consideration, Shareholders will executed and deliver such other instruments
of conveyance assignment and transfer, and take such action as Communitronics
Inc. may reasonable require, to more effectively convey or transfer to in
Communitronics, Inc. possession of the stock purchased hereunder; and,
2.5 COMPLETE TRANSFER: MI assets and properties, if any of every
nature in connection with the business of Licensee are owned by Licensee and
are hereinafter referred to as the "Assets".
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2.6 CORPORATE EXISTENCE, ORGANIZATION AND QUALIFICATION OF LICENSEE:
Licensee is a corporation duly incorporated, legally existing and in good
standing under the laws of the State of Louisiana; and, it has no state or
local fees or penalties outstanding; and it has full corporate power and
authority to carry on the business as now being conducted by it. The
authorized stock of Licensee consists sole of: 1000 Shares of voting common
stock, of which these are issued 1000; issued shares issued and outstanding,
which Ronald Scalise, Shareholder owns 600 shares and R. Allan Gallagher owns
400 shares. There are on this date no outstanding warrants, options or rights
of any kind to acquire from Licensee shares of stock in Licensee, other than
as contained in this agreement.
2.7 LICENSE'S SUBSIDIARIES AND AFFILIATES: Licensee has no
investments of any kind in any corporation, joint venture or partnership. The
Licenses is not subject to any mortgage, debt or other encumbrance, which
materially or adversely affects it business, properties, assets, or condition.
2.8 LITIGATION: Shareholders have no knowledge of litigation
threatened against or relating to Licensee's business or properties which
might individually or in the aggregate have a material adverse effect on such
business or properties or the financial condition of Licensee, nor has
Shareholder or Licensee received any notice that any basis is known to exist
for any such action or for any governmental investigation relative to
Licensee's business or properties.
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2.9 COURT ORDERS AND DECREES: Shareholders assert that there is no
validly served and effective outstanding order, writ, injunction or decree of
any court, governmental agency or arbitration tribunal against or which
could, either individually or in the aggregate, have a material adverse
effect upon Licensee's business, property, assets or financial condition.
2.10 COMPLIANCE WITH LAWS: Except as specifically disclosed in
writing to Communitronics, Inc.'s counsel prior to execution of this
agreement, Licensees are in compliance with all provisions of all applicable
laws (including environmental laws) regulations and administrative orders of
the United States, all States and each municipality, county, or subdivision
of any thereof, to which its business or any properties may be subjected
which if not complied with either individually or in the aggregate may have a
material adverse effect upon Licensee's business, properties, assets or
financial condition.
2.11 NO ADVERSE CONTRACTS: Except for contracts specifically
identified and of which complete copies thereof specifically identified and
in Exhibit "B" hereto previously delivered to Communitronics, Inc. counsel,
Licensee is not obligated under any contract or agreement or any law which
materially and adversely affects its business, properties, prospects, assets
or condition, financially or otherwise.
2.12 EXECUTION AND PERFORMANCE OF AGREEMENT: The parties hereto
represent and agree that execution and performance by Shareholders of this
agreement and the transactions contemplated hereby by the Shareholders
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will not violate any provision of, or resort in the breach of, or constitute
a default under, any law, order, writ, injunction, decree or regulation of
any court, state or federal government agency or arbitration, tribunal, or
any contract, agreement, license, permit or instrument by which any of the
stock or licensees, businesses or property is bound.
2.13 STATUS OF LEASE AND AGREEMENT: Licensees are not a party, by
transfer or otherwise, to any lease or agreement not specifically identified
in Exhibit "C", hereto and disclosed to Communitronics, Inc. Said leases and
agreements, if any, are not suspended, modified or revoked and Licensee and
its transferors are operating and will continue to operate without
modification of its agreement rights until closing, in compliance with all of
the terms of said agreement.
2.14 STATEMENT AND RECORDS: All books, statements, documents,
records and financial, statements including but not limited to, yearly and
monthly profit and loss statements of Licensee furnished or given to
Communitronics, Inc. or it agents during the negotiation of and preparatory
to the execution or consummation of the transactions contemplated herein,
including Licensee's audited due diligence acceptable financial statement
dated November 30, 1997, are true and correct are to be provided to
Communitronics are genuine and as accurately contain no material
misrepresentations or omissions of material facts, and all such statements
represent fairly the financial position of Licensee as of the date thereof,
and the results of its operation for the periods designated therein, and
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were in prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as otherwise previously disclosed in
writing to Communitronics' counsel) throughout the period involved as of the
date of Licensee's latest audited financial statements it had no liabilities,
contingent or otherwise, except in those financial statements, income
statements and other financial documents.
