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As filed with the Securities and Exchange Commission on September 28, 1999
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM 10-SB
REGISTRATION STATEMENT FOR SMALL BUSINESS ISSUER UNDER
SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
ALPHACOM CORPORATION
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 2731 98-0206030
(STATE OR JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER IDENTIFICATION NUMBER)
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151 BLOOR STREET WEST
SUITE 890
TORONTO, ONTARIO
CANADA M5S-1S4
(416) 927-7000
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
AND PRINCIPAL PLACE OF BUSINESS)
MICHAEL P. KRAFT
PRESIDENT
ALPHACOM CORPORATION
151 BLOOR STREET WEST
SUITE 890
TORONTO, ONTARIO
CANADA M5S-1S4
(416) 927-7000
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
Copies to:
STANLEY MOSKOWITZ, ESQ.
MOSKOWITZ ALTMAN & HUGHES LLP
11 EAST 44TH STREET, SUITE 504
NEW YORK, NY 10017
(212) 953-1121
Securities to be registered under Section(g) of the Exchange Act:
Title of Each Class:
Common Stock, $0.001 par value
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TABLE OF CONTENTS
TABLE OF CONTENTS
PART I
ITEM 6 DESCRIPTION OF BUSINESS
ITEM 7 DESCRIPTION OF PROPERTY
ITEM 8 DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
ITEM 9 REMUNERATION OF DIRECTORS AND OFFICERS
ITEM 10 SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN SECURITY HOLDERS
ITEM 11 INTEREST OF MANAGEMENT AND OTHERS IN
CERTAIN TRANSACTIONS
ITEM 12 DESCRIPTION OF SECURITIES
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
ITEM 2 LEGAL PROCEEDINGS
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
PART F/S
FINANCIAL STATEMENTS
PART III
ITEM 1 INDEX TO EXHIBITS
ITEM 2 DESCRIPTION OF EXHIBITS
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PART I
The Registrant has elected to report under Disclosure Alternative 2 under Form
10-SB.
ITEM 6 DESCRIPTION OF THE BUSINESS
Company Background
AlphaCom Corporation ("AlphaCom" or alternatively, the "Company"), a Delaware
corporation, is a newly formed, developmental stage marketing distribution
company operating in the specialty publishing business. The Company maintains
its executive offices at 151 Bloor Street West, Suite 809, Toronto, Ontario,
Canada M5S-1S4. The Company is a subsidiary of Alpha Communications Corp.
("ACC"), which is located at 151 Bloor Street West, Suite 809, Toronto, Ontario,
Canada M5S-1S4. AlphaCom intends to establish a United States-based specialty
publishing business by utilizing a marketing and distribution plan used by ACC
in the Canadian market. The Company intends to pre-sell (sell a concept for a
book or other media prior to development or publication), or license (obtain the
rights to publish from original copyright owners) ("License"), books, videos,
and other complementary multi-media products through traditional and alternative
distribution channels in the United States market.
The Company was incorporated in December 1997 for the express purpose of
assembling the capital and management resources required to duplicate the
strategy of ACC, as regards to the specialty publishing business in the United
States marketplace (see Sales and Marketing discussion below).
The Company is devoted to two areas of specialty publishing: (1) Promotional
Publishing; and (2) Custom Brand Name Publishing. Promotional Publishing is the
publishing and production of pre-existing books licensed to the customer and
pre-sold original books, written at the customers request. It also includes
other media products for use by consumer product and service providers as
premiums to support sales-generating consumer offers. The Company plans to
initially offer its Promotional Publishing services to the consumer products,
food service, financial services industries, as well as to specialty and general
retailers. Custom Brand Name Publishing involves the development, publishing and
production of original books and other media products under the client's brand
name, which are distributed directly to retailers, wholesalers, and distributors
and then licensed to traditional publishers.
To date, the Company has (i) defined the market opportunities for the Company in
the specialty publishing business; (ii) assembled a staff with knowledge and
experience in the North American publishing industry; and (iii) completed a
private placement offering of securities that generated the funds necessary to
begin the initial implementation of its marketing and distribution plan.
The Company's management forecasts that as a result of the proceeds received
from its Offering (which is further discussed below), the Company will have
sufficient capital during the next six months to complete the initial
implementation of the marketing and sales strategy utilized by ACC in the
Canadian market. Although the Company estimates that the proceeds of this
Offering will be used over the next six months, due to the uncertainty of the
Company's future revenue, it is difficult to predict the date by which the
proceeds will be fully utilized. To fully implement the Company's marketing and
sales strategy in the specialty publishing business in
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the United States, the Company has projected that it will need approximately
$3,500 a month. The Company intends to seek such additional funding through
private or public offerings of its securities, joint ventures or other
arrangements. However, there can be no assurances that any offerings will take
place in the future and that funds raised will be sufficient to meet the
Company's cash requirements.
Upon receipt of such funding, the Company will continue its marketing and sales
strategy. This includes the ongoing development and creation of two new original
title cookbooks to be created for the retail bookstore and promotional markets
under the imprint of the Corning Consumer Products Company houseware brands. The
Company has also targeted other brand name US corporations such as Michael's The
Arts & Crafts Store, Inc., PNC Mortgage Corp. of America, Farmers & Traders Life
Insurance Co., and has made or is in the process of making presentations to such
corporations. The Company has begun presenting and will continue to present its
Brand Name Publishing Program to a minimum of 3 United States based corporations
each month during the next 12 months following this registration.
Additionally, the Company shall seek to present and market existing
off-the-shelf books developed by third parties to United States based
corporations for their promotional and marketing use. This process will be
ongoing and each month the Company's strategy sets a goal of it making a minimum
of 5 presentations to companies focused in the consumer products, food service,
financial services and specialty/general retailers in the United States.
The Company projects that it will spend approximately $3,500 per month on
general and administrative expenses during the first 12 months following this
registration. Thereafter, should the Company achieve a positive cash flow, the
Company hopes to provide its officers with salaries and/or a combination of
draws against future commissions based on individual sales results (i.e.
confirmed and shipped orders). The Company has taken approximately 3 to 4 months
to develop and package presentations for United States based corporations, and
the Company anticipates it will take approximately 6 to 8 months to generate
confirmed orders, and approximately 9 months to complete production, deliver and
be paid for promotional sales of existing books and up to 12 months to develop
manuscripts, complete production, deliver and be paid for original custom
created Brand Name books.
However, there can be no assurance that the Company will be able to meet this
timetable, the Company will be able to implement such plan or that even when the
Company is able to implement the plan, a profit will be achieved.
Products and Products Strategy
The Company's growth strategy is to create ownership of publishing copyrights
and/or distribution rights, with an initial emphasis on books, with possible
growth into other complementary multi-media products. The Company's ownership of
publishing and distribution rights will be created through the Company's Custom
Brand Name Publishing division. As more thoroughly discussed below, Custom Brand
Name Publishing involves the development, publishing and production of original
books and other media products under a corporation's brand name. Under this
publishing model, when original books are newly created, the Company will retain
either: (i) full copyright ownership; or (ii) shared copyright ownership with
the specific corporation that the brand name books are published on behalf of.
Additionally, the Company will retain sole distribution and reprint rights on
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any newly created books.
PROMOTIONAL PUBLISHING DIVISION
The Company intends to focus on the marketing and distribution of unique
single-title offers and multi-title continuity based promotional programs to the
consumer products, food service, financial services industry and to specialty
and general retailers in the United States. In addition, the Company intends to
sell and distribute books, and other complementary multi-media products, for use
in sales promotional offers to attract or reward customers.
The sales promotion industry, in the United States, is estimated to be in excess
of $13 billion, with a recent growth rate of 12-15% per year. The Company
believes the use of books as promotional products, while growing, is currently
not a significant part of the industry. The Company believes that those
potential clients that use sales promotions will be receptive to the use of
books as promotions in order to differentiate their promotions from other
traditional premium items (i.e. glassware, t-shirts, mugs, hats and bags).
Industry experts estimate that approximately two thirds of all marketing dollars
are spent on consumer and trade promotions. According to the Promotional
Products Association International, growth in the use of "premium" based sales
promotional programs (including books and videos) is expected to continue, as a
result of a shift in advertising dollars from traditional media to new marketing
vehicles.
In accordance with an agreement between the Company and ACC, dated December 17,
1998 (the "Operating Agreement"), all publishing business based in the United
States will be conducted by the Company, while all publishing business based
outside of the United States will be conducted by ACC. Pursuant to the Operating
Agreement, the Company has access to, and will offer its clients, ACC's
originally created publications and copyrights, and intends to license these
existing copyrights to third parties. The ACC product line currently includes
products in the following categories:
Books Videos Books Plus
----- ------ ----------
Children Children's Videos Children's Books-with-Toys
Cooking General Interest Cookbooks-with-Videos
Entertainment Sports Gardening Books-with-Videos
Financial
General Interest
Health
Parenting
Reference
Sports
The Company's objectives, with regards to Promotional Publishing, is to
establish a presence in the United States marketplace dedicated to the sales of
the Company's products and services. Pursuant to an oral agreement, the Company
pays ACC a royalty fee, for access to ACC's library and services, of seven and
one-half (7-1/2%) percent of the Company's net sales ("Net Sales") up to the
first $1,000,000 and ten (10%) percent of Net Sales thereafter. Net Sales means
the amount of gross sales less any discounts, returns, allowances, shipping
costs and
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federal or state taxes.
