SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
April 20, 2000
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Date of Report (Date of earliest event reported)
BLAGMAN MEDIA INTERATIONAL, INC.
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(Exact Name of Registrant as specified in Charter)
Commission File No. 0-27777
Nevada 95-4729314
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(State of Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
1901 Avenue of the Stars, Suite 1710 90067
Los Angeles, California (Zip Code)
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(Address of Principal Executive Office)
Registrant's Telephone Number, Including Area Code: (310) 788-5444
Registrant's Former Name: MNS Eagle Equity Group I
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Table of Contents
Form 8-K Disclosures:
Page
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Item 1. Change in Control 1
Item 2. Acquisition or Disposition of Assets
(Includes Form 10-SB Disclosures, Part I, Part II and Part F/S) 17
Item 3. Bankruptcy or Receivership 17
Item 4. Changes in Registrant's Certifying Accountant 17
Item 5. Other Events 17
Item 6. Resignations of Registrant's Directors 17
Item 7. Financial Statement, Proforma, Financial Information and Exhibits 17
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Item 1. Change in Control
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(a) Pursuant to a Stock Exchange Agreement (the "Exchange Agreement") dated
as of April 20, 2000 between Blagman Media International, Inc (BMII), a Nevada
corporation, and the sole share holder of MNS Eagle Equity Group I, Inc.
("MNS"), a Nevada corporation, approximately 89.9% of the outstanding shares of
common stock of which is held by ten (10) MNS shareholders were exchanged for
50,000 shares of common stock of BMII and $100,000 cash in a transaction in
which BMII effectively became the parent corporation of MNS.
The Exchange Agreement was adopted by the unanimous consent of the Board of
Directors of MNS and BMII on April 20, 2000. NO approval of the shareholders of
either BMII or MNS is required under applicable state corporate law.
Prior to the merger, MNS had 687,000 shares of common stock outstanding of
which shares 613,794 or 89.9% of the outstanding shares were exchanged by MNS
for 100,000 shares of common stock of BMII. By virtue of the exchange, BMII
acquired 89.9% of the issued and outstanding common stock of MNS and, thus,
control.
Prior to the effectiveness of the Exchange Agreement, BMII had an aggregate
of 12,600,000 shares of common stock, par value $.001, issued and outstanding,
and 600,000 shares of Series "A" preferred stock outstanding.
Upon closing of the Exchange Agreement, BMII had an aggregate of 12,700,000
shares of common stock outstanding.
The officers of BMII continue as officers of BMII subsequent to the
Exchange Agreement. See "Management" below. The officers, directors, and by-laws
of BMII will continue without change.
A copy of the Exchange Agreement is attached hereto as an exhibit. The
foregoing description is modified by such reference.
(b) The following table sets forth certain information regarding beneficial
ownership of the common stock of BMII as of December 31, 1999 (prior to the
issuance of 100,000 shares pursuant to the Exchange Agreement) by:
o each person or entity known to own beneficially more than 5% of the
common stock;
o each of BMII directors;
o each of BMII named executive officers; and all executive officers and
directors of BMII as a group.
Name and Title Number of Shares
of Beneficial Owner Beneficially Owned Percentage
------------------- ------------------ ----------
Robert Blagman, President, 8,200,000 64.7%
Chairman of the Board and
Chief Executive Officer
Item 2. Acquisition or Disposition of Assets
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(a) The consideration exchanged pursuant to the Exchange Agreement was
negotiated between MNS and BMII.
In evaluating BMII as a candidate for the proposed acquisition, MNS used
criteria such as BMII's present stock price as set forth on the over-the-counter
bulletin board, its other businesses and other anticipated operations, and
BMII's business name and reputation. MNS and BMII each determined that the
consideration for the merger was reasonable.
