U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
COLORADO COMMUNITY BROADCASTING, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1469319
- ------------------------------ -----------------------
State or other jurisdiction of IRS Employer ID Number
incorporation or organization
10200 W. 44th Avenue, Suite 400, Wheat Ridge, CO 80033
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (303) 422-8127
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
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TABLE OF CONTENTS
PART I
Page
Item 1. Business.....................................................3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.........................21
Item 3. Properties..................................................22
Item 4. Security Ownership of Certain Beneficial Owners and
Management..................................................23
Item 5. Directors and Executive Officers of the Registrant..........23
Item 6. Executive Compensation......................................28
Item 7. Certain Relationships and Related Transactions..............29
Item 8. Description of Securities...................................30
PART II
Item 1. Market for Registrant's Common Stock and Security
Holder Matters..............................................31
Item 2. Legal Proceedings...........................................31
Item 3. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.........................31
Item 4. Recent Sales of Unregistered Securities.....................31
Item 5. Indemnification of Directors and Officers...................34
PART F/S
Financial Statements and Supplementary Data..................................F-1
Signature Page................................................................35
Exhibits, Financial Statement Schedule and Reports on Form 8-K................49
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PART I
Item 1. Description of Business.
General
Colorado Community Broadcasting, Inc. (the "Company") was formed on
June 23, 1998. The Company contracted to purchase the low power television
license and station serving Estes Park, Colorado. It planned to operate the
station to broadcast local programming mixed with appropriate national
programming. The Company was unable to complete purchase arrangements and
withdrew from the contract.
The Company is now seeking other low power station opportunities in market
areas in Colorado and New Mexico. No target market has yet been identified.
Business Plan
The Lower Power Television Service (LPTV) was established by the
Federal Communications Commission in 1982. It was primarily intended to provide
opportunities for locally-oriented television service in small communities, both
rural communities and individual communities within larger urban areas. LPTV
presents a less expensive and very flexible means of delivering programming
tailored to the interests of viewers in small localized areas, providing a means
of local self-expression. In addition, LPTV has created opportunities for new
competitors in television broadcasting, and it has permitted fuller use of the
broadcast spectrum. The Company intends to seek other low power stations for
acquisition.
With their narrow geographic coverage, unaffiliated status and local
programming focus, low-power TV stations are playing an increasingly important
role in today's broadcasting mix. For independent videomakers, they present one
of the most exciting opportunities to come along since leased access cable.
In the first calendar quarter of 1999, the Company raised $24,500 in a
private placement. For the period of 1998 through date hereof, the Company had
no revenues or business. The Company has no commercial operations as of date
hereof. The Company has no full-time employees and owns no real estate.
The Company's current business plan is to seek, investigate, and, if
warranted, acquire one or more low power TV stations and to pursue other related
activities intended to enhance shareholder value. The acquisition of a station
may be made by purchase, merger, exchange of stock, or otherwise, and may
encompass assets or a business entity, such as a corporation, joint venture, or
partnership. The Company has minimal capital.
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The Company intends to seek opportunities demonstrating the potential of
long-term growth as opposed to short-term earnings.
Low-power TV (LPTV) is relatively unused broadcast category created by
the Federal Communications Commission (FCC). While high-power TV stations boast
large antennae and enough power to transmit many miles, their low-power
counterparts have smaller antennae, less expensive gear and transmit within a
much more limited area. A typical LPTV station has a reach of between five and
twenty miles. Most easily cover an average city; many can reach entire counties.
The local LPTV niche can actually contain several different markets,
especially in areas with diverse populations. For independent producers who want
their programming on LPTV, that local angle is critical. The sorts of shows
successfully produced by independents for LPTV: special interest programming;
high school sports; neighborhood call-in shows; regional real estate and legal
advice shows; city and country political forums; local church services;
community arts and entertainment programs, and a wide range of talk show formats
covering local issues not seen on national TV. Low-power TV opens up
opportunities for videomakers to get their programming into a commercial
broadcasting environment. Independent producers in markets where LPTV exists
should definitely view it as potential sources to air their programming, now and
in the future.
LPTV Industry
In March 1982, the Federal Communications Commission adopted final
rules with regard to the establishment of a new broadcasting service called Low
Power Television (LPTV), which rules were effective on June 7, 1983. Beginning
in 1980, the FCC authorized the FCC Mass Media Bureau to accept, process and
grant conditional applications for LPTV stations while rules were finalized. As
of the date hereof there are approximately 2000 LPTV licenses which have been
granted.
Functioning in the same manner as full power (conventional) television
stations, but without many of the regulatory burdens imposed upon full power
television stations, LPTV stations are allowed to:
Broadcast programs produced locally;
Retransmit signals received via satellite;
Broadcast advertisements;
Broadcast encoded or "scrambled" signals for which viewers would have
to lease or purchase decoding devices; and
Broadcast computerized encoded data for business.
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LPTV stations can be built and can operate at a lower cost than full
service stations because the equipment LPTV stations use is less expencnsive,
the relaxed rules for the service enable staff costs to be reduced and the costs
of electricity, a major budget item for full power television stations, are
lower for LPTV stations. Lower construction and operating costs will enable LPTV
stations to offer lower advertising rates. In addition, while a company may only
own seven full power television stations, a company may own an unlimited number
of LPTV stations.
The FCC currently limits the power of LPTV stations to 150 kw of
effective radiated power for UHF stations and 3 watts of power for VHF stations.
The effect of such power limitations is to reduce the broadcast range, as
compared with full power television stations. The effective transmission range
of LPTV stations may be anticipated to extend 15 to 30 miles depending upon
numerous factors including the topography of the area, channel selected, and the
transmitter output.
Before the construction of an LPTV station begins, the FCC requires
that a construction permit be granted. From the date the construction permit is
issued, the FCC requires that construction of an LPTV station must be completed
and the station be operation within three years. If this deadline is not met,
the construction permit must be turned back to the FCC. The FCC envisions no
extensions of time will be granted, the only possible exception being documented
evidence of unforeseen and unavoidable delay in delivery of equipment that was
contracted for properly. Construction of LPTV facilities, including acquisition
and installation of equipment is in high demand, and the Company will rely upon
parties not within its control for equipment. Although the Company will endeavor
to meet the construction deadlines for any LPTV licenses it obtains, there is no
assurance it will be able to do so, or, if necessary, that it will be able to
secure extensions of time.
The operation of an LPTV station depends upon a license issued by the
FCC and licenses will only be granted after a station is constructed and
operational. Without such license, the station cannot operate. An LPTV license
will be issued for a period of eight years. At the expiration of this period,
the licensee will have to apply for renewal which, if granted, would extend the
period for an additional five years. The licensee is subject to the risk that
its license may not be renewed. Additionally, the FCC has the authority to
revoke a license prior to its expiration for serious misconduct and to assess
monetary forfeitures. Continuance of a license is dependent upon compliance with
the laws and regulations relating to the operation of LPTV stations. LPTV is not
a new broadcast service having existed for 18 years. Renewals of licenses can be
made for 8 year terms.
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All LPTV stations will receive secondary spectrum priority only.
Secondary spectrum priority means an LPTV station may not cause objectionable
interference to existing full power television stations. If an LPTV station does
cause objectionable interference, it is responsible for eliminating that
interference or it must go off the air. Further, an existing LPTV station that
would cause objectionable interference to a new or proposed full power
television station or to an existing full power television station which seeks
to improve its facility, must cease operations or somehow eliminate the
objectionable interference to the full power television station.
The Communications Act of 1934, as amended, and the rules promulgated
pursuant thereto require that prior to the transfer of control of a licensee,
the proposed transfer must receive the approval of the FCC. A transfer of
control can take place when any individual stockholder, family group or any
group in privity gains or loses affirmative or negative control. Affirmative
control means control of more than 50% of the voting stock; negative control
consists of control exactly 50% of the voting stock. A transfer of control also
is effectuated at such time as 50% or more of the stock passes out of the hands
of the shareholders who held stock at the time the original authorization for
the construction permit was issued. Therefore, if an LPTV construction permit is
issued to the Company, the Company must establish internal controls to monitor
compliance with this requirement.
At the present time the Company has not identified any low power TV
station that it plans to pursue, nor has the Company reached any agreement or
definitive understanding with any person concerning an acquisition. The Company
is filing Form 10-SB on a voluntary basis in order to become a 12(g) registered
company under the Securities Exchange Act of 1934.
Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a low power TV station may be
made upon management's analysis of:
1. Coverage of the station
2. Availability of programming in the market
3. Equipment of the station
4. Management of the station
It is emphasized that management of the Company may effect transactions having a
potentially adverse impact upon the Company's shareholders pursuant to the
authority and discretion of the Company's management to complete acquisitions
without submitting any proposal to the stockholders for their consideration.
Holders of the Company's securities should not anticipate that the Company
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necessarily will furnish such holders, prior to any merger or acquisition, with
financial statements, or any other documentation, concerning a target company or
its business. In some instances, however, the proposed participation in a
business opportunity may be submitted to the stockholders for their
consideration, either voluntarily by such directors to seek the stockholders'
advice and consent or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's President, who is not a professional business
analyst. See "Management." Although there are no current plans to do so, Company
management might hire an outside consultant to assist in the investigation and
selection of TV station opportunities, and might pay a finder's fee. Since
Company management has no current plans to use any outside consultants or
advisors to assist in the investigation and selection of business opportunities,
no policies have been adopted regarding use of such consultants or advisors, the
criteria to be used in selecting such consultants or advisors, the services to
be provided, the term of service, or regarding the total amount of fees that may
be paid. However, because of the limited resources of the Company, it is likely
that any such fee the Company agrees to pay would be paid in stock and not in
cash.
No one of the factors described above will be controlling in the
selection of a television business opportunity, and management will attempt to
analyze all factors appropriate to each opportunity and make a determination
based upon reasonable investigative measures and available data. Potential
investors must recognize that, because of the Company's limited capital
available for investigation and management's limited experience in business
analysis, the Company may not discover or adequately evaluate adverse facts
about the opportunity to be acquired.