CUSTOM PUBLISHING DIVISION
The Company intends, in the Custom Publishing area, to develop and create
non-fiction books. The Company will act as a custom publisher in one of two
ways: (1) through the creation of "brand name" editions (books with the name
and/or trademark of a widely-respected, recognized corporation or brand) for
sale to book stores, clubs and libraries; or (2) the creation of books for the
exclusive use by a "brand name" client as marketing tools for promotional
purposes. The Company will attempt to pre-sell to brand name clients such books
as well as to make them broadly available through traditional distribution
channels (i.e. book stores, mass merchandising chains, book clubs and public
libraries). The Company intends to solicit brand name clients include leading
consumer product companies, financial service companies in addition to general
retailers. The Company plans to build its ownership of copyrighted materials
through the creation of its own proprietary brand name titles, which the Company
believes will generate recurring residual revenues.
The Company intends to establish its own Brand Name so that clients and
consumers associate the Company's name as a publisher of information desired by
consumers, in book format. The Company believes that the establishment of its
brand name ("AlphaCom") will enhance the Company's ability to sell its
publishing services to trade book publishers, in addition to offering the same
books it develops for these publishers to clients, for their own marketing and
promotional needs. Either through its internal capabilities, or through
sub-contracting, the Company believes it will be able to offer the following
custom publishing services:
Business Consulting Creative Services Production Services and Expertise
------------------- ----------------- ---------------------------------
Concept Development Art Direction Project Management
Proposals and Research Design/Illustration Printing/Digitizing
Rights Negotiations Copyrighting Video Development
Licensing Editing
Distribution Proof-reading
The Company anticipates that it will generate Custom Publishing revenues through
(1) the sale of books directly to the client; (2) the sale of books to
traditional book publishers; and (3) the licensing of copyrights to traditional
book publishers.
Intellectual Property
Currently the Company does not have or use any of its own trademarks, trade
names, or copyrights. However, the Company may utilize the intellectual property
of ACC pursuant to the Operating Agreement. To that end the Company intends to
file trademark registrations with the United States Patent and Trademark Office
to register "AlphaCom" and to permit the use of ACC's trademarks within the
United States. ACC's Canadian registered trademarks include "Alpha Publishing
TM", "Alpha Media TM", and the recently filed "Alpha Brand Name Books TM." The
Company also has access to the growing list of the wide range of publishing
copyrights owned by ACC and intends to market such publishing copyrights in the
United States market. The following are specific books where ACC owns full or
partial copyright ownership and in all cases owns distribution, and reprint
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rights.
Project Title
- ------- -----
Cooperators Safe & Sound Series: In The Driver's Seat
Safeguards for Seniors
Safety at Home
President's Choice Gardening Guides: Design
Plantings
Care
Containers
Bulbs
Garden Remedies
Investors Group Managing Your Money Series: Staring Out
Prime Time
Retire Ready
Small Business
(English & French)
Cadbury Chocolate Book: The Tale of the Great Bunny
(English & French)
Polkadot Shorts Book: Dumpty's Blanket Adventure
The Pan Caribbean Handbook & Business Directory: 1998 Edition
There can be no assurance that the Company will be able to secure trademark
registrations for its name or any of the marks of ACC for use in the United
States or that third parties will not infringe upon or misappropriate the
Company's copyrights, trademarks and similar proprietary rights.
Competition
The Company will compete with both traditional publishing companies as well as
promotional marketing agencies. Management believes the Company's ability to
focus on both Promotional Publishing and Custom Brand Name Publishing will
enable the Company to compete effectively in the specialty publishing business.
However, there is no assurance that operating losses will not result from this
competition which may have a materially adverse effect on the Company.
The Company will also compete with major trade publishers, all of which have
greater financial and other resources than the Company. Such competitors include
Scholastic, Harper Collins and Simon and Schuster.
There can be no assurance that the Company will be able to compete successfully
against current and future competitors, that competition will not intensify or
that competitive pressure faced by the Company will not materially adversely
affect its business, financial condition or results of operations.
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Sales and Marketing Strategy
The Company intends to implement a sales and marketing strategy that will
emulate the strategy utilized by ACC in Canada, with regards to the specialty
publishing business in the United States marketplace. The marketing program will
initially focus on identifying potential customers in the United States market
that could utilize publishing or brand name publishing products. The Company
also intends to use ACC's existing customer base by attempting to establish
relationships with United States based companies that are associated with ACC's
Canadian customers. The Company intends to offer its proprietary or acquired
content to the targeted clients for their use as sales generating, marketing
and/or promotional tools. Additionally the Company intends to offer content
development services for other forms of media, such as audio, video, CD-based
products and the Internet.
ACC's marketing and sales strategy involves both: (i) Promotional Publishing and
(ii) Custom Brand Name Publishing. ACC's promotional publishing plans call for
ongoing development of presentations of existing off-the-shelf books developed
by third parties which are presented to Canadian corporations in the consumer
products, food service, financial services and specialty/general retail
industry. ACC's sales and marketing plans include making a minimum of 10
presentations per month to new clients in Canada within the sectors described
above. Additionally, ACC continues to market to its existing promotional
publishing customers, new off-the-shelf titles on an ongoing basis. In the
custom brand name publishing sector, ACC develops customer proposals for a
minimum of 5 new Canadian corporations per month. At the same time, ACC creates
new titles and new series of books for presentation to its existing Canadian
corporate clients which it has published brand name titles for in the past.
Staffing Requirements
The Company currently maintains a staff of three officers, whom are presently
serving on a part-time basis. Such staff is comprised of individuals who have
many years of sales, marketing and financial experience in the North American
publishing industry. None of these officers are currently paid a salary. Upon
additional funding, the Company intends to commence the payment of salaries.
Furthermore, upon additional funding, it is expected that the current staff will
serve on a full time basis and that additional staff will be employed as needed.
Regulation D, Rule 504 Offering
The Company recently completed a Regulation D-Rule 504 offering, in which the
Company offered up 1,000,000 shares of common stock, par value $0.001 per share
(the "Offering"), at an offering price of $1.00 per share (the "Offering
Price"). The Offering sold 100,000 shares of common stock and a closing Form D
was filed with the Securities and Exchange Commission on or about April 14,
1999.
The proceeds from the Offering were approximately $100,000. The following
summary, based on management estimates, illustrates the manner in which the net
proceeds of the Offering are expected to be applied and allocated.
Application Amount
Transfer Agent's Fees $ 1,000
Printing and Engraving Costs $ 200
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Legal Fees $20,000
Accounting $ 1,500
Salaries and fees $18,000
Working capital $59,300
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Total $100,000
The Company believes that the proceeds from this Offering are adequate for the
Company to initiate the preliminary stages of its business plan. The Company's
business plan is based on additional funding being obtained, through private or
public offerings of its securities, joint ventures or other arrangements. The
proceeds of any additional funding, if available, will be applied and allocated
by the Company, as determined by the board of directors of the Company. There
can be no assurances that any securities offerings will take place in the
future, or that funds sufficient to meet any of the foregoing needs or plans
will be raised. If additional funding is not obtained, then the Company will not
be able to execute its business plan.
General Economic and Other Conditions.
There is no assurance that the Company's business may not be adversely affected
from time to time by such matters that may be outside the control of the Company
and/or its officers and directors such as changes in general economic
conditions, real estate, tax law or policy, local and international governments,
international relations and related conditions, as they exist in any country
where the Company may penetrate markets.
Control by Current Management
ACC beneficially owns approximately 99% of the outstanding common stock of the
Company. As a result, current management is and will be able to exercise control
over all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions. Such control could
delay or prevent a change in control of the Company or adversely affect the
market price of the common stock.
Year 2000 Compliance.
There are issues associated with the programming code in existing computer
systems as the year 2000 approaches. The "year 2000 problem" ("Y2K") is
pervasive and complex, as virtually every computer operation will be affected in
some way by the rollover of the two-digit year value to 00. The issue is whether
computer systems will properly recognize date sensitive information when the
year changes to 2000. Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail. After a complete
assessment of potential Y2K issues, including Y2K with regard to the Company's
non-information technology systems, the Company has made a determination that
presently and in the near future it will not be adversely affected by Y2K
compliance issues. Accordingly, the Company does not anticipate that it will
incur significant operating expenses or be required to invest heavily in
computer systems improvements to be year 2000 compliant outside the ordinary
course of business. The Company's Y2K assessment was based on the following: (i)
aside from its Y2K compliant personal computers, the Company has no computer
hardware or software systems to update or replace; and (ii) the Company does not
have any third party relationships. Consequently, Y2K does not present and will
not present a material event or uncertainty for the Company. As such, the
Company does not intend to formulate a specific Y2K contingency plan. However,
the Company will take every measure to
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insure Y2K compliancy by: (i) purchasing any required future computer hardware
or software systems from only known Y2K compliant vendors; and (ii) sending
questionnaires to, and obtaining written assurance of Y2K compliancy from,
potential third party vendors, suppliers or subcontractors. Regardless,
significant uncertainty exists concerning the potential costs and effects
associated with Y2K. The Company's most likely worst-case scenario in the event
the Company is affected by Y2K will be the delay in the implementation of the
Company's marketing and distribution plan. Thus, any Y2K compliance problem of
either the Company or its users, customers or advertisers could have a material
adverse effect on the Company's business, result of operations and financial
conditions.