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(b) BMII intends to continue its historical businesses and proposed
businesses as set forth more fully immediately below in the format and with the
information set forth in Form 10-SB Part I, Part II, and Part F/S:
PART I
Description of Business
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Description of Property
Security Ownership of Certain Beneficial Owners and Management
Directors, Executive Officers, Promoters and Control Persons
Directors and Executive Officers
Certain Relationships and Related Transactions
Description of Securities
PART II
Market for Common Stock Equity and Related Stockholder Matters
Legal Proceedings
Changes In and Disagreements with Accountants
Recent Sales of Unregistered Securities
Indemnification of Officers and Directors
PART F/S
Financial Statements
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PART I
Description of Business (Blagman Media International, Inc.)
Business development or overview of background information
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Blagman Media International, Inc. (BMII) is a growing direct response and
marketing media agency. The Company markets its clients through various media:
television, radio, Internet, print and outdoor advertising. The Company is
planning to expand its distribution in print and the Internet by either
acquisition or strategic alliances with outside marketing firms.
BMII started its operations in 1994 as a sole proprietorship and was
incorporated in Nevada on January 29, 1999. On August 2, 1999 the Company
completed a tax-free reverse acquisition with Unisat, Inc., a public
non-reporting shell company, formerly known as Combined Companies, Inc. Also on
August 2, 1999, Unisat, Inc. changed its name to Blagman Media International,
Inc. The transaction required BMII to exchange tax free as a recapitalization
one hundred percent of its outstanding common stock in exchange for 8,200,000
common shares of Unisat, Inc. The 8,200,000 shares went to Robert Blagman, who
became the new President and Chief Executive Officer. Also a new Board of
Directors was elected. Prior to the reverse acquisition, Unisat, Inc. and its
predecessor, Combined Companies, Inc., had a history of acquisitions in a few
different industries. Unisat was originally incorporated in Nevada on December
16, 1961. Prior to the acquisition date, Unisat, Inc. had 3,819,973 common
shares outstanding which were part of the recapitalization with BMII.
The primary goal of the BMII acquisition was to use common stock of a
publicly held company to seek to acquire substantially all advertising currently
contracted out to other agencies through select acquisitions within the
advertising industry. The strategic business purpose is to increase market share
and profitability from retention of the increased revenues to the Company
instead of continuing to share commissions on business referred to the Company
but subcontracted to other advertising and media agencies.
BMII will provide ongoing incentives to the principals of the enterprises
it acquires. Management believes that the resulting "network" of alliance
partners and acquired companies will be more capable of delivering a more
complete service, at a better price with product that is developed more
efficiently and marketed more effectively than presently possible, including:
o Centralizing accounts payable, accounts receivable, payroll,
human resources, and other back office accounting functions.
o Establishing and maintenance of a centralized interoffice
client/server computer network which will allow for collection of
information that BMII will use to improve the ratio of response
and concurrent profitability to be realized from longer running
campaigns and reduce the overhead expenses of each office.
BMII intends through the establishment of an "Exchange Portal" on the World
Wide Web similar to CommerceOne, Ariba and VerticalNet. The BMII "media
exchange" will provide international media sellers and buyers a common platform
from which broadcast and cable, network, system and local "avails" can be
merchandised and acquired. The activities of the "media exchange" will provide
BMII an additional stream of revenue via commissions and transactions.
An expanded network of companies will allow for economies of scale from the
consolidation of financial information and integrating media buys from all
disciplines, including but not exclusive to: Internet, Radio, Television,
Outdoor, Retail, Catalogue, Syndication, Upsells, Clubs, Lists, Direct Mail,
Viral Marketing, and Advanced Micro Demographic Advertising both domestically
and internationally.
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Increased size will allow BMII to improve its negotiating power in buying
opportunities with networks, cable systems and television stations, enabling it
to gain access to the most effective media "avails" at better prices.
Principal Products or Services and Their Market
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Blagman Media International, Inc. (Media Buying and Direct Response)
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The principal business of the Company is media buying specifically focused
on direct response advertising. All aspects of direct response advertising are
available to the Company: creative, production, marketing, and account
management. Accounts of BMII have included: Kodak, Southern California Dodge,
Black and Decker, 21st Century Insurance, Met-Rx, Windmere, A Sure eCommerce,
Inc. and Play, Inc. Currently the Company provides broadcast, Internet, print
and outdoor media services.