The Company is unable to predict when it may participate in low power
TV stations opportunity. It expects, however, that the analysis of specific
proposals and the selection of a business opportunity may take several months or
more.
Prior to making a decision to participate in a business opportunity for
low power television, the Company will generally request that it be provided
with: written materials regarding the station, containing such items as a
description of programming, services and company history; management resumes;
financial information; available projections, with related assumptions upon
which they are based; present and proposed forms of compensation to management;
a description of transactions between such company and its affiliates during
relevant periods; a description of present and required facilities; an analysis
of risks and competitive conditions; a financial plan of operation and estimated
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capital requirements; audited financial statements, or if they are not
available, unaudited financial statements, together with reasonable assurances
that audited financial statements would be able to be produced within a
reasonable period of time not to exceed 60 days following completion of a merger
transaction; and other information deemed relevant.
As part of the Company's investigation, the Company's executive
officers and directors may meet personally with management and key personnel,
may visit and inspect material facilities, obtain independent analysis or
verification of certain information provided, check references of management and
key personnel, and take other reasonable investigative measures, to the extent
of the Company's limited financial resources and management expertise.
It is possible that the low power television opportunities that might
be available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission regulations regarding purchase and sale of
"penny stocks." The regulations would affect, and possibly impair, any market
that might develop in the Company's securities until such time as they qualify
for listing on NASDAQ or on another exchange which would make them exempt from
applicability of the "penny stock" regulations. See "Risk Factors -- Regulation
of Penny Stocks."
There are no loan arrangements or arrangements for any financing
whatsoever relating to any business opportunities in low power television at
this time.
Form of Acquisition
It is impossible to predict the manner in which the Company may
participate in a low power TV station opportunity. Specific business
opportunities will be reviewed as well as the respective needs and desires of
the Company and the promoters of the opportunity and, upon the basis of that
review and the relative negotiating strength of the Company and such promoters,
the legal structure or method deemed by management to be suitable will be
selected. Such structure may include, but is not limited to leases, purchase and
sale agreements, licenses, joint ventures and other contractual arrangements.
The Company may act directly or indirectly through an interest in a partnership,
corporation or other form of organization. Implementing such structure may
require the merger, consolidation or reorganization of the Company with other
corporations or forms of business organization, and although it is likely, there
is no assurance that the Company would be the surviving entity. In addition, the
present management and stockholders of the Company most likely will not have
control of a majority of the voting shares of the Company following a
reorganization transaction. As part of such a transaction, the Company's
existing directors may resign and new directors may be appointed without any
vote by stockholders.
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It is likely that the Company will acquire its participation in a
business opportunity through the issuance of Common Stock or other securities of
the Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986, depends upon the issuance to the stockholders of
the acquired company of a controlling interest (i.e. 80% or more) of the common
stock of the combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions rather than
other "tax free" provisions provided under the Internal Revenue Code, the
Company's current stockholders would retain in the aggregate 20% or less of the
total issued and outstanding shares. This could result in substantial additional
dilution in the equity of those who were stockholders of the Company prior to
such reorganization. Any such issuance of additional shares might also be done
simultaneously with a sale or transfer of shares representing a controlling
interest in the Company by the current officers, directors and principal
shareholders. (See "Description of Business - General").
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of bearing costs if the transaction is not closed, set forth remedies
upon default, and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its
officers and principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
the proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
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other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys
and others. If a decision is made not to participate in a specific business
opportunity, the costs theretofore incurred in the related investigation would
not be recoverable. Moreover, because many providers of goods and services
require compensation at the time or soon after the goods and services are
provided, the inability of the Company to pay until an indeterminate future time
may make it impossible to procure goods and services.
In all probability, upon completion of an acquisition or merger, there
will be a change in control through issuance of substantially more shares of
common stock. Further, in conjunction with an acquisition or merger, it is
likely that management may offer to sell a controlling interest at a price not
relative to or reflective of any value of the shares sold by management, and at
a price which could not be achieved by individual shareholders at the time.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
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opportunity through the purchase and sale of investment securities will be
limited.
The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Act, in order to protect purchasers of investment company securities.
Since the Company will not register as an investment company, stockholders will
not be afforded these protections.
Competition
The Company expects to encounter substantial competition in its efforts
to locate attractive low power television opportunities, primarily from other
television companies, venture capital partnerships and corporations, venture
capital affiliates of large industrial and financial companies, small investment
companies, and wealthy individuals. Many of these entities will have
significantly greater experience, resources and managerial capabilities than the
Company and will therefore be in a better position than the Company to obtain
access to attractive business opportunities.
No Rights of Dissenting Shareholders
The Company does not intend to provide Company shareholders with
complete disclosure documentation including audited financial statements,
concerning a possible target company prior to acquisition, because the Colorado
Business Corporation Act vests authority in the Board of Directors to decide and
approve matters involving acquisitions. Any transaction would be structured as
an acquisition, not a merger, with the Registrant being the parent company and
the acquiree being a wholly owned subsidiary. Therefore, a shareholder will have
no right of dissent under Colorado law.
No Target Candidates for Acquisition
None of the Company's Officers, Directors, promoters, affiliates, or
associates have had any preliminary contact or discussion with any specific
candidate for acquisition. There are no present plans, proposals, arrangements,
or understandings with any representatives of the owners of any business or
company regarding the possibility of an acquisition transaction.
Administrative Offices
The Company currently maintains a mailing address at 10200 W. 44th
Avenue, Suite 400, Wheat Ridge, Colorado 80033. The Company's telephone number
is (303) 422-8127. Other than this mailing address, the Company does not
currently maintain any other office facilities, and does not anticipate the need
for maintaining office facilities at any time in the foreseeable future. The
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Company pays no rent or other fees for the use of this mailing address.
Employees
The Company is a development stage company and currently has no
employees. Management of the Company expects to use consultants, attorneys and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating business opportunities. The
need for employees and their availability will be addressed in connection with
the decision whether or not to acquire or participate in specific business
opportunities. Although there is no current plan with respect to its nature or
amount, remuneration may be paid to or accrued for the benefit of, the Company's
officers prior to, or in conjunction with, the completion of a business
acquisition for services actually rendered, if for. See "Executive Compensation"
and under "Certain Relationships and Related Transactions."
Risk Factors
1. Conflicts of Interest. Certain conflicts of interest may exist between the
Company and its officers and directors. They have other business interests to
which they devote their attention, and may be expected to continue to do so
although management time should be devoted to the business of the Company. As a
result, conflicts of interest may arise that can be resolved only through
exercise of such judgment as is consistent with fiduciary duties to the Company.
See "Management," and "Conflicts of Interest."
It is anticipated that Company's officers and directors may actively
negotiate or otherwise consent to the purchase of a portion of his common stock
as a condition to, or in connection with, a proposed merger or acquisition
transaction. In this process, the Company's officers may consider his own
personal pecuniary benefit rather than the best interests of other Company
shareholders, and the other Company shareholders are not expected to be afforded
the opportunity to approve or consent to any particular stock buy-out
transaction. See "Conflicts of Interest."
2. Need For Additional Financing. The Company has very limited funds, and such
funds will not be adequate to take advantage of any available business
opportunities. Even if the Company's funds prove to be sufficient to acquire an
interest in, or complete a transaction with, a business opportunity, the Company
may not have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital. The Company
has not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is no assurance
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that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to the Company. If not available, the Company's
operations will be limited to those that can be financed with its modest
capital.
3. Regulation of Penny Stocks. The Company's securities, when available for
trading, will be subject to a Securities and Exchange Commission rule that
imposes special sales practice requirements upon broker-dealers who sell such
securities to persons other than established customers or accredited investors.
For purposes of the rule, the phrase "accredited investors" means, in general
terms, institutions with assets in excess of $5,000,000, or individuals having a
net worth in excess of $1,000,000 or having an annual income that exceeds
$200,000 (or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell the Company's securities and also
may affect the ability of purchasers in this offering to sell their securities
in any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a
number of rules to regulate "penny stocks." Such rules include Rules 3a51-1,
15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities
Exchange Act of 1934, as amended. Because the securities of the Company may
constitute "penny stocks" within the meaning of the rules, the rules would apply
to the Company and to its securities. The rules may further affect the ability
of owners of Shares to sell the securities of the Company in any market that
might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
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the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
4. Lack of Operating History. The Company was formed in March 1998 for the
purpose of engaging in any lawful business. No revenues have ever been achieved.
The Company is not profitable. The Company has no successful operating history,
revenues from operations, or assets. The Company faces all of the risks of a new
business and the special risks inherent in the investigation, acquisition, or
involvement in a new business opportunity. The Company must be regarded as a new
or "start-up" venture with all of the unforeseen costs, expenses, problems, and
difficulties to which such ventures are subject.
5. No Assurance of Success or Profitability. There is no assurance that the
Company will acquire a favorable business opportunity. Even if the Company
should become involved in a business opportunity, there is no assurance that it
will generate revenues or profits, or that the market price of the Company's
Common Stock will be increased thereby.
6. Possible Business - Not Identified and Highly Risky. The Company has not
identified and has no commitments to enter into or acquire a specific low power
television business opportunity and therefore can disclose the risks and hazards
of a business opportunity that it may enter into in only a general manner, and
cannot disclose fully in low power television the risks and hazards of any
specific business or opportunity that it may enter into. An investor can expect
a potential business opportunity to be quite risky. The Company's acquisition of
or participation in a business opportunity will likely be highly illiquid and
could result in a total loss to the Company and its stockholders if the business
or opportunity proves to be unsuccessful. See Item 1 "Description of Business."
7. Type of Business Acquired. The type of business to be acquired must be in the
low power television business. Because of the Company's limited capital, it is
more likely than not that any acquisition by the Company will involve other
parties whose primary interest is the acquisition of control of a publicly
traded company. Moreover, any business opportunity acquired may be currently
unprofitable or present other negative factors.