2.15 NO UNDISCLOSED LIABILITY: At closing the Licensee will have no
material liabilities contingent on otherwise except these liabilities
referred to and attached as Exhibit "D" hereto, and those audited liabilities
incurred since that date in the ordinary course of business, but only to the
extent permitted under Article IV.
2.16 TAX RETURNS: Licensees has timely filed all Federal, State and
Local tax returns required to be filed by it by the laws of the United States
and each state which it does business in, including, but not limited to all
taxes with respect to income, property withholding, workman's compensation,
social security and unemployment taxes. To the best of Licensees' knowledge
and belief, all such returns are correct as filed and all taxes due and all
additional assessments and penalties and interest thereon received prior to
the date hereof and at closing have been paid. All filed returns were
prepared in accordance with the applicable state's laws and generally
accepted accounting principles relating to taxation. The reserves for any
taxes in licensee's financial statements are sufficient for the payment of
all accrued and unpaid taxes of Licensee, if any.
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2.17 Taxes and all personal income excise, conveyance or other taxes
directly related to the transaction contemplated herein which were incurred
prior to the closing of this transaction or concurrent therewith which may
become payable by reason of the sale and purchase of the stock at closing
will be borne by the Shareholders.
2.18 NO UNDISCLOSED CONTRACTS: Licensee has no contracts not
previously disclosed in writing and delivered to Communitronics, Inc.; nor has
Licensee caused any contracts for the purchase or sale of products on
services, nor continuing contracts for the future purchase or lease of
materials, supplies, services or equipment or other property except as
previously disclosed in writing to Communitronics, Inc.
2.19 STATUS OF ASSETS: After due inquiry, Shareholders know of no
material adverse condition regarding the business of Licensee not disclosed
herein, exception generally applicable to the Paging industry.
2.20 NEW DIRECTORS AND OFFICERS: At closing the purchase of
Licensee's stock, any election of a new board of directors and officers of
Licensee will not cause the cancellation, beach, acceleration, or any other
material adverse change in terms of any contract or agreement to which
Licensee is bound.
2.21 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND OTHERS:
Licensee is not indebted to any director, officer, employer or agent of
Licensee except as indicated on the financial statement provided to
Communitronics or in the ordinary course of business.
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2.22 GOVERNMENTAL CONSENT: No consent, approval, order or
authorization or regulation, qualification, designation, declaration or
filing with any governmental authority is required on part of Shareholder in
connection with the acceptance of this agreement and delivery of the stock of
Licensee as contemplated by the agreement, except any approval or filing as
may be required under requirements of the FCC and applicable state
authorities ("PUC").
2.23 FCC AUTHORIZATION: Licensee has been granted FCC
authorization to construct and operate the system by FCC action, which has
become a Final Order (as defined in Section 5.7). Such authorization
has not been suspended, modified, or revoked, and the Licensee has complied
with and will continue without modification with terms with closing
Shareholder knows of no event or condition which would materially endanger
the continued effectiveness of the Authorization.
2.24 DURING THE PERIOD FROM APRIL 22,1998 UNTIL CLOSING DATE:
Shareholder shall not discuss with, accept offers from or negotiate with any
other party regarding the sale, transfer, or management of Shareholders'
interests in Cresent Paging, Inc. but will instead deal exclusively and good
faith with Communitronics, Inc. regarding the transfer of control of the
Licensee. During this period, Shareholders shall be restricted from
encumbering, agreeing to transfer or convey, or, transferring or conveying
any portion of their interests except with the express written consent of
Communitronics, Inc.
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2.25 SURVIVAL OF REPRESENTATIONS AND WARRANTIES: The representation
and warranties contained in this agreement shall survive the closing date and
shall bind Shareholders and Shareholders' transfer's heirs and assigns.
ARTICLE III
3.1 REPRESENTATIONS AND WARRANTIES OF COMMUNICATIONS, INC.:
Communitronics, Inc. represents and warrants as set forth in this Article III.
3.2 QUALIFICATIONS OF COMMUNITRONICS, INC.: Communitronics, Inc. is
an Alabama corporation duly qualified to do business in all the jurisdictions
in which it is legally required to be so qualified. Communitronics, Inc. is
legally, financially, technically, and otherwise qualified to acquire
Licensee's stock as contemplated herein.