Lack of an Operating History.
The Company will be utilizing the marketing and distribution plan used by ACC in
the Canadian market for the specialty publishing business within the United
States. ACC, since its inception May 24, 1996, has implemented a sales and
marketing strategy for both Promotional Publishing sales and Custom Brand Name
Publishing sales for a wide range of customers including Spiegel Inc., Cadbury
Chocolate Inc., Investors Group, Co-Operators Insurance Company, and the Corning
Consumer Products Company. For the latest fiscal year ending December 31, 1998,
ACC had total sales of Cd$1,926,786 and net loss after taxes of Cd$307,557. At
the end of the first quarter ending March 31, 1999, ACC had a pre-tax income of
Cd$186,100. There can be no assurance that such plan will be successful in the
United States.
ITEM 7 DESCRIPTION OF PROPERTY
The Company maintains offices at:
151 Bloor Street West
Suite 890
Toronto, Ontario, Canada M5S 1S4
Beginning July 1, 1999, the Company entered into a month-to-month, oral lease
with ACC at the rate of US$750 per month.
ITEM 8 DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following table sets forth certain information with respect to the
directors and executive officers of the Company:
Name Age Position Term of Office
- ---- --- -------- --------------
Michael P. Kraft 36 President, CEO, Secretary and Director 1997 - present
Richard Sherman 37 Executive Vice-President and Director 1997 - present
Khurram Qureshi 36 Chief Financial Officer and Director 1999 - present
The board of directors will be the governing body of the Company and will set
goals and establish policies, will retain qualified executive leadership and
will oversee the performance of that leadership for the organization.
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The board of directors will be active in that it will meet formally at least on
a quarterly basis. The full board of directors may choose to delegate some
authority to an executive committee that will meet more frequently and will
exercise interim policy making and oversight authority.
Each director will be elected to hold office until the next annual meeting of
shareholders and until his successor has been qualified and elected. The
following sets forth certain information as well as a brief account of business
experience during the past five years of each director and executive officer of
the Company.
Current Officers and Directors
Michael P. Kraft - President, CEO, Secretary and Director. Mr. Kraft co-founded
ACC in the fall of 1994 and, as President, Chief Executive Officer, and
Secretary of ACC, Mr. Kraft is involved in overseeing sales, acquisitions,
financing and contract strategy. Mr. Kraft has been involved in the sales
promotion marketing industry in Toronto since 1986. He has developed numerous
working relationships with clients in the packaged goods, financial services,
consumer products, retail petroleum industries, etc., throughout Canada. In
August 1990, Mr. Kraft joined Madison Marketing Limited, one of North America's
leading Specialty Book Publishers concentrating in the retail gasoline and food
services industries in Canada, the United States, and internationally. As
Vice-President of Sales & Marketing, Mr. Kraft was involved in the product
development process and responsible for that company's sales and marketing
efforts. He developed numerous client relationships and was involved in the sale
of in excess of 20 million books through various consumer promotion programs.
Richard Sherman - Executive Vice-President and Director. Mr. Sherman is a
co-founder of ACC and as Executive Vice-President of AlphaCom is actively
involved in the Company's sales efforts. For the past three years, Mr. Sherman
has played a key role in expanding ACC's client base. In Canada, Mr. Sherman has
developed relationships with, and sold promotional/premium programs to numerous
high-profile accounts including Avon Canada, Hudson's Bay, Molson Breweries,
Arby's Canada, Cadbury Chocolate Canada, etc. Prior to his position at AlphaCom,
Mr. Sherman managed a variety of sales and marketing activities within the
communications industry. He began his career in 1986 at Scotpage Corporation
Limited in sales and marketing. During his tenure at Scotpage, he pursued and
acquired many new accounts leading to record sales for the company.
Additionally, Mr. Sherman was involved in the development and execution of
several successful promotional campaigns.
Khurram Qureshi- Chief Financial Officer and Director. Mr. Qureshi has been the
Chief Financial Officer of ACC since 1997 and brings to AlphaCom over ten years
of experience in the field of finance and accounting, including experience
working for several public companies. Mr. Qureshi graduated from York University
(Toronto), with a Bachelors Degree in Administrative Studies and qualified as a
Chartered Accountant in 1990. Mr. Qureshi's responsibilities with the Company
will include financial administration, control and reporting.
ITEM 9 REMUNERATION OF DIRECTORS AND OFFICERS
To date, the Company has paid no compensation to any of its officers or
directors. It is the Company's intention in the upcoming year, to compensate
certain officers of the Company on a reasonable basis in keeping with industry
standards. Certain officers and directors of the Company will also own, either
directly or indirectly, equity in the capital stock of the Company.
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Presently the Company's three officers are serving on a part time basis only.
The Company has estimated that it will take approximately 10 to 12 months to
generate positive cash flow through its Promotional and Custom Brand Name
publishing sales . Following this estimated 12 month period, or in the event the
Company raises additional funding beyond its requirements estimated at $3,500
per month for general and administrative expenses, the Company may entertain the
payment of salaries and/or draws against commission on an individual basis with
each officer based on sales results (i.e. confirmed and shipped orders). The
directors at this time have not received any compensation nor is any planned.
Nor has the Company entered into any agreements with officers and/or directors
in regard to future compensation they may earn. The Company may in the future
seek to implement a stock option plan for the benefit of its employees.
Messrs. Kraft and Sherman, in addition to being directors and officers of the
Company are also officers, directors and major shareholders of ACC. As a result
of ACC being the controlling shareholder of the Company, Messrs. Kraft and
Sherman have an indirect interest in the capital stock of the Company. Mr.
Qureshi is the Chief Financial Officer of ACC and has stock options in ACC, and
thus has the opportunity for an indirect ownership in the capital stock of the
Company through ACC's controlling shareholder position, assuming Mr. Qureshi
exercises his ACC options.
Summary Compensation Table
Annual Expected
Name and Compensation Total Compensation
Principal Position Year Salary Compensation for 1999
------------------ ---- ------ ------------ --------
Michael P. Kraft* 1998 $0 $0 $0
President, CEO &
Secretary
Richard Sherman* 1998 $0 $0 $0
Executive Vice-
President
Khurram Qureshi* N/A N/A $0 $0
Chief Financial Officer
and Director
*Messrs. Kraft, Sherman and Qureshi are officers of ACC and receive salaries
from ACC. As of July 1, 1999, the Company has access to ACC's premises, library
and other services and pays a royalty fee of seven and one-half (7-1/2%) percent
of net sales up to $1,000,000 and ten (10%) percent of net sales thereafter.
ITEM 10 SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
As of July 1, 1999, the Company had 11,100,000 shares of common stock issued and
outstanding. The following tabulates the holdings of shares of the Company by
each person who, to date, holds of record or is known by management of the
Company to own beneficially 5% or more of the outstanding shares and, in
addition, by all directors and officers of the Company, individually and as a
group.
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Number of Shares Percentage of Class
Name and Address of Beneficial Owner(2) Beneficially Owned(1) Beneficially Owned
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Alpha Communication Corp............... 11,000,000 99.1%
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(1) Beneficial ownership has been determined in accordance with Rule 13d-3 of
the Securities Exchange Act of 1934, as amended. Generally, a person is
deemed to be the beneficial owner of a security if he has the right to
acquire voting or investment power within 60 days of the date of this
Registration Statement. Except as otherwise noted, each individual or
entity has sole voting and investment power over the securities listed.
(2) The address of Alpha Communications Corporation, 151 Bloor Street West,
Suite 890, Toronto, Ontario, Canada M5S-1S4.
Changes in Control
The Company is not aware of any arrangements, including the pledge by any person
of securities of the Company, which may at a subsequent date result in a change
in control of the Company.
Certain Provisions of Delaware Law
The Company is a Delaware corporation and is subject to the provisions of
Section 203 of the Delaware General Corporation Law ("DGCL"). In general,
Section 203 prevents an "interested stockholder" (defined generally as a person
owning 15% or more of the Company's outstanding voting stock) from engaging in a
"business combination" (as defined in Section 203) with the Company for three
years following the date that person became an interested stockholder unless (i)
before that person became an interested stockholder or approved the business
combination, (ii) upon completion of the transaction that resulted in the
interested stockholder becoming an interested stockholder the interested
stockholder owned at least 85% of the voting stock of the Company outstanding at
the time the transaction commenced (excluding stock held by directors who are
also officers of the Company and by employee stock plans that do not provide
employees with the right to determine confidentially whether shares held subject
to the plan will be tendered in a tender or exchange offer) or (iii) on or
following the date of which that person became an interested stockholder, the
business combination is approved by the Company's board of directors and
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least 66 2/3% of the outstanding voting stock of the Company not owed by
the interested stockholder.
Under Section 203 of the DGCL, these restrictions do not apply to certain
business combinations proposed by an interested stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the Company and a person who was not an interested stockholder during
the previous three years or who became an interested stockholder with the
approval of a majority of the Company's directors, if that extraordinary
transaction is approved or not opposed by a majority of the directors (but not
less than one) who were directors before any person became an interested
stockholder in the previous three years or who were recommended for election or
elected to succeed such directors by a majority of such directors then in
office.