Eicoff T.V. Infomercial (Shared Business)
-----------------------------------------
The Company is engaged in direct response long form media buying in
association with A. Eicoff & Company (subsidiary of Ogilvy & Mather). A. Eicoff
& Company's Infomercial division purchases all long form media for A. Eicoff.
Short form advertising is purchased on their behalf for some accounts. The
Company has an exclusive agreement with A. Eicoff & Company to place all long
form media for A. Eicoff & Company. A. Eicoff & Company is the number one short
form-advertising agency in the world with billing exceeding $135 million.
Infomercials are either long form or short form. The long form infomercial runs
30 minutes while the short form is typically 30, 60 or 120 seconds of air time.
Eicoff Radio (Shared Business)
------------------------------
The Company engages in direct response radio (long and short form) in
association with Eicoff Company. BMII has an exclusive agreement to place all
direct response radio for Eicoff. Clients have included: 21st Century Insurance,
The Phonics Game and Liberty Medical.
Blagman Media/Mercury Media Joint Venture
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The Company is party to a joint venture with Mercury Media to enhance media
acquisition of long form infomercial for television. Mercury Media was founded
in 1988,and has current billings now exceed $85 million. Mercury Media
represents the direct response industry's most prestigious companies, including
Guthy Renker, TriStar, Home Shopping Direct and GT Direct. Mercury Media is the
number one long form billing advertising agency in the world.
GSP/Blagman (Shared Business)
-----------------------------
Crain's Chicago Business Magazine has named GSP one of the top-marketing
firms of 1998. With annual billing exceeding $186 million, GSP is one of the
premier print media and marketing firms in the country. BMII has contracted with
GSP to act as its exclusive television and radio-buying partner for GSP's print
clients. Print clients include: Diners club, American Medical Association,
Anheuser-Busch, FTD direct, Hammacher Schlemmer, Lens Crafters, Nieman Marcus,
Sears, Windmere and The Sharper Image.
Operations
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The Company currently generates its revenue from direct response media
services as follows:
Radio 18%
Television 72%
Outdoor Bill Board 10%
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100%
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The above represents approximately 76% of its revenues from media
transactions. The other 24% is generated from contracts for fees and commissions
for the Company to represent its advertising clients for exclusive placement of
services covering productions, advertising, marketing/media, telemarketing and
fulfillment activities. Usually there is a monthly fee for the complete
marketing strategy, tactics, and related market research to establish known
identity and demographic for TV, radio and outdoor placements. The Company
charges commissions to place media services. However, in the past, most of its
media placements are split 50/50 with strategic partners. The Company approves
media purchase orders and out of its gross billings pays for media and its full
or split commission based on negotiated contracts. All media is paid to BMII in
advance. All media will be billed approximately one month after it is placed and
commissions are payable after the media placement airs or is consummated.
Growth Strategies
-----------------
Starting in the year 2000, the Company plans to bring in house most of the
services it presently shares with its strategic partners. The Company plans to
perform in house services by acquiring other advertising media firms and
committing new personnel to open offices in New York and London. The above plans
will commence in April 2000 and success depends upon BMII's obtaining sufficient
financing.
The Company is also relying on hiring experienced people for its
headquarter office in Los Angeles and outside marketing representatives to
achieve its goals. In the next year or two the Company also plans to change its
service mix so that television revenues represent 50% of its media placement and
radio and other forms run 30% and 20% respectively. The other media forms will
be divided among outdoor, Internet and print placements. In time, Management
believes, Internet media placements will increase at a pace because of the
Company's recent involvement with Transactional Marketing Partners, Inc., one of
its marketing representatives.
Distribution Methods
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The Company's CEO, who is also in charge of sales and marketing is Robert
Blagman, who attracts business directly from customers or strategic alliances.