3.3 AUTHORITY ACTION OF COMMUNITRONICS, INC.: The execution and
delivery of this agreement by Communitronics, Inc. has been duly authorized
by all necessary corporate action. The consummation of the transaction
contemplated by this agreement will not violate any provision in
Communitronics, Inc.'s Articles of Incorporation, bylaws, or result in any
breech or default under any applicable State or Federal law, nor any rule,
regulation, order, writ, injunction or decree of any court, state or federal
governmental agency or arbitration tribunal having jurisdiction over
Communitronics, Inc. or any contract, agreement or instrument by which
Communicatronics, Inc. may be bound. All action required of
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the Shareholders and directors of Communitronics, Inc. in connection with the
execution, delivery and performance of this agreement has been taken.
3.4 LITIGATION: There is not any undisclosed litigation pending or
threatened against Communitronics, Inc. which would have a material adverse
effect on the business of Communitronics, Inc. or prevent Communitronics,
Inc. from fulfilling all its obligation hereunder.
ARTICLE IV
4.1 CONDUCT OF BUSINESS FROM EXECUTION OF THIS AGREEMENT PENDING
CLOSING: From April 22, 1998 until the closing date, Shareholders warrant and
covenant that, pending and as a condition precedent to closing, except as
otherwise consented to in advance in writing by Communitronics, Inc. with
respect to Licensee the following, to wit:
(a) Licensee's business will be conducted only in the ordinary and
usual course business;
(b) No contract or commitment will be entered into by Licensee
except in the ordinary course of business;
(c) No indebtedness for borrowed money will be created, assumed
or incurred by Licensee;
(d) No sale, transfer or other disposition, directly or
indirectly, and no mortgage, pledge or other encumbrance, of its assets will
be made or entered into by or on behalf of Licensee (even if made in the
ordinary course of business);
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(e) Licensee will use its best efforts to keep the
organizations of its business intact to preserve and maintain its assets and
properties;
(f) Licensee will not directly or indirectly do, or agree to
do any of the following acts:
(1) Grant any increase in salaries payable or to become
payable or grant any bonus to any officer, employee,
agent, or representative, except with the consent of
Communitronics, Inc.;
(2) Increase benefits payable to any officer, employee,
agent or representative under any pension plan or
other contract or commitment;
(3) Enter into any collective bargaining agreement to
which it is a party or by which it may be bound;
(4) Enter into any employment agreement or other such
agreement;
(5) Pay any obligation or liability, fixed or contingent,
other than current audited liabilities payable to
persons other then Shareholder, or other related or
affiliated entities or to their employees, agents,
shareholders, partners assigns;
(6) Waive or compromise any right or claim;
(7) Cancel, without full payment any note loan or other
obligation owing to it;
(8) Take any other action, which would materially diminish
the value of its business to Communitronics, Inc.;
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(9) Licensee will not directly or indirectly:
a. Declare, set aside or pay any dividend or make
any distribution in respect of its capital stock;
b. Purchase, redeem, or otherwise acquire any shares
of its capital stock;
c. Change its accounting method or treatment of any
material item; or
d. Enter into any agreement obligation to do any of
the foregoing prohibited acts;
(10) Licensee will not directly or indirectly enter into
any contract or other agreement of any nature with
Shareholders or other related or affiliated persons or
entities or their employees, agents or assigns; or
(11) Licensee will not directly terminate any of its
existing of these acts.
4.2 ACCESS AND INFORMATION: To the extent reasonably required for
the purpose of this agreement Shareholders will permit Communitronics, Inc.,
its counsel, accountants and other representatives to have full access
during normal business hours throughout the period prior to closing, to its
properties, books and records of Licensee, and will cause to be furnished to
Communitronics, Inc. and its representative during such all such information
concerning the affairs of Licensee
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as Communitronics, Inc. or its representatives may reasonably request, including
but not limited to, subscriber customer data.
ARTICLE V
5.1 CONDITIONS PRESIDENT TO CLOSING: Closing shall occur only
upon the occurrence of all the conditions set forth in this Article V and
elsewhere in this agreement (unless expressly waiving in writing by the party
to whose favor the representation or condition runs at any time prior to
closing). Each party shall have performed its obligations due to be performed
hereunder on or before the closing date.