Under Section 162 of the DGCL, the board of directors of the Company can,
without stockholders approval, issue authorized but unissued shares of capital
stock, which may have the effect of delaying deferring or preventing a change of
control of the Company.
12
<PAGE>
ITEM 11 INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
The Company's transactions with ACC during the past two years:
o In December 1997, on behalf of the Company, ACC prepaid legal expenses
in the form of a retainer to Moskowitz, Altman & Hughes LLP in the
amount of US$5,000.
o In December 1998, the Company issued 11 million shares of its common
stock to ACC for paid up capital of US$11,000.
o In December 1998, the Company entered into an operating agreement with
ACC, whereby the Company will have access to ACC's originally created
publications and copyrights, and ACC will provide the Company with
consulting, managerial assistance and marketing assistance.
o In December 1998, ACC identified, negotiated and secured a licensing
agreement on behalf of the Company with Corning Consumer Products.
o Pursuant to an oral agreement with ACC, commencing January 1999 and
terminating June 1999, the Company was obligated to pay ACC a monthly
management fee in the amount of $5,000. Effective July 1999, such
management fee was reduced to $500 a month.
o Commencing July 1, 1999, the Company entered into a month-to-month
oral lease with ACC at the rate of US$750 per month for use of ACC's
offices at 151 Bloor Street West Suite 890, Toronto, Ontario, Canada
M5S 1S4.
o Pursuant to an oral agreement with ACC, the Company shall pay ACC a
royalty fee for access to ACC's library and services, of 7 1/2% of the
Company's Net Sales up to the first $1,000,000 and 10% of Net Sales
thereafter. To date, no royalty payments have been paid to ACC, as no
final or finished or printed product has been delivered and paid for
as of yet.
No member of the board of directors or officer of the Company, to the Company's
knowledge has any material interest resulting from any relationship or business
affiliation with the Company.
ITEM 12 DESCRIPTION OF THE COMPANY'S SECURITIES
The Company, a Delaware corporation, is authorized to issue 50,000,000 shares of
which 49,990,000 shall be common stock, $0.001 par value and 10,000 shares shall
be preferred stock, $0.001 par value. As of July 1, 1999 the Company had
11,100,000 shares of common stock issued and outstanding.
Common Stock
All shares are fully paid and non-assessable. All shares are equal to each other
with respect to voting, liquidation, and dividend rights. Special shareholder
meetings may be called by the officers or directors, or upon the request of
holders of at least one-tenth (1/10) of the outstanding shares. Holders of
shares are entitled to one vote at any shareholder's meeting for each share they
own as of the record date set by the board of directors. There is no quorum
requirement for shareholders meetings. Therefore, a vote of the majority of the
shares represented at a meeting will govern even if this is substantially less
than a majority of the shares outstanding. Holders of shares are entitled to
receive such dividends as may be declared by the board of directors out of funds
legally available therefore, and upon liquidation are entitled to participate in
a distribution of assets available for such a distribution to shareholders.
There are no conversion, preemptive or other subscription rights or privileges
with respect to any share. Reference is made to the Company's Articles of
Incorporation, as amended, and its bylaws as well as to the applicable Statutes
of the State of Delaware for a more complete description of the rights and
liabilities of holders of shares. It should be noted that the bylaws may be
amended by the board of directors
13
<PAGE>
without notice to the shareholders. The shares of the Company do not have
cumulative voting rights, which means that the holders of more than fifty
percent (50%) of the shares voting for election of directors may elect all the
directors if they choose to do so. In such event, the holders of the remaining
shares aggregating less than fifty percent (50%) will not be able to elect
directors.
Preferred Stock
The Company has not issued any preferred stock. The 10,000 shares of preferred
stock designated in the Company's certificate of incorporation is "blank check"
preferred stock, which authorizes the board of directors to authorize and issue
one or more series of preferred stock with the designations, rights and
preferences as determined, from time to time, by the board of directors. The
board of directors is authorized to make such designations without shareholder
approval.
Dividend and Stock Buy Back Policy
The Company is a new business and no assurance can be given that it will
generate earnings from which cash dividends can be paid. However, if earnings
are generated, management may follow a policy of retaining all earnings for the
expansion of the capital base of its business. Such a policy could be maintained
as long as necessary to provide funds for the Company's expansion of capital
base. Any dividends that may be paid in the future will be dependent upon the
earnings and financial requirements of the Company and all other relevant
factors. At such time as the Company has accumulated profits not needed to
sustain operations or planned for expansion, the Company may choose to implement
a share buy back program, if such a program is deemed to be the most cost
efficient method of delivering a capital return to its shareholders. If such a
program is implemented, and if some shareholders choose to sell a portion of
their shares to the Company and other do not, the proportion of ownership of the
Company held by participating and nonparticipating shareholders will be
effected. The Company has not paid any dividends on its common stock to date.
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER STOCKHOLDER MATTERS
Market for Common Stock
Prior to this Registration, there has been no public market for the common stock
of the Company and there can be no assurance that a trading market will develop
at the conclusion of this Registration, or even if such a trading market should
develop, that the common stock may be resold at or near the original purchase
price. Any market for the common stock of the Company that may develop will, in
all likelihood, be a substantially limited one. The Company intends to apply to
the NASD OTCBB (Bulletin Board) to have its shares listed for trading. There can
be no assurance that it will be accepted for trading on the OTCBB.
As of July 1, 1999 the Company had 11,100,000 shares of common stock issued and
outstanding held by
14
<PAGE>
approximately 50 holders of record. Of these shares, 100,000 shares are freely
transferable without restriction or further registration under the Securities
Act, unless purchased by "affiliates" of the Company, as that term is defined in
Rule 144 under the Securities Act ("Rule 144") described below, which will be
subject to the resale limitations of Rule 144. The remaining 11,000,000 shares
of common stock, will be "restricted securities" within the meaning of Rule 144
and may not be resold in a public distribution unless they are registered under
the Securities Act or are sold pursuant to Rule 144 or another exemption from
registration. In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least one year (including the holding period of any prior owner
except an affiliate) is entitled to sell publicly, within any three-month
period, a number of shares that does not exceed the greater of (i) one percent
of the number of shares of common stock then outstanding or (ii) the average
weekly reported trading volume of the common stock during the four calendar
weeks preceding the filing of a Form 144 with respect to such sale. Sales under
Rule 144 are also subject to certain manner of sale provisions and notice
requirements and to the availability of current public information about the
Company. Under Rule 144(k), a person who is not deemed to have been an affiliate
of the Company at any time during the 90 days preceding a sale, and who has
beneficially owned the shares to be sold for at least two years (including the
holding period of any prior owner except an affiliate), is entitled to sell such
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
The Company has not agreed to register any shares of common or preferred stock
under the Securities Act for sale by any of the Company's security holders.
Dividend Policy
The Company does not have a policy of paying dividends, and it is currently
anticipated that no cash dividends will be paid. Any future decision to pay cash
dividends will be made on the basis of earnings, alternative needs for funds and
other conditions existing at the time.
ITEM 2 LEGAL PROCEEDINGS
Legal Proceedings
The Company is not a party to any legal proceeding or claims which, if decided
adversely against the Company, would have such a material adverse effect on the
Company's business, financial condition or results of operations.
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has no changes in or disagreements with its accountants since the
Company's incorporation.
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
Since inception, the Company has issued unregistered securities to a limited
number of persons as described below.
(1) On or about December 16, 1998, the Company issued 11,000,000 shares
of common stock at a
15
<PAGE>
subscription price of $0.001 per share to Alpha Communications Corp.
(2) The company offered for sale common stock of the Company through a
Confidential Offering Circular pursuant to Rule 504 of Regulation D of the
Securities Act of 1933. The 504 placement began in December, 1998 and was
completed as of April 6, 1999. The offering succeeded in selling 100,000 shares
of the Company's common stock at an offering price of $1.00 per share. The
shares were sold to 49 unaccredited investors residing within New York State and
outside the United States.
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Limitation on Liability; Indemnification of Directors and Officers
The Company's certificate of incorporation includes certain provisions permitted
pursuant to the DGCL whereby officers and directors of the Company shall be
indemnified against certain liabilities to the Company or its shareholders. The
certificate of incorporation also limits to the fullest extent permitted by the
DGCL a director's liability to the Company or its stockholders for monetary
damages for breach of fiduciary of care duty as a director, including gross
negligence, except liability for (i) breach of the director's duty of loyalty to
the Company or its shareholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or knowing violation of the laws, (iii)
under Section 174 of the DGCL (relating to unlawful payments of dividends or
unlawful stock repurchases or redemptions) or (iv) any transaction from which
the director derives an improper personal benefit. This provision of the
Company's certificate of incorporation has no effect on the availability of
equitable remedies, such as injunction or rescission. The Company believes that
these provisions will facilitate the Company's ability to continue to attract
and retain qualified individuals to serve as directors and officers of the
Company.
Business Insurance
The Company through ACC carries Errors and Omissions liability insurance to
cover the Company along with standard business insurance policy to insure the
assets and activities of the Company.