Mr. Blagman, at times in association with A. Eicoff & Company, makes
presentations to customers and shares fees or commissions from gross billings.
Mercury Media Marketing and GSP, a top marketing firm, share similar
arrangements. BMII has just retained an established marketing firm on a month to
month basis to get business in all forms of media. The marketing firm will be
paid a monthly fee of $10,000 and commissions of up to 5% of total receipts
derived by the Company from such business.
The firm, Transactional Marketing Partners, Inc., is a well established
marketer which acts as an expeditor helping various companies attain their
particular goals. Among their clients are Mercury Media, Home Shopping Network
and Amerinet. The intent is to package their clients needs with the Company's
ability to get direct response marketing results from broadcast, outdoor or
Internet media placements. They are also assisting BMII in identifying strategic
acquisitions. To the extent possible, the Company intends that almost all
acquisitions will be consummated with common stock shares of BMII.
In short, the Company has formed strategic alliances to grow its business.
These arrangements allow BMII to go to corporate clients and provide them with
the best access to long form media for infomercials to fully explain their story
and build a brand image.
BMII plans in the future to enter Internet advertising in alignment with
direct response techniques that will increase impulse buying. The Company also
plans to enter the medical marketing media area through a well known surgeon who
can help obtain a strong network of service providers than can use direct
response marketing approaches.
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Competition
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The Company competes with much larger advertising agencies that have
greater financial and personnel resources to service their accounts. The Company
currently has identified 4 other advertising firms with aggregate gross billings
of $100 million. BMII plans to open a New York and London office, initially
subletting space. The Company performs extensive research in house and conducts
selective competitive intelligence on consumer and customer trends to enhance
sales and marketing results. The Company's main strength is the data thus
obtained as to what motivates people to buy, and the quality and reliability in
executing their client's direct response targeted programs. The direct response
market is approximately 1 billion dollars. No one competitor has more than a 15%
market share. The Company primarily plans to improve its market share, which is
presently less than 1%, by acquisitions. The Company is planning to enter new
markets with the help of outsourcing its sales and marketing functions to well
established marketing firms that can assist the Company expand in its target
markets.
The Company competes directly against such companies as Hawthorne Media,
Century Media and Fredrickson Television, all of which are considerably larger
than BMII. These three competitors sold approximately $370 million of the total
estimated one billion in gross billings in the direct response media advertising
niche market.
Dependence on a Few Major Customers
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The Company has one major customer, representing approximately 51% of its
revenue for the year ended December 31, 1999. Sixteen other customers represent
the balance of the Company's revenues.
As BMII brings more of its major business in house, the percentages of each
account will level out in a more favorable manner. Specifically, the one major
account in 1999 representing 51% will drop to around 20% due to new business
already contracted. With BMII's plan to pursue advanced media placement billings
will span TV, Radio, Internet, Outdoor and Direct Mail. BMII also plans to
acquire similar media companies to enhance its infrastructure and acquire
additional media billing per account. It is estimated that the decrease in split
commission revenues from the Strategic Partners will be more than offset by
bringing its business in house where it keeps all of its 15% commission versus
7 1/2% split commissions. Furthermore, all planned acquisition will involve full
commissions and the possibility of cross selling advertising, media or
production services. The above estimated strategies may mitigate the loss of key
customers.
The Company's suppliers are radio, television or outdoor billboard media.
Currently the Company does not rely on any one vendor to place its media on
behalf of its clients.
Intellectual Properties
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The Company has no patents, trademarks, licenses or any other intangible
assets that would impact its value or earnings.
Government Compliance
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The Company has no specific compliance issues with any federal or state
agency.
Research and Development of Advertising Activities
- --------------------------------------------------
The Company estimates it spends approximately 25% of its time on research
and development activities related to marketing strategies or techniques. The
Company believes research on consumer trends is one of its competitive
advantages.