8. Impracticability of Exhaustive Investigation. The Company's limited funds and
the lack of full-time management will likely make it impracticable to conduct a
complete and exhaustive investigation and analysis of a business opportunity
before the Company commits its capital or other resources thereto. Management
decisions, therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Company had more
funds available to it, would be desirable. The Company will be particularly
dependent in making decisions upon information provided by the promoter, owner,
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sponsor, or others associated with the business opportunity seeking the
Company's participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related to
preliminary aspects of completing an acquisition transaction, whether or not any
business opportunity investigated is eventually acquired.
9. Lack of Diversification. Because of the limited financial resources that the
Company has, it is unlikely that the Company will be able to diversify its
acquisitions or operations. The Company's probable inability to diversify its
activities into more than one area will subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
10. Reliance upon Financial Statements. The Company generally will require
audited financial statements from companies that it proposes to acquire. Given
cases where audited financials are available, the Company will have to rely upon
interim period unaudited information received from target companies' management
that has not been verified by outside auditors. The lack of the type of
independent verification which audited financial statements would provide,
increases the risk that the Company, in evaluating an acquisition with such a
target company, will not have the benefit of full and accurate information about
the financial condition and recent interim operating history of the target
company. This risk increases the prospect that the acquisition of such a company
might prove to be an unfavorable one for the Company or the holders of the
Company's securities.
Moreover, the Company will be subject to the reporting provisions of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and thus
will be required to furnish certain information about significant acquisitions,
including audited financial statements for any business that it acquires.
Consequently, acquisition prospects that do not have, or are unable to provide
reasonable assurances that they will be able to obtain, the required audited
statements would not be considered by the Company to be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable. Should the Company, during the time it remains subject to the
reporting provisions of the Exchange Act, complete an acquisition of an entity
for which audited financial statements prove to be unobtainable, the Company
would be exposed to enforcement actions by the Securities and Exchange
Commission (the "Commission") and to corresponding administrative sanctions,
including permanent injunctions against the Company and its management. The
legal and other costs of defending a Commission enforcement action would have
material, adverse consequences for the Company and its business. The imposition
of administrative sanctions would subject the Company to further adverse
consequences.
<PAGE>
In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ, or on
any existing stock exchange. Moreover, the lack of such financial statements is
likely to discourage broker-dealers from becoming or continuing to serve as
market makers in the securities of the Company. Without audited financial
statements, the Company would almost certainly be unable to offer securities
under a registration statement pursuant to the Securities Act of 1933, and the
ability of the Company to raise capital would be significantly limited until
such financial statements were to become available.
11. Other Regulation. An acquisition made by the Company may be of a low power
television business that is subject to regulation or licensing by the agency,
the Federal Communications Commission. Compliance with such regulations and
licensing can be expected to be a time-consuming, expensive process and may
limit other investment opportunities of the Company.
12. Dependence upon Management; Limited Participation of Management. The Company
currently has only three individuals who are serving as its officers and
directors. The Company will be heavily dependent upon his skills, talents, and
abilities to implement its business plan, and may, from time to time, find that
the inability of the officers and directors to devote their full time attention
to the business of the Company results in a delay in progress toward
implementing its business plan. See "Management." Because investors will not be
able to evaluate the merits of possible business acquisitions by the Company,
they should critically assess the information concerning the Company's officers
and directors.
13. Lack of Continuity in Management. The Company does not have an employment
agreement with its officers and directors, and as a result, there is no
assurance they will continue to manage the Company in the future. In connection
with acquisition of a business opportunity, it is likely the current officers
and directors of the Company may resign subject to compliance with Section 14f
of the Securities Exchange Act of 1934. A decision to resign will be based upon
the identity of the business opportunity and the nature of the transaction, and
is likely to occur without the vote or consent of the stockholders of the
Company.
14. Indemnification of Officers and Directors. Colorado Revised Statutes provide
for the indemnification of its directors, officers, employees, and agents, under
certain circumstances, against attorney's fees and other expenses incurred by
them in any litigation to which they become a party arising from their
association with or activities on behalf of the Company. The Company will also
bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company therefor
if it is ultimately determined that any such person shall not have been entitled
<PAGE>
to indemnification. This indemnification policy could result in substantial
expenditures by the Company which it will be unable to recoup.
15. Director's Liability Limited. Colorado Revised Statutes exclude personal
liability of its directors to the Company and its stockholders for monetary
damages for breach of fiduciary duty except in certain specified circumstances.
Accordingly, the Company will have a much more limited right of action against
its directors than otherwise would be the case. This provision does not affect
the liability of any director under federal or applicable state securities laws.
16. Dependence upon Outside Advisors. To supplement the business experience of
its officers and directors, the Company may be required to employ accountants,
technical experts, appraisers, attorneys, or other consultants or advisors. The
selection of any such advisors will be made by the Company's President without
any input from stockholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing fiduciary or other
obligation to the Company. In the event the President of the Company considers
it necessary to hire outside advisors, he may elect to hire persons who are
affiliates, if they are able to provide the required services.
17. Leveraged Transactions. There is a possibility that any acquisition of a
business opportunity by the Company may be leveraged, i.e., the Company may
finance the acquisition of the business opportunity by borrowing against the
assets of the business opportunity to be acquired, or against the projected
future revenues or profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired through a
leveraged transaction is profitable only if it generates enough revenues to
cover the related debt and expenses. Failure to make payments on the debt
incurred to purchase the business opportunity could result in the loss of a
portion or all of the assets acquired. There is no assurance that any business
opportunity acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
18. Competition. The search for potentially profitable low power TV
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with many firms that have substantially greater
financial and management resources and capabilities than the Company. These
competitive conditions will exist in any industry in which the Company may
become interested.
19. The Industry. The rules regarding LPTV stations have been in effect since
1982 and approximately 2000 LPTV licenses exist but less than 1200 stations are
in operation, although approximately 1500 licenses have been granted, and the
<PAGE>
ones that are in operation have been in operation with mixed success.
Accordingly, there is no assurance the LPTV business will be successful.
20. Competition in the Broadcast Industry. Competition for LPTV licenses and
stations is severe. There are over 2000 licenses for LPTV stations presently
granted by the FCC, and any license in which the Company or its affiliates
acquires and interest faces competition from other applicants. The Company, if
it is able to obtain a construction permit for an LPTV station and construct an
LPTV station will face major competition for audience time and for advertising
revenue from full service television stations which have a larger broadcast
range, cable television systems, radio stations, and other entertainment and
informational media.
21. Government Regulation. The Company's proposed activities are subject to
extensive regulation by governmental authorities. Specifically, the FCC
regulates the grant and renewal of licenses as well as the operation of
stations. Existing and future laws or regulations could adversely affect such
activities, and additional or changed activities could be subject to additional
regulation by the same or other governmental authorities.
22. Dependence on Financing. Significant capital expenditures will be required
to construct and operate LPTV stations. The cost to construct and operate a
station depends on the range of coverage, topography of the area covered,
programming costs and extent of local program origination. Due to such cost
uncertainties and due to the fact that it is not known how many, if any, LPTV
station licenses will be granted to the Company, the Company will only be able
to construct a limited number of LPTV stations. Once the net proceeds from this
offering allocated for such purposes have been utilized, additional
opportunities with respect to LPTV stations may become available to the Company
and, unless the Company has cash on hand or is able to secure additional
financing, the Company may not be able to take advantage of such opportunities.
23. Programming. Although the Company believes that programming for LPTV
stations is readily available, the Company may not have sufficient funds
available to obtain quality programming that will attract advertisers and
viewers. As of the date hereof the Company has not contracts to obtain either
music video or satellite programming.
24. Business Dependent on Key Personnel. The business of the Company is
dependent upon the active participation of its executive officers. Loss of the
services of any of the Company's executive officers could adversely affect the
conduct of the Company's business. The Company does not maintain nor does it
have a present intention to acquire key man life insurance policies on its
officers. The Company does, however, have written employment agreements with its
officers.
<PAGE>
25. Limitation of LPTV Industry. LPTV stations only receive secondary spectrum
priority which means that: (1) a proposed LPTV station, in order to be granted a
construction permit, may not cause objectionable interference with existing full
power stations; and (2) an existing LPTV station that would cause objectionable
interference with a new or proposed full power station or an existing full power
station which seeks to improve its facility, must cease operations or eliminate
the objectionable interference. There is no assurance that operations of any
LPTV stations obtained by the Company will not have to be curtailed because of
the objectionable interference.
26. No Foreseeable Dividends. The Company has not paid dividends on its Common
Stock and does not anticipate paying such dividends in the foreseeable future.
27. Loss of Control by Present Management and Stockholders. The Company may
consider an acquisition in which the Company would issue as consideration for
the business opportunity to be acquired an amount of the Company's authorized
but unissued Common Stock that would, upon issuance, represent the great
majority of the voting power and equity of the Company. The result of such an
acquisition would be that the acquired company's stockholders and management
would control the Company, and the Company's management could be replaced by
persons unknown at this time. Such a merger would result in a greatly reduced
percentage of ownership of the Company by its current shareholders. In addition,
the Company's major shareholders could sell control blocks of stock at a premium
price to the acquired company's stockholders.
28. No Public Market Exists. There is no public market for the Company's common
stock, and no assurance can be given that a market will develop or that a
shareholder ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly volatile.
Factors such as those discussed in this "Risk Factors" section may have a
significant impact upon the market price of the securities offered hereby. Owing
to the low price of the securities, many brokerage firms may not be willing to
effect transactions in the securities. Even if a purchaser finds a broker
willing to effect a transaction in these securities, the combination of
brokerage commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such securities as collateral for any loans.