PART F/S FINANCIAL STATEMENT
16
<PAGE>
Financial Statements
(In U.S. dollars)
ALPHACOM CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Period from December 15, 1997 (date of incorporation)
to December 31, 1998
<PAGE>
AUDITORS' REPORT
To the Director of AlphaCom Corporation
We have audited the balance sheet of AlphaCom Corporation (A Development Stage
Enterprise) as at December 31, 1998 and the statements of operations and deficit
and cash flows for the period from December 15, 1997 (date of incorporation) to
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the 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.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at December
31, 1998 and the results of its operations and its cash flows for the
period then ended in accordance with generally accepted accounting
principles in the United States.
/S/ KPMG LLP
Chartered Accountants
Toronto, Canada
April 23, 1999
<PAGE>
ALPHACOM CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Balance Sheet
(In U.S. dollars)
December 31, 1998
Assets
Cash $ 461
$ 461
Liabilities and Shareholder's Deficiency
Liabilities:
Accounts payable and accrued liabilities $ 9,261
Advances from parent company (note 1) 6,910
16,171
Shareholder's deficiency:
Capital stock:
Authorized:
49,990,000 common shares, no par value, $0.001
per share 10,000 preferred shares, par value
$0.001
Issued:
11,000,000 common shares
11,000
Deficit
(26,710)
(15,710)
$ 461
See accompanying notes to financial statements.
3
<PAGE>
ALPHACOM CORPORATION
(A DEVELOPMENT STAGE ENTERPRISE)
Statement of Operations and Deficit
(In U.S. dollars)
Period from December 15, 1997 (date of incorporation) to
December 31, 1998
Expenses:
General and administrative $ 26,710
Loss for the period, being deficit, end of period $ 26,710
Statement of Cash Flows
(In U.S. dollars)
Period from December 15, 1997 (date of incorporation) to
December 31, 1998
Cash provided by (used in):
Operating activities:
Loss for the period $ (26,710)
Increase in accounts payable and accrued liabilities
9,261
(17,449)
Financing activities:
Issuance of capital stock
11,000
Advances from parent company
6,910
17,910
Increase in cash, being cash, end of period $ 461
See accompanying notes to financial statements.
4
<PAGE>
The Company was incorporated under the laws of the State of Delaware on December
15, 1997 and is a development stage marketing distribution company operating in
the specialty publishing business.
1. Advances from parent company:
Advances from parent company are non-interest bearing with no
specific date of repayment.
2. Capital stock:
Issued upon incorporation:
11,000,000 common shares $ 11,000
3. Fair value of financial instruments:
The fair value of cash is the same as its carrying value. The fair
value of advances from parent company are not determinable due to
their related party nature.
4. Subsequent event:
On April 13, 1999, the Company issued $100,000 of common shares to
qualified investors pursuant to the offering exemptions from
registration with the Securities and Exchange Commission in the
United States provided by Regulation D, Rule 504, of the 1993
Securities Act.
5. Uncertainty due to the Year 2000 Issue:
The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems
may recognize the year 2000 as 1900 or some other date, resulting in
errors when information using year 2000 dates is processed. In
addition, similar problems may arise in some systems which use
certain dates in 1999 to represent something other than a date. The
effects of the Year 2000 Issue may be experienced before, on, or
after January 1, 2000, and, if not addressed, the impact on
operations and financial reporting may range from minor errors to
significant systems failure which could affect an entity's ability
to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the
Company, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
5
<PAGE>
ALPHACOM CORPORATION
INTERIM FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
<PAGE>
ALPHACOM CORPORATION
INTERIM FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
INDEX
Page
----
Interim Financial Statements:
Balance Sheet I
Statement of Retained Earnings (Deficit) II
Statement of Operations (Loss) III
Statement of Changes in Financial Position IV
Notes to Financial Statements V
<PAGE>
ALPHACOM CORPORATION
INTERIM BALANCE SHEET
(Unaudited)
March 31, 1999
ASSETS
1999
----
Bank $ -
Loan Receivable 4,000
--------
$ 4,000
========
LIABILITIES
Bank Indebtedness $ 140
Accounts Payable and Accrued Liabilities 9,106
Management Services Payable 15,000
Loan Payable 9,000
Advances From Related Company 3,215
--------
36,461
========
SHAREHOLDERS' EQUITY
Capital Stock
Authorized 49,990,000 common shares, no par value
10,000 preferred shares, par value $0.001
Issued 11,000,000 Common Shares 11,000
Retained Earnings (Deficit) (43,461)
--------
(32,461)
--------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,000
========
<PAGE>
ALPHACOM CORPORATION
INTERIM STATEMENT OF RETAINED EARNINGS (DEFICIT)
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
1999
----
Retained Earnings (Deficit), beginning of the period (26,710)
Net Income (loss) for the period (16,751)
---------
Retained Earnings (Deficit), end of the period (43,461)
=========
<PAGE>
ALPHACOM CORPORATION
INTERIM STATEMENT OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
1999
REVENUE
Sales $ -
COST OF SALES
Cost of Sales and Direct Costs -
--------
GROSS PROFIT $ -
--------
EXPENSES
General and Administrative $ 1,186
Management Services 15,000
Professional Fees and Shareholder Services
565
--------
$ 16,751
--------
NET INCOME (LOSS) BEFORE INCOME TAXES (16,751)
Income Taxes
Current ( Recovery ) -
--------
NET INCOME (LOSS) FOR THE PERIOD $(16,751)
========
Loss per Shares - Basic $ (0.002)
========
Earnings per Shares- Fully Diluted $ (0.002)
========
<PAGE>
ALPHACOM CORPORATION
STATEMENT OF CHANGES IN FINANCIAL POSITION
(Unaudited)
FOR THE THREE MONTHS ENDED MARCH 31, 1999
1999
----
OPERATING ACTIVITIES
Net Income (Loss) $(16,751)
Change in non-cash components of working capital 10,845
--------
(5,906)
--------
FINANCING ACTIVITIES
Loan Payable 9,000
Advances From Related Company (3,695)
--------
5,305
--------
Change in Cash (Bank Indebtedness) (601)
Cash - Beginning of period 461
--------
Cash (Bank Indebtedness) - End of period $ (140)
========
<PAGE>
ALPHACOM CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 1999
1. Company
The company was incorporated under the laws of the State of Delaware
on December 15, 1997 and is a development stage marketing distribution
company operating in the specialty publishing business.
2. Advances From Related Company
Advances from related company are non-interest bearing with no
specific date of repayment.
3. Management Services Payable
Management Services Payable is due to the parent company.
4. Capital Stock
Issued upon incorporation:
11,000,000 common shares $ 11,000
------------------------------------------------------------------
5. Subsequent Event
On April 6, 1999, the Company issued 100,000 common shares at $1.00
per share to a total of 49 investors.
<PAGE>
ALPHACOM CORPORATION
INTERIM FINANCIAL STATEMENTS
(Unaudited)
June 30, 1999
<PAGE>
ALPHACOM CORPORATION
INTERIM FINANCIAL STATEMENTS
(Unaudited)
June 30, 1999
INDEX
Page
----
Interim Financial Statements:
Balance Sheet I
Statement of Retained Earnings (Deficit) II
Statement of Operations (Loss) III
Statement of Changes in Financial Position IV
Notes to Financial Statements V
<PAGE>
ALPHACOM CORPORATION
INTERIM BALANCE SHEET
(Unaudited)
June 30, 1999
ASSETS
1999
----
Bank $ 37,231
Loan Receivable 4,000
=========
$ 41,231
=========
LIABILITIES
Bank Indebtedness $ -
Accounts Payable and Accrued Liabilities 1,818
Advances From Related Company 3,215
=========
5,033
=========
SHAREHOLDERS' EQUITY
Capital Stock
Authorized 49,990,000 common shares, no par value
10,000 preferred shares, par value $0.001
Issued 11,100,000 Common Shares 111,000
Retained Earnings (Deficit) (74,802)
---------
36,198
---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,231
=========
<PAGE>
ALPHACOM CORPORATION
INTERIM STATEMENT OF RETAINED EARNINGS (DEFICIT)
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
1999
----
Retained Earnings (Deficit), beginning of the period (26,710)
Net Income (loss) for the period (48,092)
---------
Retained Earnings (Deficit), end of the period (74,802)
=========
<PAGE>
ALPHACOM CORPORATION
INTERIM STATEMENT OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
1999
----
REVENUE:
Sales $ -
COST OF SALES:
Cost of Sales and Direct Costs
-
---------
GROSS PROFIT $ -
---------
EXPENSES:
General and Administrative $ 10,880
Management Services 30,000
Professional Fees and Shareholder Services 7,212
---------
$ 48,092
---------
NET INCOME (LOSS) BEFORE INCOME TAXES (48,092)
Income Taxes
Current ( Recovery ) -
---------
NET INCOME (LOSS) FOR THE PERIOD $ (48,092)
=========
Loss per Shares - Basic $ (0.004)
=========
Earnings per Shares- Fully Diluted $ (0.004)
=========
<PAGE>
ALPHACOM CORPORATION
STATEMENT OF CHANGES IN FINANCIAL POSITION
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 1999
1999
OPERATING ACTIVITIES
Net Income (Loss) $ (48092)
Change in non-cash components of working capital (11,443)
---------
(59,535)
---------
FINANCING ACTIVITIES
Issuance of Capital Stock 100,000
Advances From Related Company (3,695)
---------
96,305
---------
Change in Cash (Bank Indebtedness) 36,770
Cash - Beginning of period 461
---------
Cash (Bank Indebtedness) - End of period $ 37,231
=========
<PAGE>
ALPHACOM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1999
1. Company
The company was incorporated under the laws of the State of Delaware
on December 15, 1997 and is a development stage marketing distribution
company operating in the specialty publishing business.