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Environmental Regulation
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The cost and effects of compliance with environmental laws for federal,
state or local governments are inconsequential.
Employees
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As of January 31, 2000, BMII had 5 full-time employees, including 3 in
Marketing and sales and 2 in operations and general management. None of the
employees is a member of any union or collective bargaining organization. BMII
considers its relationship with its employees to be excellent. A significant
portion of BMII's public relations and marketing is performed by independent
contractors from whom the Company expects to acquire new customer billings. As
of January 31, 2000, the Company had four independent contractors concentrating
primarily on marketing and public relations to improve the Company's visibility
in branding its names and services. All of these sales and marketing
representatives work on a month-to-month basis.
Compliance Issues
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BMII has voluntarily elected to include in the Form 8-K the information
required in the Form 10-SB registration statement under the Securities Exchange
Act of 1934. Following the effective date of this Form 8-K, BMII will be
required to comply with the reporting requirements of the Exchange Act. BMII
will file annual, quarterly and other reports with the Securities and Exchange
Commission. BMII will also be subject to the proxy solicitation requirements of
the Exchange Act and, accordingly, will furnish an annual report with audited
financial statements to its stockholders.
Available Information
- ---------------------
Copies of this Form 8-K may be inspected, without charge, at the SEC's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0300 for further information on the
operation of its public reference rooms. In addition, copies of this material
also should be available through the Internet by using the SEC's Electronic Data
Gathering, Analysis and Retrieval System, which is located http://www.sec.gov.
You may also obtain information about us on the Over the Counter Bulletin
Board's web site which is located at http://www.otcbb.com.
Management Discussion and Analysis of Financial Condition and Results of
Operations
- ------------------------------------------------------------------------
The following discussion and analysis should be read in conjunction with
our financial statements and accompanying notes appearing elsewhere herein.
Overview
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History of Operations
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For the past two years the key growth strategy was to joint venture BMII's
sales with large well-established advertising agencies to help market and sell
its direct response media services. This co-partnering usually meant splitting
the fee equally for services rendered on behalf of clients.
In the foreseeable future, the strategy of the Company is to bring in house
services by acquiring other media entities and become a more full service
advertising agency. The Company will also outsource its marketing functions to
develop an Internet presence. The Company acquired another advertising company
in January 2000, Mullinger Media and Communications Limited which is the
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publisher of a magazine about Visa Card services in the Middle East subscribed
for by over 400,000 persons. The Company also has a contract with a marketing
firm to develop its Internet business and to assist in increasing sales in areas
other than direct response advertising including identification of possible
acquisition candidates. The Company expects to lose a significant portion of its
major customers representing approximately 60% of its current business but is
confident based on new customer contracts that the effect will be positive for
the growth of the Company.
Results of Operations
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Management believes that period-to-period comparisons of the Company's
operating results are not necessarily indicators of future performance. You
should consider our prospects in light of the risks, expenses and difficulties
frequently encountered by companies experiencing rapid growth and, in
particular, rapidly growing companies that operate in evolving markets. The
Company may not be able to successfully address these risks and difficulties.
Although the Company has experienced net sales growth in recent years, net sales
growth may not continue, and the Company cannot assure future growth or
profitability.
Comparison of the Years Ended December 31, 1999 and December 31, 1998
- ---------------------------------------------------------------------
Net Sales
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The Company's sales grew by 98.1% to $3,182,000 in 1999 from $1,606,000 in
1998. Direct response revenue increased to $2,742,000 in 1999 as compared to
$1,256,000 in 1998, an increase of 118.3% for 1999. The balance of revenues came
from fees and commissions. In 1999, non-media revenue increased 25.7% to
$440,000 from $350,000 in 1998. Most of the media sales increases were in radio
and television short and long form infomercials. Short form ads are usually
thirty, sixty or ninety second commercials while long form infomercials run
thirty minutes.