29. Rule 144 Sales. 210,000 of the outstanding shares of Common Stock held by
present officers, directors, and stockholders are "restricted securities" within
the meaning of Rule 144 under the Securities Act of 1933, as amended. As
restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Act and as required under applicable
<PAGE>
state securities laws. Rule 144 provides in essence that a person who has held
restricted securities for one year may, under certain conditions, sell every
three months, in brokerage transactions, a number of shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. Nonaffiliate shareholders of the Company have held their
shares for two years are eligible to have freely tradable shares under Rule
144(K). A sale under Rule 144 or under any other exemption from the Act, if
available, or pursuant to subsequent registration of shares of Common Stock of
present stockholders, may have a depressive effect upon the price of the Common
Stock in any market that may develop.
30. Blue Sky Considerations. Because the securities registered hereunder have
not been registered for resale under the blue sky laws of any state, the holders
of such shares and persons who desire to purchase them in any trading market
that might develop in the future, should be aware that there may be significant
state blue-sky law restrictions upon the ability of investors to sell the
securities and of purchasers to purchase the securities. Some jurisdictions may
not under any circumstances allow the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider the secondary
market for the Company's securities to be a limited one.
31. Blue Sky Restrictions. Many states have enacted statutes or rules which
restrict or prohibit the sale or resale of securities of "blank check" companies
to residents so long as they remain shell companies. In certain states this
company might be deemed to be a "blank check" company because it has no
operating business. To the extent any current shareholders or subsequent
purchaser from a shareholder may reside in a state which restricts or prohibits
resale of shares in a "blank check" company, warning is hereby given that the
shares may be "restricted" from resale as long as the company is a shell
company.
At the date of this registration statement, the Company has no
intention of offering further shares in a private offering to anyone. Further,
the policy of the Board of Directors is that any future offering of shares will
only be made after an acquisition has been made and can be disclosed in
appropriate 8-K filings.
In the event of a violation of state laws regarding resale, the Company
could be liable for civil and criminal penalties which would be a substantial
impairment to the Company. At date of this registration statement, all
shareholders' shares bear a "restrictive legend," and the Company will examine
each shareholders' resident state laws at the time of any proposed resale of
<PAGE>
shares now outstanding to attempt to avoid any inadvertent breach of state laws.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS OR PLAN OF
OPERATIONS.
Liquidity and Capital Resources
The Company remains in the development stage and, since inception, has
experienced significant liquidity problems and has had little capital resources
and stockholder's equity.
The Company will carry out its plan of business as discussed above. The
Company cannot predict to what extent its liquidity and capital resources will
be diminished prior to the consummation of a business combination or whether its
capital will be further depleted by the operating losses (if any) of the
business entity which the Company may eventually acquire.
Results of Operations
During the period from March 16, 1998 (inception) through April 30,
1999, the Company has engaged in no significant operations other than
organizational activities. There were no operations revenues or expenses from
inception to April 30, 1998.
The Company had no revenues in fiscal 1998. The Company incurred $793
in expenses in fiscal 1998, ended April 30, 1999.
The net operating loss in fiscal 1998 was ($793). The net loss per
share for the year was less than ($.01) per share.
For the current fiscal year, the Company anticipates incurring a loss
as a result of legal and accounting expenses, expenses associated with
registration under the Securities Exchange Act of 1934, and expenses associated
with locating and evaluating acquisition candidates. The Company anticipates
that until a business combination is completed with an acquisition candidate, it
will not generate revenues other than interest income, and may continue to
operate at a loss after completing a business combination, depending upon the
performance of the acquired business.
Results of Operations for the Quarter Ended July 31, 1999
The Company incurred expenses of $1,800 for audit costs in the quarter
ended July 31, 1999. The Company had no expenses in the same period in 1998. The
Company had a loss on operations of $1,800 in the quarter in 1999 compared to no
profit or loss on operations in the quarter in 1998.
The Company expects that its losses on operations will continue for an
indefinite time until it achieves an operational business, which it cannot
<PAGE>
achieve without significant additional capital investment, for which the Company
has no source.
Need for Additional Financing
The Company does not have capital sufficient to meet the Company's cash
needs, including the costs of compliance with the continuing reporting
requirements of the Securities Exchange Act of 1934. The Company will have to
seek loans or equity placements to cover such cash needs. In the event the
Company is able to complete a business combination during this period, lack of
its existing capital may be a sufficient impediment to prevent it from
accomplishing the goal of completing a business combination. There is no
assurance, however, that the available funds will ultimately prove to be
adequate to allow it to complete a business combination. And once a business
combination is completed, the Company's needs for additional financing are
likely to increase substantially.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses.
Irrespective of whether the Company's cash assets prove to be
inadequate to meet the Company's operational needs, the Company might seek to
compensate providers of services by issuances of stock in lieu of cash.
Year 2000 Issues
Year 2000 problems result primarily from the inability of some computer
software to property store, recall, or use data after December 31, 1999. These
problems may affect many computers and other devices that contain embedded
computer chips. The Company's operations, however, do not rely on information
technology (IT) systems. Accordingly, the Company does not believe it will be
material affected by Year 2000 problems.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other office machines.
Moreover, the Company relies on third-parties that may suffer from Year 2000
problems that could affect the Company's operations, including banks, oil field
operators, and utilities. In light of the Company's substantially reduced
operations, the Company does not believe that such non-IT systems or third-party
Year 2000 problems will affect the Company in a manner that is different or more
substantial than such problems affect other similarly situated companies or
industry generally. Consequently, the Company does not currently intend to
conduct a readiness assessment of Year 2000 problems or to develop a detailed
contingency plan with respect to Year 2000 problems that may affect the Company.
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY.
The Company has no property. The Company does not currently maintain an
office or any other facilities. It does currently maintain a mailing address at
10200 W. 44th Avenue, Suite 400, Wheat Ridge, Colorado 80033, which is the
office address of its legal counsel, Michael A. Littman. The Company pays no
rent for the use of this mailing address. The Company does not believe that it
will need to maintain an office at any time in the foreseeable future in order
to carry out its plan of operations described herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of the date of this Registration
Statement, the number of shares of Common Stock owned of record and beneficially
by executive officers, directors and persons who hold 5.0% or more of the
outstanding Common Stock of the Company. Also included are the shares held by
all executive officers and directors as a group.
NUMBER OF
SHAREHOLDERS BENEFICIAL OWNERS SHARES PERCENTAGE
- ---------------------------------------------------------------------------
Adelisa Shwayder 210,000 97.9%
Byron W. St. Clair 0 0%
Wesley F. Whiting 0 0%
All directors and executive
officers as a group (3 persons) 210,000 97.9%
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are
as follows:
Name Position
- ---------------------------------------------------------------
Byron W. St. Clair President and Director
Adelisa Shwayder Secretary, Treasurer, and
Director
Wesley F. Whiting Director
The directors named above will serve until the next annual meeting of
the Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting. Officers will hold their positions at
the pleasure of the board of directors, absent any employment agreement, of
which
<PAGE>
none currently exists or is contemplated. There is no arrangement or
understanding between the directors and officers of the Company and any other
person pursuant to which any director or officer was or is to be selected as a
director or officer.
The directors and officers of the Company will devote such time to the
Company's affairs on an "as needed" basis. As a result, the actual amount of
time which they will devote to the Company's affairs is unknown and is likely to
vary substantially from month to month.
Biographical Information
Dr. Byron W. St. Clair, Vice President and Director, is an independent
engineering consultant specializing in over-the-air distribution systems. He was
first President and then Chairman (Emeritus) of the Board of Directors of
Larcan-TTC, a major manufacturer of television, radio transmitters until 1996.
Previously he served as President of EMCEE and as a Director of Development of
Adler Electronics, pioneering firms in the development of Low Power TV systems.
His experience has included supplying equipment to establish instructional and
entertainment TV systems in Alaska, administering television technology transfer
projects in China, and participating in subcommittees regarding High Definition
Television (HDTV) technologies.
Dr. St. Clair holds a Ph.D. in Physics from Syracuse University, an MA and
BS in Electrical Engineering from Columbia University. He is President of the
National Translator Association, and associate member of the Association of
Federal Communications Consulting Engineers, a member of the New York Academy of
Sciences, and sits on the board of a Denver educational TV station. He has
written numerous technical papers and articles.
Adelisa Shwayder, Secretary and Director, received a BS from the
University of Puerto Rico and an MS from Stanford University. She is currently a
school psychologist for the Denver Public School system. She was previously a
school psychologist for Arlington County Virginia and the Illinois Department of
Child Development.
Wesley Whiting, Director, Mr. Whiting was President, director, and
secretary of Berge Exploration, Inc. (1978-88) and president, vice president,
and director of NELX, Inc. (1994- 1998), and was vice president and director of
Intermountain Methane Corporation (1988-91), and president of Westwind
Production, Inc. (1997-1998). He has been a director of Kimbell deCar
Corporation since 1998, and he has been President and a director of Dynadapt
System, INc. since 1998.
<PAGE>
Management will devote minimal time to the operations of the Company,
and any time spent will be devoted to screening and assessing and, if warranted,
negotiating to acquire low power TV opportunities.
None of the Company's officers and/or directors receives any
compensation for their respective services rendered to the Company, nor have
they received such compensation in the past. They all have agreed to act without
compensation until authorized by the Board of Directors, which is not expected
to occur until the Company has generated revenues from operations after
consummation of a merger or acquisition. As of the date of filing this report,
the Company has no funds available to pay officers or directors. Further, none
of the officers or directors is accruing any compensation pursuant to any
agreement with the Company. No retirement, pension, profit sharing, stock option
or insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.
It is possible that, after the Company successfully consummates a
merger or acquisition with an unaffiliated entity, that entity may desire to
employ or retain one or a number of members of the Company's management for the
purposes of providing services to the surviving entity, or otherwise provide
other compensation to such persons. However, the Company has adopted a policy
whereby the offer of any post-transaction remuneration to members of management
will not be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors were
offered compensation in any form from any prospective merger or acquisition
candidate, the proposed transaction would not be approved by the Company's Board
of Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted Common Stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee cannot
be determined as of the date of filing this report, but is expected to be
<PAGE>
comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
The Company has adopted a policy that its affiliates and management
shall not be issued further common shares of the Company, except in the event
discussed in the preceding paragraphs.