2. Advances From Related Company
Advances from related company are non-interest bearing with no
specific date of repayment.
3. Capital Stock
Issued upon incorporation:
11,000,000 common shares $ 11,000
Issued during the period:
100,000 common shares 100,000
--------------------------------------------------------------
11,100,000 Common Shares $ 111,000
--------------------------------------------------------------
<PAGE>
PART III
ITEM 1 INDEX TO EXHIBITS
Exhibit No. Exhibit Name
2.1 Certificate of Incorporation of Registrant
2.2 Amendment to Certificate of Incorporation of Registrant
2.3 By-laws of Registrant
10 Operating Agreement between the Registrant and Alpha
Communications Corp., dated December 17, 1998
(the "Operating Agreement")
99 Specimen of the Company's common stock certificate
ITEM 2 DESCRIPTION OF EXHIBITS
See Item 1 above
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
ALPHACOM CORPORATION
Date: September 28, 1999 By: \s\ Michael P. Kraft
--------------------
Michael P. Kraft
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that the persons whose signatures
appear below each severally constitutes and appoints Michael P. Kraft as true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for them in their name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, any registration
statement relating to the same offering as this Registration Statement that is
to be effective upon filing pursuant to Section 12 under the Securities Exchange
Act of 1934, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing
17
<PAGE>
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they might or could do in person, hereby ratifying and
confirming all which said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do, or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
\s\ Michael P. Kraft
- --------------------------------------
Michael P. Kraft
President, CEO, Secretary and Director Date: September 28, 1999
------------------
\s\ Richard Sherman
- --------------------------------------
Richard Sherman
Executive Vice-President and Director Date: September 28, 1999
------------------
\s\ Khurram Qureshi
- --------------------------------------
Khurram Qureshi
Chief Financial Officer and Director Date: September 28, 1999
------------------
18
<PAGE>
Page 1
State of Delaware
Office of the Secretary of State
---------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "ALPHACOM CORPORATION", FILED IN THIS OFFICE ON THE FIFTEENTH
DAY OF DECEMBER, A.D. 1997, AT 9 O'CLOCK A.M.
/S/ EDWARD J. FREEL
[STATE SEAL] ----------------------------------
Edward J. Freel, Secretary of State
2833253 8100 AUTHENTICATION: 8813072
971428854 DATE: 12-16-97
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 12/15/1997
971428854 -2833253
CERTIFICATE OF INCORPORATION
OF
ALPHACOM CORPORATION
The undersigned, in order to form a corporation under and pursuant to the
provisions of the General Corporation Law of the State of Delaware, does hereby
certify the following:
FIRST: The name of the corporation is AlphaCom Corporation.
SECOND: The registered agent and the registered office of the corporation
is as follows:
Nationwide Information Services, Inc.
15 North Street, Dover, Kent County, DE 19901
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 50,000,000, of which 49,990,000 shares shall be
Common Stock, $0.001 par value, and 10,000 of which shall be Preferred Stock,
$0.001 per value, which shall be subject to the provisions of ARTICLE FIFTH.
FIFTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of the Article FOURTH, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a
certificate pursuant to the applicable law of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and the qualifications, limitations or restrictions thereof.
SIXTH: The name and address of the incorporator is as follows:
Jason Pickering 11 East 44th Street, Suite 504
New York, NY 10017
SEVENTH: The directors of the corporation shall have the power to make and
to alter or amend the By-laws of the corporation, to fix the amount to be
reserved as working capital; and to authorize and cause to be executed
mortgages and liens without limit as to the amount upon the property and
franchise of the corporation.
IN WITNESS WHEREOF, the incorporator has signed this certificate this
12th day of December, 1997.
/s/ JASON PICKERING
-----------------------------
Jason Pickering, Incorporator
37161001-a.020
<PAGE>
State of Delaware
Office of the Secretary of State PAGE 1
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "ALPHACOM CORPORATION", FILED IN THIS OFFICE ON THE FIRST DAY OF JULY, A.D.
1999, AT 9 O'CLOCK A.M.
A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY
RECORDER OF DEEDS.
/s/ Edward J. Freel
[LOGO] -----------------------------------
Edward J. Freel, Secretary of State
2833253 8100 AUTHENTICATION: 9844337
991270996 DATE: 07-01-99
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 07/01/1999
991270996 - 2833253
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
ALPHACOM CORPORATION
The undersigned President and Secretary of AlphaCom Corporation, a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), hereby certifies that the following amendment to the Company's
Certificate of Incorporation in accordance with the provisions of Section 242 of
the General Corporation Law of the State of Delaware.
FIRST, that the Certificate of Incorporation of the Company be amended by
inserting an Article Eighth, which shall read as follows:
EIGHTH: The personal liability of the directors of the Company is
hereby eliminated to the fullest extent permitted by Section 102(b)(7) of
the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented.
SECOND, that the Certificate of Incorporation of the Company be amended by
inserting an Article Ninth, which shall read as follows:
NINTH: The Company shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have the power to indemnify under said section from and against any
and all of the expenses, liabilities, or other matters referred to in or
covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may
be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors,
and administrators of such person.
IN WITNESS WHEREOF, the undersigned President and Treasurer of the Company
has executed this certificate the date set forth underneath his name and affirms
under penalties of perjury that the statements contained herein are true and
correct.
/s/ Michael P. Kraft
--------------------
Michael P. Kraft
President and Secretary
Date 6/30/99
<PAGE>
BY-LAWS
OF
AlphaCom Corporation
(A Delaware Corporation)
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City and State designated
in the Articles of Incorporation. The Corporation may also maintain offices at
such other places within or without the United States as the Board of Directors
may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1- Annual Meetings:
The annual meeting of the shareholders of the Corporation shall be held within
five months after the close of the fiscal year of the Corporation, for the
purpose of electing directors, and transacting such other business as may
properly come before the meeting.
Section 2- Special Meetings:
Special meetings of the shareholders may be called at any time by the Board of
Directors or by the President, and shall be called by the President or the
Secretary at the written request of the holders of ten percent (10%) of the
shares then outstanding and entitled to vote there at, or as otherwise required
under the provisions of the Business Corporation Act.
Section 3- Place of Meetings:
All meetings of shareholders shall be held at the principal office of the
Corporation, or at such other places as shall be designated in the notices or
waivers of notice of such meetings.
Section 4- Notice of Meetings:
(a) Except as otherwise provided by Statute, written notice of each meeting of
shareholders, whether annual or special, stating the time when and place where
it is to be held, shall be served either personally or by mail, not less than
ten or more than fifty days before the meeting, upon each shareholder of record
entitled to vote at such meeting, and to any other shareholder to whom the
giving of notice may be required by law. Notice of a special meeting shall also
state the purpose or purposes for which the meeting is called, and shall
indicate that it is being issued by, or at the direction of, the person or
persons calling the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle shareholders to receive payment for their shares
pursuant to Statute, the notice of such meeting shall include a statement of
that purpose and to that effect. If mailed, such notice shall be directed to
each such shareholder at his address, as it appears on the records of the
shareholders of the Corporation, unless he shall have previously filed with the
Secretary of the Corporation a written request that notices intended for him be
mailed to the address designated in such request.
By-Laws-1
<PAGE>
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, or to any
shareholder who, in person or by proxy, submits a signed waiver of notice either
before or after such meeting. Notice of any adjourned meeting of shareholders
need not be given, unless otherwise required by statute.
Section 5- Quorum:
(a) Except as otherwise provided herein, or by statute, or in the Certificate of
Incorporation (such Certificate and any amendments thereof being hereinafter
collectively referred to as the "Certificate of Incorporation"), at all meetings
of shareholders of the Corporation, the presence at the commencement of such
meetings in person or by proxy of shareholders holding of record a majority of
the total number of shares of the Corporation then issued and outstanding and
entitled to vote, shall be necessary and sufficient to constitute a quorum for
the transaction of any business. The withdrawal of any shareholder after the
commencement of a meeting shall have no effect on the existence of a quorum,
after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of
shareholders, the shareholders, by a majority of the votes cast by the holders
of shares entitled to vote thereon, may adjourn the meeting. At any such
adjourned meeting at which a quorum is present, any business may be transacted
at the meeting as originally called if a quorum had been present.
Section 6- Voting
(a) Except as otherwise provided by statute or by the Certificate of
Incorporation, any corporate action, other than the election of directors to be
taken by vote of the shareholders, shall be authorized by a majority of votes
cast at a meeting of shareholders by the holders of shares entitled to vote
thereon.
(b) Except as otherwise provided by statute or by the Certificate of
Incorporation, at each meeting of shareholders, each holder of record of stock
of the Corporation entitled to vote thereat, shall be entitled to one vote for
each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so by proxy; provided, however, that the instrument authorizing
such proxy to act shall have been executed in writing by the shareholder
himself, or by his attorney-in-fact thereunto duly authorized in writing. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the persons executing it shall have specified therein the
length of time it is to continue in force. Such instrument shall be exhibited to
the Secretary at the meeting and shall be filed with the records of the
Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled to
vote thereon, shall be and constitute action by such shareholders to the effect
therein expressed, with the same force and effect as if the same had been duly
passed by unanimous vote at a duly called meeting of shareholders and such
resolution so signed shall be inserted in the Minute Book of the Corporation
under its proper date.