5.2 REPRESENTATION AND WARRANTIES TRUE WHEN MADE: No
representations or warranty of Shareholders or Communitronics, Inc. contained
in this agreement shall be inaccurate or incomplete, nor have Shareholders
knowingly or negligently omitted to disclose any material fact pertinent to
this transaction.
5.3 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING: The
representations and warranties of Shareholders and Communitronics, Inc.
contained in this agreement shall be deemed to have been made again at the
time of closing, and shall have caused all covenants, agreements and conditions
required by this agreement to be performed or complied with prior to or at
closing to be so performed and complied with; and, The parties hereto will
furnish to each other a certificate signed by each respectively, dated on the
date of closing date, certifying
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to the truth of such representations and to the fulfillment of all such
covenants, agreements and conditions.
5.4 OCCURRENCE OF EVENTS: All of the following events shall occur
at or prior to closing:
(a) The receipt by Communitronics of all government approvals by
final order (as defined in Section 5.9), if any are necessary, and all other
necessary approvals, if any, for the assignment and transfer of the stock of
Licensee to Communitronics, Inc. with respect to the rights, agreements,
privilege, licenses and franchises referred to in this agreement, including
but not limited to the agreements, if any, referred to in Section 2.13.
Communitronics, Inc. and Shareholders agree to cooperate in obtaining all
necessary governmental and third party consents and approvals required to
complete this agreement.
(b) The receipt by Communitronics, Inc.'s attorneys of the
documents if any, referred to in Section 2.2.
(c) The mortgage referred to within Section 1.4 herein
5.5 ABSENCE OF ADVERSE CHANGES: Subsequent to the execution of this
agreement and prior to closing Shareholders and Licensee agree that there
shall not be any adverse change in the business or prospects of Licensee's
properties or business and on the closing date, there shall be delivered to
Communitronics, Inc. a certificate to such effect, dated the date of closing
and signed by the Shareholders. It is understood that Shareholders assume all
risks of destruction, loss or damage
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due to fire or other causes of destruction to the Licensee's properties and
business up to and including the date of closing.
5.6 TERMINATION AS OF RIGHT: If this agreement is terminated
pursuant to Section 8.11 of this agreement, Communitronics, Inc. agrees to
return to Shareholders any and all information, documents or assets received
from Shareholders, and Shareholders agree to return to Communitronics, Inc.,
the funds held by escrow agent pursuant to the Escrow Agreement and this
agreement shall have no effect whatsoever and the transactions contemplated
herein shall terminate and be null and void.
5.7 FINAL ORDER: For purposes of this agreement, a grant by
governmental authority shall be considered a Final Order ("Final Order")
when it is no longer subject to regulatory or administrative reconsideration,
review or appeal, with said times have lapsed with no petition, appeal,
objection or other like adverse pleading having been filed with the FCC or
other authority having jurisdiction over the matter.
ARTICLE VI
6.1 INDEMNIFICATION BY SHAREHOLDERS: Shareholders agree to defend
and hold Communitronics, Inc. harmless from any and all losses,
liabilities, expenses, damages or costs (including reasonable attorney's
fees, penalties and interest), payable to or for the benefit of or asserted
by any party, resulting from or arising out of or incurred as a result of the
falsify of any
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representation or breach of any warranty or covenant made by Communitronics,
Inc. herein or in accordance herewith.
6.3 SURVIVAL OF COVENANTS AND WARRANTIES: The representative,
warranties and agreements made by Shareholders, except as they may be fully
performed prior to or contemporaneously with closing, shall survive closing
and shall be fully enforceable at law or in equity against Shareholders,
Licensee and their successors and assigns by Communitronics, Inc. and its
successors and assigns. The representations, warranties and agreements made
by Communitronics, Inc. herein, except as they may be fully performed prior
to or contemporaneously with closing shall survive closing and shall be
enforceable at law or in equity against Communitronics, Inc. and its
successors and assigns. Any investigation at any time made by or on behalf of
(or disclosure to) any party hereto shall not diminish in any respect
whatsoever all parties hereto right to rely on such representation and
warranties.