Indemnification of Officers and Directors
As permitted by Colorado Revised Statutes, the Company may indemnify
its directors and officers against expenses and liabilities they incur to
defend, settle, or satisfy any civil or criminal action brought against them on
account of their being or having been Company directors or officers unless, in
any such action, they are adjudged to have acted with gross negligence or
willful misconduct. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable.
Exclusion of Liability
The Colorado Business Corporation Act excludes personal liability for
its directors for monetary damages based upon any violation of their fiduciary
duties as directors, except as to liability for any breach of the duty of
loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, acts in violation of the Colorado
Business Corporation Act, or any transaction from which a director receives an
improper personal benefit. This exclusion of liability does not limit any right
which a director may have to be indemnified and does not affect any director's
liability under federal or applicable state securities laws.
Conflicts of Interest
The officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
<PAGE>
Conflicts of Interest - General
The Company's officers and directors may actively negotiate or
otherwise consent to the purchase of a portion of their common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. It is anticipated that a substantial premium over the initial cost
of such shares may be paid by the purchaser in conjunction with any sale of
shares by the Company's officers and directors which is made as a condition to,
or in connection with, a proposed merger or acquisition transaction. The fact
that a substantial premium may be paid to the Company's officers and directors
to acquire their shares creates a potential conflict of interest for them in
satisfying their fiduciary duties to the Company and its other shareholders.
Even though such a sale could result in a substantial profit to them, they would
be legally required to make the decision based upon the best interests of the
Company and the Company's other shareholders, rather than their own personal
pecuniary benefit.
Item 6. Executive Compensation.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) Options/
($) SARs (#)
----------------------------------------------------------------------------------------------------------------
Byron W. 0 0 0 0 0
St. Clair,
President
----------------------------------------------------------------------------------------------------------------
1998 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Adelisa 0 0 0 0 0
Shwayder,
Secretary
----------------------------------------------------------------------------------------------------------------
1998 0 0 0 0 0
====================================================================================================================================
</TABLE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End
Option/SAR value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
No officer or director has received any other remuneration in the one
year period prior to the filing of this registration statement. Although there
is no current plan in existence, it is possible that the Company will adopt a
plan to pay or accrue compensation to its officers and directors for services
related to seeking business opportunities and completing a merger or acquisition
transaction. See "Certain Relationships and Related Transactions." The Company
has no stock option, retirement, pension, or profit-sharing programs for the
<PAGE>
benefit of directors, officers or other employees, but the Board of Directors
may recommend adoption of one or more such programs in the future.
Item 7. Certain Relationships and Related Transactions.
Prior to the date of this Registration Statement, the Company issued to
its founders, officers, and directors, and to other shareholders, a total of
225,000 shares of Common Stock for a total of $25,000 in cash and nominal value
of services. Certificates evidencing the Common Stock issued by the Company to
these persons have all been stamped with a restrictive legend, and are subject
to stop transfer orders by the Company unless resale is exempt under Section
4(1) or Rule 144 of the Securities Act of 1933. For additional information
concerning restrictions that are imposed upon the securities held by current
stockholders, and the responsibilities of such stockholders to comply with
federal securities laws in the disposition of such Common Stock, see "Risk
Factors - Rule 144 Sales."
Its founder, Adelisa Shwayder, received 200,000 shares in 1998 as
consideration for services rendered in setting up the corporation and developing
the business plan. Ms. Shwayder purchased 10,000 shares of common stock for
$10,000 in 1999.
No officer, director, or affiliate of the Company has or proposes to
have any direct or indirect material interest in any asset proposed to be
acquired by the Company through security holdings, contracts, options, or
otherwise.
The Company has adopted a policy under which any consulting or finder's
fee that may be paid to a third party or affiliate for consulting services to
assist management in evaluating a prospective business opportunity would be paid
in stock or in cash. Any such issuance of stock would be made on an ad hoc
basis. Accordingly, the Company is unable to predict whether or in what amount
such a stock issuance might be made.
Although there is no current plan in existence, it is possible that the
Company will adopt a plan to pay or accrue compensation to its officers and
directors for services related to seeking business opportunities and completing
a merger or acquisition transaction.
Although management has no current plans to cause the Company to do so,
it is possible that the Company may enter into an agreement with an acquisition
candidate requiring the sale of all or a portion of the Common Stock held by the
Company's current stockholders to the acquisition candidate or principals
thereof, or to other individuals or business entities, or requiring some other
form of payment to the Company's current stockholders, or requiring the future
employment of specified officers and payment of salaries to them. It is more
likely than not that any sale of securities by the Company's current
stockholders to an acquisition candidate would be at a price substantially
higher than that originally paid by such stockholders. Any payment to current
<PAGE>
stockholders in the context of an acquisition involving the Company would be
determined entirely by the largely unforeseeable terms of a future agreement
with an unidentified business entity.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of Common Stock $.0001 par value. Each record holder of
Common Stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. Cumulative voting for the election
of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
Shareholders
Each shareholder has sole investment power and sole voting power over
the shares owned by such shareholder.
No shareholder has entered into or delivered any lock up agreement or
letter agreement regarding their shares or options thereon. Under Colorado laws,
no lock up agreement is required regarding the Company's shares as it might
relate to an acquisition.
Transfer Agent
The Company has engaged Mountain Share Transfer Inc. of Broomfield,
Colorado as its transfer agent.
Reports to Stockholders
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim reports
<PAGE>
to its stockholders when it deems appropriate. The Company intends to comply
with the periodic reporting requirements of the Securities Exchange Act of 1934
for so long as it is subject to those requirements.
PART II
Item 1. Market Price and Dividends on the Registrant's Common Equity and Other
Shareholder Matters
No public trading market exists for the Company's securities and all of
its outstanding securities are restricted securities as defined in Rule 144.
There were 17 holders of record of the Company's common stock on April 30, 1999.
No dividends have been paid to date and the Company's Board of Directors does
not anticipate paying dividends in the foreseeable future.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no
such proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the Company,
or any associate of any such director, officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company in
reference to any litigation.
Item 3. Changes in and Disagreements with Accountants.
Not applicable.
Item 4. Recent Sales of Unregistered Securities.
Since March 16, 1998 (the date of the Company's formation), the Company
has sold its Common Stock to the persons listed in the table below in
transactions summarized as follows:
<TABLE>
<CAPTION>
PURCHASE AMOUNT OF CONSID- PRICE PER
NAME & ADDRESS DATE SHARES ERATION SHARE
<S> <C> <C> <C> <C>
Adelissa Shwayder 1998 200,000 $20 $.0001
Jim Allen April 6, 1999 500 $500 1.00
Don Spencer April 6, 1999 1000 $1000 1.00
Blaine Stokes April 6, 1999 2000 $2000 1.00
Clark Rheemes April 6, 1999 1000 $1000 1.00
Frank Sularz April 6, 1999 250 $250 1.00
Rod Greiner April 6, 1999 1000 $1000 1.00
<PAGE>
Brian Smith April 6, 1999 250 $250 1.00
Jim Sorensen April 6, 1999 500 $500 1.00
Andrew Snyder April 6, 1999 250 $250 1.00
John Schlie April 6, 1999 250 $25 1.00
Tom Joyce April 6, 1999 250 $250 1.00
Ron Galifa April 6, 1999 250 $25 1.00
Charlene Shaffer April 10, 1999 7000 $7000 1.00
Adelisa Shwayder April 10, 1999 10000 $10,000 1.00
Peter Hiniker April 10, 1999 250 $250 1.00
George Alverio April 10, 1999 250 $250 1.00
Total $25,000
</TABLE>
Each of the sales listed above was made for cash or services as listed. All of
the listed sales were made in reliance upon the exemption from registration
offered by Section 4(2) of the Securities Act of 1933, as amended. Based upon
Subscription Agreements completed by each of the subscribers, the Company had
reasonable grounds to believe immediately prior to making an offer to the
private investors, and did in fact believe, when such subscriptions were
accepted, that such purchasers (1) were purchasing for investment and not with a
view to distribution, and (2) had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
their investment and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters, and no sales
commissions were paid.
Item 5. Indemnification of Directors and Officers
The Colorado Revised Statutes provide that the Company may indemnify
its officers and directors for costs and expenses incurred in connection with
the defense of actions, suits, or proceedings where the officer or director
acted in good faith and in a manner he reasonably believed to be in the
Company's best interest and is a party by reason of his status as an officer or
director, absent a finding of negligence or misconduct in the performance of
duty.
<PAGE>
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DATED: August 27, 1999
COLORADO COMMUNITY BROADCASTING, INC.
/s/ Byron W. St. Clair
by: ----------------------------------
President
Directors:
/s/ Adelisa Shwayder
--------------------------------------
Secretary and Director
/s/ Wesley F. Whiting
--------------------------------------
Director
--------------------------------------
Director
<PAGE>
INDEX TO EXHIBITS
SK#
3.1 Articles of Incorporation
3.2 Bylaws
<PAGE>
FINANCIAL STATEMENTS
(A Development Stage Company)
COLORADO COMMUNITY BROADCASTING, INC.
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(A Development Stage Company)
Index to Financial Statements
1998
- ----
Report of Independent Auditors for year ended April 30, 1999
from Inception F-1
Balance Sheet for year ended April 30, 1999
from Inception F-2
Statement of Operations for year ended April 30, 1999
from Inception F-3
Statement of Changes in Stockholders' Equity for year
ended April 30, 1999 from Inception F-4
Statement of Cash Flows for year ended April 30, 1999
from Inception F-5
Notes to Financial Statements F-6 - F-7
1999
- ----
Interim Financial Statements for period ended
July 31, 1999 (unaudited) F-1
Balance Sheet - Period ended July 31, 1999 F-2
Statement of Operations - Period ended July 31, 1999 F-3
Statement of Cash Flows - Period ended July 31, 1999 F-4
Notes to Financial Statements F-5 - F-6
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Colorado Community Broadcasting, Inc.