By-Laws-2
<PAGE>
ARTICLE III - BOARD OF DIRECTORS
Section 1- Number, Election and Term of Office:
(a) The number of the directors of the Corporation shall be no more than nine
(9), unless and until otherwise determined by vote of a majority of the entire
Board of Directors. The number of Directors shall not be less than two (2),
unless all of the outstanding shares are owned beneficially and of record by
less than three (3) shareholders, in which event the number of directors shall
not be less than the number of shareholders permitted by statute.
(b) Except as may otherwise be provided herein or in the Certificate of
Incorporation, the members of the Board of Directors of the Corporation, who
need not be shareholders, shall be elected by a majority of the votes cast at a
meeting of shareholders, by the holders of shares, present in person or by
proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the shareholders
next succeeding his election, and until his successor is elected and qualified,
or until his prior death, resignation or removal.
Section 2- Duties and Powers:
The Board of Directors shall be responsible for the control and management of
the affairs, property and interests of the Corporation, and may exercise all
powers of the Corporation, except as are in the Certificate of Incorporation or
by statute expressly conferred upon or reserved to the shareholders.
Section 3- Annual and Regular Meetings: Notice:
(a) A regular annual meeting of the Board of Directors shall be held immediately
following the annual meeting of the shareholders, at the place of such annual
meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution for the
holding of other regular meetings of the Board of Directors, and may fix the
time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be
required to be given and, if given, need not specify the purpose of the meeting;
provided, however, that in case the Board of Directors shall fix or change the
time or place of any regular meeting, notice of such action shall be given to
each director who shall not have been present at the meeting at which such
action was taken within the time limited, and in the manner set forth in
paragraph (b) of Section 4 of this Article III, with respect to special
meetings, unless such notice shall be waived in the manner set forth in
paragraph (c) of such Section 4.
By-Laws-3
<PAGE>
Section 4- Special Meetings: Notice:
(a) Special meetings of the Board of Directors shall be held whenever called by
the President or by one of the directors, at such time and place as may be
specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meeting shall be
mailed directly to each director, addressed to him at his residence or usual
place of business, at least two (2) days before the day on which the meeting is
to be held, or shall be sent to him at such place by telegram, radio or cable,
or shall be delivered to him personally or given to him orally, not later than
the day before the day on which the meeting is to be held. A notice, or waiver
of notice, except as required by Section 8 of this Article III, need not specify
the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any
director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to him, or who submits a signed waiver of
notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
Section 5- Chairman:
At all meetings of the Board of Directors the Chairman of the Board, if any and
if present, shall preside. If there shall be no Chairman, or he shall be absent,
then the President shall preside, and in his absence, a Chairman chosen by the
directors shall preside.
Section 6- Quorum and Adjournments:
(a) At all meetings of the Board of Directors, the presence of a majority of the
entire Board shall be necessary and sufficient to constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, until a quorum shall be present.
Section 7- Manner of Acting:
(a) At all meetings of the Board of Directors, each director present shall have
one vote, irrespective of the number of shares of stock, if any, which he may
hold.
(b) Except as otherwise provided by statute, by the Certificate of
Incorporation, or these ByLaws, the action of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board of Directors. Any action authorized in writing, by all of the directors
entitled to vote thereon and filed with the minutes of the corporation shall be
the act of the Board of Directors with the same force and effect as if the same
had been passed by unanimous vote at a duly called meeting of the Board.
By-Laws-4
<PAGE>
Section 8- Vacancies:
Any vacancy in the Board of Directors occurring by reason of an increase in the
number of directors, or by reason of the death, resignation, disqualification,
removal (unless a vacancy created by the removal of a director by the
shareholders shall be filled by the shareholders at the meeting at which the
removal was effected) or inability to act of any director, or otherwise, shall
be filled for the unexpired portion of the term by a majority vote of the
remaining directors, though less than a quorum, at any regular meeting or
special meeting of the Board of Directors called for that purpose.
Section 9- Resignation:
Any director may resign at any time by giving written notice to the Board of
Directors, the President or the Secretary of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or such officer, and the acceptance of
such resignation shall not be necessary to make it effective.
Section 10- Removal:
Any director may be removed with or without cause at any time by the affirmative
vote of shareholders holding of record in the aggregate at least a majority of
the outstanding shares of the Corporation at a special meeting of the
shareholders called for that purpose, and may be removed for caused by action of
the Board.
Section 11- Salary:
No stated sum shall be paid to directors, as such, for their services, but by
resolution of the Board of Directors a fixed sum and expenses of attendance, if
any, may be allowed for attendance at each regular or special meeting of the
Board; provided, however, that nothing herein contained shall be construed to
preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12- Contracts:
(a) No contract or other transaction between this Corporation and any other
Corporation shall be impaired, affected or invalidated, nor shall any director
be liable in any way by reason of the fact that any one or more of the directors
of this Corporation is or are interested in, or is a director or officer, or are
directors or officers of such other Corporation, provided that such facts are
disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be
interested in any contract or transaction of this Corporation, and no director
shall be liable in any way by reason of such interest, provided that the fact of
such interest be disclosed or made known to the Board of Directors, and provided
that the Board of Directors shall authorize, approve or ratify such contract or
transaction by the vote (not counting the vote of any such director) of a
majority of a quorum, notwithstanding the presence of any such director at the
meeting at which such action is taken. Such director or directors may be counted
in determining the presence of a quorum at such meeting. This Section shall not
be construed to impair or invalidate or in any way affect any contract or other
transaction which would otherwise be valid under the law (common, statutory or
otherwise) applicable thereto.
By-Laws-5
<PAGE>
Section 13- Committees:
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an executive committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of three or more members, with such powers and
authority (to the extent permitted by law) as may be provided in such
resolution. Each such committee shall serve at the pleasure of the Board.
ARTICLE IV - OFFICERS
Section 1- Number, Qualifications, Election and Term of Office:
(a) The officers of the Corporation shall consist of a President, a Secretary,
and such other officers, including a Chairman of the Board of Directors, and one
or more Vice Presidents, as the Board of Directors may from time to time deem
advisable. Any officer other than the Chairman of the Board of Directors may be,
but is not required to be, a director of the Corporation. Any two or more
offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, or until his death, resignation or removal.
Section 2- Resignation:
Any officer may resign at any time by giving written notice of such resignation
to the Board of Directors, or to the President or the Secretary of the
Corporation. Unless otherwise specified in such written notice, such resignation
shall take effect upon receipt thereof by the Board of Directors or by such
officer, and the acceptance of such resignation shall not be necessary to make
it effective.
Section 3- Removal:
Any officer may be removed, either with or without cause, and a successor
elected by a majority of the Board of Directors at any time.
Section 4- Vacancies:
A vacancy in any office by reason of death, resignation, inability to act,
disqualification, or any other cause, may at any time be filled for the
unexpired portion of the term by the Board of Directors.
Section 5- Duties of Officers:
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such powers and duties as generally pertain to their
respective offices as well as such powers and duties as may be set forth in
these By-laws, or may from time to time be specifically conferred or imposed by
the Board of Directors. The President shall be the chief executive
By-Laws-6
<PAGE>
officer of the Corporation.
Section 6- Sureties and Bonds:
In case the Board of Directors shall so require, any officer, employee or agent
of the Corporation shall execute to the Corporation a bond in such sum, and with
such surety or sureties as the Board of Directors may direct, conditioned upon
the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property, funds or
securities of the Corporation which may come into his hands.
Section 7- Shares of Other Corporations:
Whenever the Corporation is the holder of shares of any other Corporation, any
right or power of the Corporation as such shareholder (including the attendance,
acting and voting at shareholders' meetings and execution of waivers, consents,
proxies or other instruments) may be exercised on behalf of the Corporation by
the President, any Vice President, or such other person as the Board of
Directors may authorize.
ARTICLE V - SHARES OF STOCK
Section 1- Certificate of Stock:
(a) The certificates representing shares of the Corporation shall be in such
form as shall be adopted by the Board of Directors, and shall be numbered and
registered in the order issued. They shall bear the holder's name and the number
of shares, and shall be signed by (i) the Chairman of the Board or the President
or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant
Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize the
issuance of certificates for fractions of a share which shall entitle the holder
to exercise voting rights, receive dividends and participate in liquidating
distributions, in proportion to the fractional holdings; or it may authorize the
payment in cash of the fair value of fractions of a share as of the time when
those entitled to receive such fractions are determined; or it may authorize the
issuance, subject to such conditions as may be permitted by law, of scrip in
registered or bearer form over the signature of an officer or agent of the
Corporation, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder, except as therein
provided.
Section 2- Lost or Destroyed Certificates:
The holder of any certificate representing shares of the Corporation shall
immediately notify the Corporation of any loss or destruction of the certificate
representing the same. The Corporation may issue a new certificate in the place
of any certificate theretofore issued by it, alleged to have been lost or
destroyed. On production of such evidence of loss or destruction as the Board of
Directors in its discretion may require, the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or his legal
representatives, to give the Corporation a bond in such sum as the Board may
direct, and with such surety or sureties as
By-Laws-7
<PAGE>
may be satisfactory to the Board, to indemnify the Corporation against any
claims, loss, liability or damage it may suffer on account of the issuance of
the new certificate. A new certificate may be issued without requiring any such
evidence or bond when, in the judgment of the Board of Directors, it is proper
so to do.