ARTICLE VII
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7.1 Notices, all notices, request, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
effective upon receipt if delivered in person or by prepaid overnight express
service delivered to the parties hereto at the following addresses:
If to Shareholders:
Ronald Scalise
909 Aris Avenue
Metairie, LA 70001
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(Facsimile (504) 885-9514)
R. Allen Gallagher
909 Aris Avenue
Metairie, LA 70005
(Facsimile (504) 885-9514)
with copy to:
Joseph C. Bartels
Attorney at Law
3900 Canal Street
TELE: (504) 482-2900
FAX: (504) 482-1900
If to Communitronics, Inc.:
David Pressler
Magnolia Shopping Center
27955 Highway 98, Suite WW-X
Daphne,AL 36526
(Facsimile (334) 344-3171)
with copy to:
Charles H. Hillman, Esq.
Ulmer, Hillman, Burnett & Nagrich
Riverview Plaza, Suite 1107
63 S. Royal Street
Mobile, AL 36602
(Facsimile (334)-694-0076)
or such other address as specified by the parties from time to time.
ARTICLE VIII
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8.1 NOTICE OF CLAIMS: Shareholder and Communitronics, Inc. each agree
to give prompt written notice to the other and to all affected parties of any
claim against the party giving notice which might give rise to a claim
against the
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party, to include information detailing the nature and basis of the claim
and the actual or estimated amount thereof. In the event action, suit or
proceeding is brought against the Shareholders, Licensee and/or
Communitronics, Inc. with respect to which any party hereto may have
liability under the indemnity previsions herein, the indemnifying party
shall have the right, but not the responsibility, at its sole cost and
expense, to defend such action in the name of and on behalf of the
indemnified party or corporation, and in connection with any such action,
suit or proceeding and in connection with any such assistance as may
reasonably be required, in order to insure proper and adequate defense of any
such action, suit or proceeding. No party hereto shall make any settlement of
any claim which might give rise to liability of the other parties hereto
under the indemnity provisions contained herein without the written consent
of such other party(s), of which said consent such party covenants shall not
be unreasonably withheld
8.2 AMENDMENTS: This agreement may be amended or modified only by a
written instrument executed by Communitronics, Inc. and Shareholders.
8.3 EXPENSES: Communitronics, Inc. agrees to reimburse Shareholders
for out-of-pocket expenses (including capital contribution) incurred during
normal course of operation and construction of the system between August 27,
1998 and the closing date, provided that said expenses have been approved in
writing by Communitronics, Inc. In addition, Communitronics, Inc. shall
assume the continuing obligation of the systems, if any reasonable incurred
in the normal course of operation and construction of the system through such
closing
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date. Communitronics, Inc. shall not reimburse Shareholders for Shareholder's
legal expenses attributable to the sale of their interests. Communitronics,
Inc. shall not be reimbursed for reasonable and necessary out-of-pocket
expenses or construction costs incurred by Communitronics, Inc. not paid by
System Financing if the FCC or other governmental authority does not approve
contemplated transfer of control of the system without first obtaining
written consent from Shareholders.
8.4 BROKERS: Shareholders agree to indemnity Communitronics, Inc.
against any third person for any commission, brokerage fee, finder fee or
other payment alleged to be due as a result of this transaction based upon
any alleged agreement or understanding between such third person and
shareholders whether expressed or implied from actions of Shareholders or
their agents.
8.5 COUNTER PARTS: This agreement may be executed in any number of
counter parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.6 PARTIES IN INTEREST: This agreement shall inure to the benefit
of and be binding upon Communitronics, Inc. and Shareholders (Crescent
Paging, Inc.) and their respective successors, heirs and assigns. Nothing in
this agreement, either expressed or implied, is intended to confer upon any
other person any rights or remedies under or by reason of this agreement.
8.7 APPLICABLE LAW: The rights and obligations of the parties shall
be construed under and governed by the laws of the State of Alabama. Personal
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jurisdiction over all parties hereto and venue over any legal action shall be
in the Federal or State courts of general jurisdiction, which are Daphne,
Alabama.
8.8 WAIVERS: No provision in this agreement shall be deemed waived
by course of conduct, including the act of closing under Article V unless
such waiver is in writing signed by all parties and stating specifically that
it was intended to modify this agreement.
8.9 SCHEDULES AND EXHIBITS: The exhibits attached hereto shall be
deemed to be incorporated by referenced in this agreement as if fully set
forth herein.
8.10 CAPTIONS: Section headings are descriptive only, and shall
have no legal effects.