We have audited the accompanying balance sheet of Colorado Community
Broadcasting, Inc. (a development stage company), as of April 30, 1999, and the
related statement of operations and retained earnings and cash flows from March
16, 1998 (inception) to April 30, 1999. 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 the audits to obtain reasonable
assurance about 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.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Colorado Community
Broadcasting, Inc. as of April 30, 1998, and the results of its operations and
its cash flows from March 16, 1998 (inception) to April 30, 1999, in conformity
with generally accepted accounting principles.
Michael Johnson & Co.
<PAGE>
<TABLE>
<CAPTION>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
APRIL 30,
ASSETS 1999 1998
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $23,307 0
Subscriptions receivable 0 10,250
--------------------------------------
Total current assets 25,307 0
Total Assets $ 25,307 0
=======================================
LIABILITIES
CURRENT LIABILITIES
Accrued expenses $250 0
Due to related party 1,100 0
------------------------------------
Total Current Liabilities 1,350 0
------------------------------------
Total Liabilities 1,350 0
------------------------------------
STOCKHOLDERS' EQUITY (DEFICIT)
Additional paid-in capital 24,729 0
Common stock, $.0001 par value, 100,000,000 21 0
shares authorized, 214,500 shares issued and
outstanding
Retained earnings (deficit) accumulated during (793) 0
development stage
-------------------------------------
Total Stockholders' Equity 23,957 0
-------------------------------------
Total Liabilities and Stockholders' Equity $25,307 0
=====================================
</TABLE>
The Notes to Financial Statements are an Integral Part of These Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1999 AND 1998 AND THE PERIOD FROM
MARCH 16, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
March 16, 1998
Year Ended Year Ended (Inception) to
April 30, 1998 April 30, 1999 April 30, 1999
------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES 0 0 0
EXPENSES 0 0 0
Bank charges 0 $80 $80
Telephone 0 50 50
Entertainment 0 38 38
Travel 0 625 625
------------------------------------------------------------------------------
Total Expenses 0 793 793
------------------------------------------------------------------------------
NET LOSS 0 ($793) ($793)
==============================================================================
</TABLE>
The Notes to Financial Statements are an Integral Part of These Financial
Statements
<PAGE>
<TABLE>
<CAPTION>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED APRIL 30, 1999 AND THE PERIOD FROM
MARCH 16, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
Year Ended March 16, 1998
April 30, (Inception) to
1999 April 30,
1999
----------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ($739) ($793)
Adjustments to reconcile net loss to net
cash required by operating activities
Increase in accrued expenses
250 250
----------------------------------------------------
NET CASH REQUIRED BY OPERATING ACTIVITIES (543) (543)
----------------------------------------------------
Proceeds from related party
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from issuance of stock 1,100 1,100
----------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of stock 14,500 14,500
----------------------------------------------------
NET INCREASE IN CASH 15,057 15,057
CASH BEGINNING OF PERIOD
----------------------------------------------------
CASH END OF PERIOD $15,057 $15,057
====================================================
Supplemental disclosure of non-cash data.
During the year ended April 30, 1999, the Company issued $25,000 in common stock
subscriptions.
</TABLE>
The Notes to Financial Statements are an Integral Part of These Financial
Statements
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED APRIL 30, 1999 AND THE PERIOD FROM
MARCH 16, 1998 (DATE OF INCEPTION) TO APRIL 30, 1999
Retained earnings, March 16, 1998 $ 0
Net income
----------------
Retained earnings, April 30, 1998 0
Net loss (793)
----------------
Retained earnings (deficit), April 30, 1999 ($793)
================
The Notes to Financial Statements are an Integral Part of These Financial
Statements
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 1 - Organization
Colorado Community Broadcasting, Inc. ("Company") was incorporated under the
laws of the State of Colorado on March 16, 1998. The Company will own and
operate low power television stations. It plans to operate the station to
broadcast local programming mixed with appropriate national programming.
Note 2 - Summary of Significant Acounting Policies
A. Use of Estimates in Preparation of Financial Statements
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenue and expenses. Actual results may differ from those
estimates.
B. Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note 3 - Development Stage Operations
The Company is considered to be a Development Stage Company because it has been
devoting substantially all of its efforts to obtaining investors and contracting
to purchase a low power television license and station.
Note 4 - Related Party Transactions
The spouse of the President of the Company loaned $1,100 to the Company. No
repayment terms have been negotiated. This individual was also reimbursed $663
for expenses.
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(a Development Stage Company)
Interim Financial Statements
(Unaudited)
For Quarter Ended July 31, 1999
<PAGE>
<TABLE>
<CAPTION>
COLORADO COMMUNITY BROADCASTING, INC.
(a Development Stage Company)
BALANCE SHEET
(unaudited)
July 31, April 30,
1999 1999
--------------------------------------------------------
<S> <C> <C>
Curent Assets:
Cash and cash equivalents 23,507 15,057
Subscriptions receivable 10,250
--------------------------------------------------------
Total Current Assets 23,507 25,307
Total Assets 23,507 25,307
Current Liabilities:
Payables 250 250
Related party 1,100 1,100
--------------------------------------------------------
Total Current Liabilities 1,350 1,350
Stockholders' equity
Common stock, $.0001 par value
Authorized 100,000,000 shares:
Issued and outstanding 24,500,000
shares
21 21
Additional paid-in capital
24,729 24,729
Retained Earnings (deficit)
(2,593) (793)
Total stockholders' equity 22,157 23,957
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY
23,507 25,307
========================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLORADO COMMUNITY BROADCASTING, INC.
(a Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Three Months Three Months
Ending July Ending July
31, 1999 31, 1998
----------------------------------------------
<S> <C> <C>
Revenue & interest $0 $0
Expenses, general & administrative 1,800 0
-------- ------
Total expenses 1,800 -
Net income (loss) for period (1,800) $0
Net income (loss) per share ($-) ($-)
Weighted average number of common shares 214,500 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COLORADO COMMUNITY BROADCASTING, INC.
(a Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Three Months Three Months
Ending July 31, Ending July 31,
1999 1998
-----------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) (1,800) 0
Adjustments to reconcile net income
(loss) to net cash provided (used) by
operating activities:
0 0
Amortization 0 0
Rent 0 0
Changes in: 0 0
Accounts payable - related parties 0 0
-----------------------------------------------------
Cash provided (used) by operating
activites
(1,800) 0
Cash flows from financing activities 0 0
Proceeds from stock subscription 10,250 0
Cash at beginning of period 15,057 0
Cash at end of period 23,507 0
Net increase in cash 10,250 0
=====================================================
</TABLE>
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Note 1 - Organization
Colorado Community Broadcasting, Inc. ("Company") was incorporated under the
laws of the State of Colorado on March 16, 1998. The Company will own and
operate low power television stations. It plans to operate the station to
broadcast local programming mixed with appropriate national programming.
Note 2 - Summary of Significant Acounting Policies
A. Use of Estimates in Preparation of Financial Statements
The preparation of the accompanying financial statements in conformity with
generally accepted accounting principles requires management to make certain
estimates and assumptions that directly affect the results of reported assets,
liabilities, revenue and expenses. Actual results may differ from those
estimates.
B. Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.
<PAGE>
COLORADO COMMUNITY BROADCASTING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
Note 3 - Development Stage Operations
The Company is considered to be a Development Stage Company because it has been
devoting substantially all of its efforts to obtaining investors and contracting
to purchase a low power television license and station.
Note 4 - Related Party Transactions
The spouse of the President of the Company loaned $1,100 to the Company. No
repayment terms have been negotiated. This individual was also reimbursed $663
for expenses.
ARTICLES OF INCORPORATION
OF
COLORADO COMMUNITY BROADCASTING, INC.
I, the undersigned natural person, being more than twenty-one (21)
years of age, acting as incorporator of a corporation under the Colorado
Corporation Act adopt the following Articles of Incorporation for such
corporation.
ARTICLE I
The name of the corporation is: COLORADO COMMUNITY BROADCASTING, INC., and
its principal place of business shall be: 10730 E. Bethany Dr., Ste. #300,
Aurora, CO 80014
ARTICLE II
The period of duration of the corporation shall be perpetual.
ARTICLE III
The purposes for which the corporation is organized are: to engage in
any purpose or type of business lawful in the State of Colorado and the United
States of America, as the Board of Directors may deem convenient and proper.
ARTICLE IV
The corporation shall have and may exercise all the rights, powers
and privileges now or hereafter conferred upon corporations organized under and
pursuant to the laws of the State of Colorado, including entering into
partnerships, limited partnerships (whether the corporation be a limited or
general partner), joint ventures, and other arrangements for carrying on one or
more of the purposes set forth in Article III of these Articles of
Incorporation.
ARTICLE V
A. AUTHORIZED SHARES. The aggregate number of shares which the
Corporation shall have authority to issue is 100,000 shares of Common Stock at
no par value each.
1
<PAGE>
B. TRANSFER RESTRICTIONS. The Corporation shall have the right by
appropriate action to impose restrictions on the transfer of any shares of its
common stock, or any interest therein, from time to time issued, provided that
such restrictions as may from time to time be so imposed or notice of the
substance thereof shall be set forth upon the face or back of the certificates
representing such shares of common stock.
C. PRE-EMPTIVE RIGHTS. A holder of any of the shares of the Common
Stock of the Corporation shall not be entitled as of right to purchase or
subscribe for any unissued or treasurer shares of any class, or any additional
shares of any class to be issued by reason of any increase of the authorized
shares of the Corporation of any class, or any bonds, certificates of
indebtedness, debentures, or other securities, rights, warrants, or options
convertible into shares of the Corporation or carrying any right to purchase
shares of any class.