Section 3- Transfers of Shares:
(a) Transfers of shares of the Corporation shall be made on the share records of
the Corporation only by the holder of record thereof, in person or by his duly
authorized attorney, upon surrender for cancellation of the certificate or
certificates representing such shares, with an assignment or power of transfer
endorsed thereon or delivered therewith, duly executed, with such proof of the
authenticity of the signature and of authority to transfer and of payment of
transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any share
or shares as the absolute owner thereof for all purposes and, accordingly, shall
not be bound to recognize any legal, equitable or other claim to, or interest
in, such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 4- Record Date:
In lieu of closing the share records of the Corporation, the Board of Directors
may fix, in advance, a date not exceeding fifty days, nor less than ten days, as
the record date for the determination of shareholders entitled to receive notice
of, or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if no notice is given, the day on which the
meeting is held; the record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the resolution of
the directors relating thereto is adopted. When a determination of shareholders
of record entitled to notice of or to vote at any meeting of shareholders has
been made as provided for herein, such determination shall apply to any
adjournment thereof, unless the directors fix a new record date for the
adjourned meeting.
ARTICLE VI - DIVIDENDS
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine.
ARTICLE VIl - FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of Directors from
time to time, subject to applicable law.
By-Laws-8
<PAGE>
ARTICLE VIII - CORPORATE SEAL
The corporate seal, if any, shall be in such form as shall be approved from time
to time by the Board of Directors.
ARTICLE IX - AMENDMENTS
Section 1- By Shareholders:
All by-laws of the Corporation shall be subject to alteration or repeal, and new
by-laws may be made, by the affirmative vote of shareholders holding of record
in the aggregate at least a majority of the outstanding shares entitled to vote
in the election of directors at any annual or special meeting of shareholders,
provided that the notice or waiver of notice of such meeting shall have
summarized or set forth in full therein, the proposed amendment.
Section 2- By Directors:
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, by-laws of the Corporation; provided, however, that the
shareholders entitled to vote with respect thereto as in this Article IX
above-provided may alter, amend or repeal by-laws made by the Board of
Directors, except that the Board of Directors shall have no power to change the
quorum for meetings of shareholders or of the Board of Directors, or to change
any provisions of the by-laws with respect to the removal of directors or the
filling of vacancies in the Board resulting from the removal by the
shareholders. If any by-law regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set forth
in the notice of the next meeting of shareholders for the election of directors,
the by-law so adopted, amended or repealed, together with a concise statement of
the changes made.
ARTICLE X - INDEMNITY
(a) Any person made a party to any action, suit or proceeding, by reason of the
fact that he, his testator or intestate representative is or was a director,
officer or employee of the Corporation, or of any Corporation in which he served
as such at the request of the Corporation, shall be indemnified by the
Corporation against the reasonable expenses, including attorney's fees, actually
and necessarily incurred by him in connection with the defense of such action,
suit or proceedings, or in connection with any appeal therein that such officer,
director or employee is liable for negligence or misconduct in the performance
of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of any
other rights to which any officer or director or employee may be entitled apart
from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be entitled
shall be fixed by the Board of Directors, except that in any case where there is
no disinterested majority of the Board available, the amount shall be fixed by
arbitration pursuant to then existing rules of the American Arbitration
Association.
By-Laws-9
<PAGE>
Agreement (the "Agreement") dated December 17, 1998, by and between Alpha
Communications Corp., an Ontario corporation with a principal place of business
at 151 Bloor Street West, Suite #890, Toronto, Ontario, Canada M5S 1S4 ("ACC"),
and AlphaCom Corporation, a Delaware corporation with a principal place of
business at 54 Greene Street, New York, NY 10014 ("AlphaCom"). ACC and AlphaCom
may hereinafter be referred to collectively as "Parties" and individually as a
"Party."
Intending to be legally bound, and in consideration of the mutual
covenants set forth herein, the Parties agree as follows:
1 Acknowledgments.
1.1 ACC a publicly traded company, trading on the Alberta Stock
Exchange, operates a speciality publishing business ("Speciality Publishing") in
Canada and other international markets.
1.2 AlphaCom a wholly-owned subsidiary of ACC, was incorporated in
January 1998 for the express purpose of assembling the capital and management
resources required to duplicate the strategy of ACC with regard to Speciality
Publishing in the United States marketplace.
2 Purpose of Agreement. For good consideration, the sufficiency of
which is hereby acknowledged, the Parties hereby expressly agree as follows:
2.1 ACC shall License all of its methods of doing business, proprietary
information, and trademarks, if any, for use by AlphaCom in the United States.
ACC shall further provide AlphaCom with consulting, managerial assistance, and
marketing assistance.
2.2 ACC expressly acknowledges and agrees that it shall not directly or
indirectly through any other person, firm or corporation be engaged or compete
with AlphaCom in Speciality Publishing in the United States. ACC further
expressly acknowledges and agrees that all Speciality Publishing in the United
States shall be conducted by AlphaCom.
2.3 ACC expressly acknowledges and agrees that it shall deliver to
AlphaCom, on an on going basis, all sales leads and other marketing information
in, or any time during the term hereof coming into, ACC's possession that may
reasonably lead to potential Speciality Publishing opportunities for AlphaCom in
the United States.
2.4 AlphaCom expressly acknowledges and agrees that it shall not
directly or indirectly through any other person, firm or corporation be engaged
or compete with ACC in the Speciality Publishing in countries other than the
United States. AlphaCom further expressly acknowledges and agrees that all
Speciality Publishing in countries other than the United States shall be
conducted by ACC.
2.5 AlphaCom expressly acknowledges and agrees that it shall deliver to
ACC, on an on going basis, all sales leads and other marketing information in,
or any time during the term hereof coming into, AlphaCom's possession that may
reasonably lead to potential Speciality Publishing opportunities for ACC in
countries other than the United States.
3 Miscellaneous.
3.1 No Assignment. Either Party shall not, without the written consent
of the other Party, assign or transfer its rights or obligations hereunder to
another company or person.
3.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and will become
effective when one or more counterparts have been signed by the Parties hereto
and delivered to the other Parties. Facsimile signatures will be deemed
originals for purposes of the execution of this Agreement.
3.3 Notices. Any notice required or permitted to be given hereunder
shall be in writing and shall be: (i) delivered personally; or (ii) sent by
prepaid courier service or by registered or certified mail or the equivalent and
also sent prepaid by telecopier, telex or other similar means of electronic
1
<PAGE>
communication; or (iii) sent prepaid by telecopier, telex or other similar means
of electronic communication (confirmed on the same or following day by prepaid
registered or certified mail or the equivalent or by courier), addressed to the
Parties as shown on page one of this Agreement or at such address as may be
designated by the Parties in writing. Any notice so given shall be deemed
conclusively to have been given, and received when so personally delivered or
sent by mail, or when received if by telex, telecopier or other electronic
communication or by courier.
3.4 Waiver. The delay or failure of any right provided herein shall in
no way affect its rights at a later time to enforce that right or any other
rights under this Agreement. No waiver shall be effective unless in writing
signed by the waiving Party.
3.5 Entire Agreement. This Agreement constitutes the complete,
exclusive and final understanding between the two Parties with respect to the
Agreement and supersedes any and all prior negotiations, correspondence,
understandings and agreements, whether oral or written, between the Parties
respecting the subject matter hereof.
3.6 Amendment. No modification of this Agreement will be
effective unless it is made in writing and is signed by the Parties hereto.
3.7 Governing Law. This Agreement shall be construed under the laws of
the State of New York.
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement and caused the same to be delivered on their behalf as of the date
first above written.
Alpha Communications Corp. AlphaCom Corporation
\s\ Michael P. Kraft \s\ Michael P. Kraft
- -------------------- ---------------------------
By: Michael P. Kraft, its President By: Michael P. Kraft, its President
<PAGE>
NUMBER SHARES
[__] ALPHACOM CORPORATION [__]
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
50,000,000 AUTHORIZED SHARES $0.001 PAR VALUE
[ CUSIP 02078R 10 3 ]
SEE REVERSE
FOR CERTAIN DEFINITIOINS
THIS CERTIFIES THAT
Is the Owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF $0.001 PAR VALUE COMMON STOCK OF
ALPHACOM CORPORATION
transferable only on the books of the Company in person or by duly authroized
attorney upon surrender of this Certificate properly endorsed. This Certificate
is not valid unless conountersigned by the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said company has caused this Certificate to be executed
by the facisimile signatures of its duly authroized officers and to be sealed
with the facismile seal of the Company
Dated:
ALPHACOM CORPORATION
CORPORATE
Michael Kraft SEAL Michael Kraft
SECRETARY DELAWARE PRESIDENT
COUNTERSIGNED AND REGISTERED:
American Securities Transfer & Trust, Inc.
P.O. Box 1598
Denver, colorado 80201
By________________________________________________
Transfer Agent & Registered Authorized Signiture
THIS PROOF MUST HAVE
PROOF YOUR O.K. AND SIGNATURE
BEFORE PRINTING
O.K. AS IS MK O.K. AS CORRECTED
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Signature /s/ Michael Kraft
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