8.11 TERMINATION OF RIGHTS: Shareholders (Crescent Paging, Inc.) and
Communitronics, Inc. may terminate this agreement if counsel for Shareholders
and counsel for Communitronics, Inc. determine in good faith that any
provision of this agreement or the performance of any obligation will
adversely affect Shareholders or Licensee's application for, or their
qualification to hold or transfer the FCC authorization or PVC Certificate
for the System. If an irreconcilable difference of opinion develops between
counsel for Shareholders and counsel for Communitronics regarding a claim of
such adverse condition, then both counsel shall agree upon a independent
counsel whose opinion shall be determinative in this matter. However, in the
event that a determination is made that such adverse conditions exists, the
parties agree to use their best efforts to cure
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the adverse or disqualifying condition, provided that the cure does not
substantially diminish the benefits of this agreement to either party.
8.12 SERERABLITY: In the event that any item or provision of this
agreement is determines to be void, unenforceable, or contrary to law, the
remainder of this agreement shall continue in full force and effect, provided
that such continuation would not materially diminish the benefits of this
agreement for either party.
8.13 ASSIGNMENT: No right or obligation herein may be assigned or
delegated by a party, either directly or indirectly, by transfer of control
without the written consent of the other party, where whose consent shall not
be unreasonably withheld.
8.14 ARBITRATION AGREEMENT: Shareholders, Licensee and/or
Communitronics, Inc. agree that any material dispute arise out of this
agreement between Shareholders, Licensee and/or Communitronics, Inc., said
dispute will be submitted for resolution by arbitration in accordance with
the rules of the American Arbitration Association. Such arbitration shall be
binding and final. In agreeing to arbitration, all parties acknowledge that in
the event of a dispute, each party is giving up the right to have the dispute
decided in a court of law before a judge of jury, and instead are accepting
the use of arbitration for resolution. The non prevailing party(s) as a
result of the arbitration process also agrees to pay all costs, including
reasonable attorney's fees, incurred in said arbitration process including
such initial fees as may be required to initiate a claim in arbitration.
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8.15 ENTIRE AGREEMENT: This agreement and letter agreement entered
into between Shareholders (Crescent Paging, Inc.) and Communitronics Inc.
constitute the entire agreement between the parties governing the matters
addressed. No prior agreement or representation, whether verbal or written,
shall have any force or effect upon this agreement.
08/31/1998 /s/ David Pressler
- -------------- -----------------------------------------
Dated DAVID PRESSLER,
President of Communitronics, Inc.
- -------------- -----------------------------------------
Dated SAMUEL MASTRULL
Business Consultant and Financial Adviser
08/31/98 /s/ Ronald Scalise
- -------------- -----------------------------------------
Dated RONALD SCALISE
Owner of Crescent Paging, Inc.
Aug 31, 1998 /s/ R. Allen Gallagher
- -------------- -----------------------------------------
Dated R. ALLEN GALLAGHER
Owner of Crescent Paging, Inc.
STATE OF ALABAMA
COUNTY OF MOBILE
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that DAVID PRESSLER, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day
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that, being informed of the contents of said Stock Exchange Ageeement, he
executed the same voluntarily on the day the same bears date.
Given under my hand this the ____ day of _______________ 1998.
----------------------------------
Notary Public
Commission expires
----------------
STATE OF
-------------
COUNTY OF
------------
I, the undersigned, a Notary Public in and FOR said County in said
State, hereby certify that SAMUEL MASTRULL, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of said Stock
Exchange Agreement, he executed the same voluntarily on the day the same
bears date.
Given under my hand this the ____ day of _______________ 1998.
-----------------------------------
Notary Public
Commission expires
-----------------
STATE OF
-------------
COUNTY OF
------------
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that RONAlD SCALISE, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day
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that, being informed of the contents of said Stock Exchange Agreement, he
executed the same voluntarily on the day the same bears date.
Given under my hand this the ____ day of _______________ 1998.
------------------------------------
Notary Public
Commission expires
------------------
STATE OF
-----------------
COUNTY OF
----------------
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that R. ALLEN GALLAGHER, whose name is signed to the
foregoing Stock Exchange Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of said Stock
Exchange Agreement, he executed the same voluntarily on the day the same
bears date.
Given under my hand this the ____ day of _______________ 1998.
------------------------------------
Notary Public
Commission expires
------------------
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Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in Post-Effective Amendment No. 1 to
the Form 10-SB of our report dated February 26, 1999, relating to the
consolidated financial statements of Communitronics of America, Inc., which
is contained therein.
Mobile, Alabama Garner Prichard & Middleton, P.C.
December 29, 1999