D. CUMULATIVE VOTING. Cumulative voting shall not be allowed in the
election of directors in the manner provided by the Colorado Code.
E. QUORUM. One-third (1/3rd) of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders.
ARTICLE VI
A. BOARD OF DIRECTORS. The number of directors of this corporation
shall be fixed in accordance with the bylaws. As long as the number of directors
shall be less than three:
1. No shares of this corporation may be issued and held of record by
more shareholders than there are directors;
2. Any shares issued in violation of this paragraph shall be null and
void;
3. This provision shall also constitute a restriction on the transfer
of shares and the legend shall be
conspicuously placed on each certificate respecting shares preventing
transfer of the shares to more shareholders than there are directors.
B. INITIAL BOARD OF DIRECTORS. The initial Board of Directors of the
Corporation shall consist of one member, until such time as more than one
director is elected, who need not be a shareholder of the Corporation or
resident of the State of Colorado.
2
<PAGE>
The name and address of the person who is to serve as the initial
director of the Corporation until the first annual meeting of shareholders, and
until her successors shall be elected and shall qualify is as follows:
Keith Shwayder 10730 E. Bethany Dr., Ste. #300
Aurora, CO 80014
ARTICLE VII
No contract or other transaction between the Corporation or any other
person, firm, partnership, corporation, trust, joint venture, syndicate or other
entity shall be in any way affected or invalidated solely by reason of the fact
that any director or officer of the Corporation is pecuniarily or otherwise
interested in, or is a director or officer of any entity which may be a party to
or may be interested in a contract or other transaction of the Corporation.
ARTICLE VIII
The address of the initial registered agent of the corporation is 10730 E.
Bethany Dr., Ste. #300, Aurora, CO 80014 and the initial registered agent is
Keith Shwayder.
--------------------------
Keith Shwayder
ARTICLE IX
The corporation reserves the right to amend, alter, change or repeal
any provisions contained in, or add any provisions to its Articles of
Incorporation from time to time in any manner now or hereafter prescribed or
permitted by the Colorado Code.
ARTICLE X
The name and address of the Incorporator of the Corporation is as
follows:
NAME ADDRESS
Keith Shwayder 10730 E. Bethany Dr., Ste. #300
Aurora, CO 80014
IN WITNESS WHEREOF, the undersigned, being the Incorporator in Article X of
the annexed and foregoing Articles of
3
<PAGE>
Incorporation, has executed said Articles of Incorporation as of this 24th day
of September, 1996.
---------------------------
Keith Shwayder
STATE OF COLORADO )
) SS.
COUNTY OF _________)
I, _____________________, a Notary Public, hereby certify that on the
_____ day of June, 1999, Keith Shwayder personally appeared before me, who being
first duly sworn, declares that he is the person who signed the foregoing
Articles of Incorporation as Incorporator for COLORADO COMMUNITY BROADCASTING,
INC., and that the statements therein are true.
IN WITNESS WHEREOF I have hereto set my hand and seal this _____ day of
June, 1999.
My Commission expires:
-------------------------
Notary Public
Address:
4
BY-LAWS
of
COLORADO COMMUNITY BROADCASTING, INC.
a Colorado Corporation
ARTICLE I
The initial principal office of the Corporation shall be in Englewood,
Colorado. The Corporation may have offices at such other places within or
without the State of Colorado as the Board of Directors may from time to time
establish.
ARTICLE II
CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Whenever the vote
of stockholders at a meeting thereof is required or permitted to be taken in
connection with corporate action, by any provisions of the statutes of the
Certificate of Incorporation, the meeting and vote of stockholders may be
dispensed with, if all the stockholders who should have been entitled to vote
upon the action if such meeting were held, shall consent in writing to such
corporate action being taken.
ARTICLE III
Board of Directors
Section 1. GENERAL POWERS. The business of the Corporation shall be managed
by the Board of Directors, except as otherwise provided by statute or by the
Certificate of Incorporation.
Section 2. NUMBER AND QUALIFICATIONS. The Board of Directors
shall consist of up to three (3) members. Except as provided in the Certificate
of Incorporation, this number can be increased only by the vote or written
consent of the holders of ninety (90) percent of the stock of the Corporation
outstanding and entitled to vote. The current number of Directors shall be
determined by the Board of Directors at its annual meeting. No Director need be
a stockholder.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be
elected annually by the stockholders, and shall hold office until their
successors are respectively elected and qualified.
Election of Directors need not be by ballot.
<PAGE>
Section 4. COMPENSATION. The members of the Board of Directors
shall be paid a fee of $10.00 for attendance at all annual, regular, special and
adjourned meetings of the Board. No such fee shall be paid any director if
absent. Any director of the Corporation may also serve the Corporation in any
other capacity, and receive compensation therefor in any form. Members of
special or standing committees may be allowed like compensation for attending
committee meetings.
Section 5. REMOVAL AND RESIGNATIONS. The stockholders may, at
any meeting called for the purpose, by vote of two-thirds of the capital stock
issued and outstanding, remove any directors from office, with or without cause;
provided however, that no director shall be removed in case the vote of a
sufficient number of shares are cast against his removal, which if cumulatively
voted at any election of directors would be sufficient to elect him, if
cumulative voting is allowed by the Articles of Incorporation.
The stockholders may, at any meeting, by vote of a majority of
such stock represented at such meeting accept the resignation of any director.
Section 6. VACANCIES. Any vacancy occurring in the office of
director may be filled by a majority of the directors then in office, though
less than a quorum, and the directors so chosen shall hold office until the next
annual election and until their successors are duly elected and qualified,
unless sooner displaced.
When one or more directors resign from the Board, effective at
a future date, a majority of the directors then in office, including those who
have so resigned, shall have powers to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations become effective.
ARTICLE IV
Meetings of Board of Directors
Section 1. REGULAR MEETINGS. A regular meeting of the Board of
Directors may be held without call or formal notice immediately after and at the
same place as the annual meeting of the stockholders or any special meeting of
the stockholders at such places within or without the State of Colorado and at
such times as the Board may by vote from time to time determine.
Section 2. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be held at any place whether within or without the State of
Colorado at any time when called by the President, Treasurer, Secretary or two
or more directors. Notice of the time and place thereof shall be given to each
director at least three (3) days before the meeting if by mail or at least
2
<PAGE>
twenty-four hours if in person or by telephone or telegraph. A waiver of such
notice in writing, signed by the person or persons entitled to said notice,
either before or after the time stated therein, shall be deemed equivalent to
such notice. Notice of any adjourned meeting of the Board of Directors need not
be given.
Section 3. QUORUM. The presence, at any meeting, of one-third
of the total number of directors, but in no case less than two (2) directors,
shall be necessary and sufficient to constitute a quorum for the transaction of
business except as otherwise required by statute or by the Certificate of
Incorporation, the act of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board of Directors. In the
absence of a quorum, a majority of the directors present at the time and place
of any meeting may adjourn such meeting from time to time until a quorum be
present.
Section 4.a. CONSENT OF DIRECTORS IN LIEU OF MEETING. Unless
otherwise restricted by the Certificate of Incorporation, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board or committee, and such
written consent is filed within the minutes of the Corporation.
b. The Board of Directors may hold regular or special meetings
by telephone conference call, provided that any resolutions adopted shall be
recorded in writing within 3 days of such telephone conference, and written
ratification of such resolutions by the directors shall be provided within 10
days thereafter.
ARTICLE V
Committees of Board of Directors
The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of two or more of the directors of the Corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the Board
of Directors in the management of the business and affairs of the Corporation,
and may authorize the seal of the Corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the Board of
Directors.
The committees of the Board of Directors shall keep regular
minutes of their proceedings and report the same to the Board of Directors when
required.
3
<PAGE>
ARTICLE VI
Officers
Section 1. NUMBER. The Corporation shall have a President, one
or more Vice Presidents, a Secretary and a Treasurer, and such other officers,
agents and factors as may be deemed necessary. One person may hold any two
offices except the offices of President and Vice President and the offices of
President and Secretary.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATION. The
officers specifically designated in Section 1 of this Article VI shall be chosen
annually by the Board of Directors and shall hold office until their successors
are chosen and qualified. No officer need be a director.
Section 3. SUBORDINATE OFFICERS. The Board of Directors from
time to time may appoint other officers and agents, including one or more
Assistant Secretaries and one or more Assistant Treasurers, each of whom shall
hold office for such period, have such authority and perform such duties as are
provided in these ByLaws or as the Board of Directors from time to time may
determine. The Board of Directors may delegate to any office the power to
appoint any such subordinate officers, agents and factors and to prescribe their
respective authorities and duties.
Section 4. REMOVALS AND RESIGNATIONS. The Board of Directors
may at any meeting called for the purpose, by vote of a majority of their entire
number, remove from office any officer or agent of the Corporation, or any
member of any committee appointed by the Board of Directors.
The Board of Directors may at any meeting, by vote of a
majority of the directors present at such meeting, accept the resignation of any
officer of the Corporation.
Section 5. VACANCIES. Any vacancy occurring in the office of
President, Vice President, Secretary, Treasurer or any other office by death,
resignation, removal or otherwise shall be filled for the expired portion of the
term in the manner prescribed by these By-Laws for the regular election or
appointment to such office.
Section 6. THE PRESIDENT. The President shall be the chief
executive officer of the Corporation and, subject to the direction and under the
supervision of the Board of Directors, shall have general charge of the
business, affairs and property of the Corporation, and control over its
officers, agents and employees. The President shall preside at all meetings of
the stockholders and of the Board of Directors at which he is present. The
President shall do and perform such other duties and may exercise such other
powers as from time to time may be assigned to him by these By-Laws or by the
Board of Directors.
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Section 7. THE VICE PRESIDENT. At the request of the President
or in the event of his absence or disability, the Vice President, or in case
there shall be more than one Vice President, the Vice President designated by
the President, or in the absence of such designation, the Vice President
designated by the Board of Directors, shall perform all the duties of the
President, and when so acting, shall have all the powers of, and be subject to
all the restrictions upon, the President. Any Vice President shall perform such
other duties and may exercise such other powers as from time to time may be
assigned to him by these By-Laws or by the Board of Directors, or the President.
Section 8. THE SECRETARY. The Secretary shall:
a. Record all the proceedings of the meetings of the
Corporation and directors in a book to be kept for that purpose;
b. Have charge of the stock ledger (which may, however, be
kept by any transfer agent or agents of the Corporation under the direction of
the Secretary), an original or duplicate of which shall be kept at the principal
office or place of business of the Corporation in the State of Colorado;
c. Prepare and make, at least ten (10) days before every
election of directors, a complete list of the stockholders entitled to vote at
said election, arranged in alphabetical order;
d. See that all notices are duly given in accordance with the
provisions of these By-Laws or as required by statute;
e. Be custodian of the records of the Corporation and the
Board of Directors, and of the seal of the Corporation, and see that the seal is
affixed to all stock certificates prior to their issuance and to all documents,
the execution of which on behalf of the Corporation under its seal have been
duly authorized;
f. See that all books, reports, statements, certificates and
the other documents and records required by law to be kept or filed are properly
kept or filed; and
g. In general, perform all duties and have all powers incident
to the office of Secretary and perform such other duties and have such powers as
from time to time may be assigned to him by these By-Laws or by the Board of
Directors or the President.
Section 9. THE TREASURER. The Treasurer shall:
a. Have supervision over the funds, securities, receipts, and
disbursements of the Corporation;
b. Cause all monies and other valuable effects of the
Corporation to be deposited in its name and to its credit, in such depositories
as shall be selected by the Board of Directors or pursuant to authority
conferred by the Board of Directors.
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c. Cause the funds of the Corporation to be disbursed by
checks or drafts upon the authorized depositories of the Corporation, when such
disbursements shall have been duly authorized;
d. Cause to be taken and preserved proper vouchers for all
monies disbursed;
e. Cause to be kept at the principal office of the Corporation
correct books of account of all its business and transactions;
f. Render to the President or the Board of Directors, whenever requested,
an account of the financial condition of the Corporation and of his transactions
as Treasurer;
g. Be empowered to require from the officers or agents of the
Corporation reports or statements giving such information as he may desire with
respect to any and all financial transactions of the Corporation; and
h. In general, perform all duties and have all powers incident
to the office of Treasurer and perform such other duties and have such power as
from time to time may be assigned to him by these By-Laws or by the Board of
Directors or President.
Section 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The Assistant Secretaries and Assistant Treasurers shall have such duties as
from time to time may be assigned to them by the Board of Directors or the
President.
Section 11. SALARIES. The salaries of the officers of the
Corporation shall be fixed from time to time by the Board of Directors, except
that the Board of Directors may delegate to any person the power to fix the
salaries or other compensation of any officers or agents appointed in accordance
with the provisions of Section 3 of this Article VI. No officer shall be
prevented from receiving such salary by reason of the fact that he is also a
director of the Corporation.
Section 12. SURETY BOND. The Board of Directors may secure the fidelity of
any or all of the officers of the Corporation by bond or otherwise.
ARTICLE VII
Execution of Instruments
Section 1. EXECUTION OF INSTRUMENTS GENERALLY. All documents
or writings of any nature shall be signed, executed, verified, acknowledged and
delivered by such officer or officers or such agent of the Corporation and in
such manner as the Board of Directors from time to time may determine.
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Section 2. CHECKS, DRAFTS, ETC. All notes, drafts,
acceptances, checks, endorsements, and all evidence of indebtedness of the
corporation whatsoever, shall be signed by such officer or officers or such
agent or agents of the Corporation and in such manner as the Board of Directors
from time to time may determine. Endorsements for deposit to the credit of the
Corporation in any of its duly authorized depositories shall be made in such
manner as the Board of Directors from time to time may determine.
Section 3. PROXIES. Proxies to vote with respect to shares of
stock of other corporations owned by or standing in the name of the Corporation
may be executed and delivered from time to time on behalf of the Corporation by
the President or Vice President and the Secretary or Assistant Secretary of the
Corporation or by any other person or persons duly authorized by the Board of
Directors.
ARTICLE VIII
Section 1. CERTIFICATES OF STOCK. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed in the name of the
Corporation by the Chairman or Vice President of the Board of Directors, the
President or a Vice President and by the Treasurer or an Assistant Treasurer, or
the Secretary or an Assistant Secretary of the Corporation, certifying the
number of shares owned by him in the Corporation; provided, however, that where
such certificate is signed by a transfer agent or an assistant transfer agent or
by a transfer clerk acting on behalf of the Corporation and a registrar, the
signature of any such Chairman of the Board of Directors, President, Vice
President, Treasurer, Assistant Treasurer, Secretary, or Assistant Secretary may
be facsimile. In case any officer or officers who shall have signed, or whole
facsimile signature or signatures shall have been used thereon, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates, or whose facsimile signature or signatures shall
have been used thereon, had not ceased to be such officer or officers of the
Corporation, and any such delivery shall be regarded as an adoption by the
Corporation of such certificate or certificates.
Certificates of stock shall be in such form as shall, in
conformity to law, be prescribed from time to time by the Board of Directors.
Section 2. TRANSFER OF STOCK. Shares of stock of the
Corporation shall only be transferred on the books of the Corporation by the
holder of record thereof or by his attorney duly authorized in writing, upon
surrender to the Corporation of the certificates for such shares endorsed by the
appropriate person or persons, with such evidence of the authenticity of such
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endorsement, transfer, authorization and other matters as the Corporation may
reasonably require, and accompanied by all necessary stock transfer tax stamps.
In that event, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate, and
record the transaction on its books.
Section 3. RIGHTS OF CORPORATION WITH RESPECT TO REGISTERED
OWNERS. Prior to the surrender to the Corporation of the certificates for shares
of stock with a request to record the transfer of such shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 4. CLOSING STOCK TRANSFER BOOK. The Board of Directors
may close the Stock Transfer Book of the Corporation for a period not exceeding
fifty (50) days preceding the date of any meeting of the stockholders or the
date for payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect or for a period of not exceeding (50) days in connection with obtaining
the consent of stockholders for any purpose. However, in lieu of closing the
Stock Transfer Book, the Board of Directors may fix in advance a date, not
exceeding fifty (50) days preceding the date of any meeting of stockholders or
the date for the payment of any dividend or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining such consent, as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting and any adjournment thereof, or entitled to receive
payment of any such dividend, or to any such allotment of rights or to exercise
the rights in respect of any such change, conversion or exchange of capital
stock, or to give such consent, and in such case such stockholders, and only
such stockholders as shall be stockholders of record on the date so fixed shall
be entitled to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment of
rights, or to exercise such rights, or to give such consent, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid.
Section 5. LOST, DESTROYED AND STOLEN CERTIFICATES. Where the
owner of a Certificate for shares claims that such certificate has been lost,
destroyed or wrongfully taken, the Corporation shall issue a new certificate in
place of the original certificate if the owner (a) so requests before the
Corporation has notice that the shares have been acquired by a bona fide
purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c)
satisfies such other reasonable requirements, including evidence of such loss,
destruction, or wrongful taking, as may be imposed by the Corporation.
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ARTICLE IX
Dividends
Section 1. SOURCES OF DIVIDENDS. The directors of the
Corporation, subject to any restrictions contained in the statutes and
Certificate of Incorporation, may declare and pay dividends upon the shares of
the capital stock of the Corporation either (a) out of its new assets in excess
of its capital, or (b) in case there shall be no such excess, out of its net
profits for the fiscal year then current or the current and preceding fiscal
year.
Section 2. RESERVES. Before the payment of any dividend, the
directors of the Corporation may set apart out of any of the funds of the
Corporation available for dividends a reserve or reserves for any proper
purpose, and the directors may abolish any such reserve in the manner in which
it was created.
Section 3. RELIANCE ON CORPORATE RECORDS. A director shall be
fully protected in relying in good faith upon the books of account of the
Corporation or statements prepared by any of its officials as to the value and
amount of the assets, liabilities and net profits of the Corporation, or any
other facts pertinent to the existence and amount of surplus or other funds from
which dividends might properly be declared and paid.
Section 4. MANNER OF PAYMENT. Dividends may be paid in cash,
in property, or in shares of the capital stock of the Corporation at par.
ARTICLE X
Seal
The Corporate seal, subject to alteration by the Board of
Directors, shall be in the form of a circle and shall bear the name of the
Corporation and shall indicate its formation under the laws of the State of
Colorado. Such seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE XI
Fiscal Year
Except as from time to time otherwise provided by the Board of
Directors, the fiscal year of the Corporation shall be April 30.
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ARTICLE XII
Amendments
Section 1. BY THE STOCKHOLDERS. Except as otherwise provided
in the Certificate of Incorporation or in these By-Laws, these By-Laws may be
amended or repealed, or new By-Laws may be made and adopted by a majority vote
of all the stock of the Corporation issued and outstanding and entitled to vote
at any annual or special meeting of the stockholders, provided that notice of
intention to amend shall have been contained in the notice of meeting.
Section 2. BY THE DIRECTORS. Except as otherwise provided in
the Certificate of Incorporation or in these By-Laws, these By-Laws, including
amendments adopted by the stockholders, may be amended or repealed by a majority
vote of the whole Board of Directors at any regular or special meeting of the
Board, provided that the stockholders may from time to time specify particular
provisions of the By-Laws which shall not be amended by the Board of Directors.
ARTICLE XIII
Indemnification
The Board of Directors hereby adopt the provision of C.R.S.
7-3-101 S (as it may be amended from time to time) relating to Indemnification
and in corporate such provisions by this reference as fully as if set forth
herein.
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