Gross Profit
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The Company's gross profit grew 14.1% to $639,000 in 1999 from $560,000 in
1998. The gross profit as a percentage of net sales decreased 14.8% to 20.1% in
1999 from 34.9% in 1998. We believe the reduced gross profit was primarily the
result of the mix of sales between radio and television short and long form
infomercials. Part of the reduction also came from increased joint ventures
where revenues are split. In the future, Management anticipates improving gross
profit margins as more of our revenues are expected to be derived from sales
contracts with the Company as a sole provider of direct response media or other
types of advertising revenues. No assurance can be given that the Company's
revenues will in fact increase by reason of the Company increasing sales
contracts in which it is the sole provider.
Operating Expenses
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General and administrative expenses grew to $755,000 in 1999 from $534,000
in 1998, an increase of 41.4%. The increase came primarily from a 98.1% increase
in net sales. The expenses to service this revenue increase were primarily
incurred in hiring more people and in increased travel. The officers'
compensation increased approximately $53,000 in 1999, and professional fees by
$25,000 because of the reverse acquisition. Management believes operating
expenses will continue to increase in future periods in both real dollars and as
a percentage of sales as the Company acquires more advertising agencies, brings
more business in house and outsources sales and marketing. In house staff will
increase to handle customer service. There will be the need for increased
financial and control services to handle acquisitions and to comply with the
responsibility of being a publicly held company including SEC reporting and
financial public relations.
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Other Income (Expense)
- ----------------------
There was no change in net interest expense, which in both years totaled
$9,000. Although the amount borrowed to finance the operations increased
approximately $100,000, $66,000 was a non interest bearing note from a related
party. The Interest income increase of $1,000 offset the additional interest
expense related to increased borrowings.
Income Tax Expense
- ------------------
The Company's $16,000 of pre-tax income in 1998 was derived as a sole
proprietorship and income taxes are paid as an individual. The Company's loss
for 1999 of $126,000 will be carried forward to future years to offset taxable
income in compliance with IRS regulations. The carry forward is approximately
$32,000.
Net (Loss) Income
- -----------------
For the reasons described above, the decrease in pre-tax income was
approximately $142,000 in 1999 as net loss was $126,000 in 1999 compared to
pre-tax income of $16,000 in 1998.
Liquidity and Capital Resources
- -------------------------------
The Company's working capital was approximately negative $95,000 at
December 31, 1999 as compared to a negative working capital of approximately
$53,000 at December 31, 1998. Cash balances at December 31, 1999 were zero
compared to cash balance of $67,000 a year ago. Net cash flow from operating
activities was a negative $176,000 in 1999 compared to a positive net cash flow
from operating activities of $30,000 in 1998. Cash flow from investing
activities was zero in 1999 compared to purchasing office equipment of $4,000 in
1998. Cash flow provided from financing activities was $109,000 versus $13,000
provided in 1998. The primary change came from increase on new notes payable of
approximately $116,000 less the repayment of loans payable of $17,000 during
1999.
Management anticipates working capital requirements may go up in the future
as a result of increased accounts receivable and overhead for acquisitions and
SEC compliance. Increased working capital requirements may arise from
month-to-month fixed sales and marketing expenses.
The Company has a line of credit agreement with a bank that provided that
it may borrow up to $75,000 at 2% over prime rate quoted from time to time by
the Bank of America. At December 31, 1999, the Company had borrowed $74,713 and
$64,771 respectively under this agreement. The Line of Credit matured on
February 7, 2000 and all principal and interest due was paid at that time.
Management believes that liquidity will be adequate to meet capital
requirements for at least the next twelve (12) months as the result of a private
equity placement in February 2000, of $616,000 of the fully subscribed common
stock offering of 1,250,000 shares at $.80 per share totaling $1,000,000. The
offering was pursuant to Regulation D, promulgated under the Securities Act of
1933, as amended.
Inflation and Price Increases
- -----------------------------
Although Management cannot accurately anticipate the effect of inflation on
operations, Management does not believe that inflation has had or is likely in
the foreseeable future to have a materially adversely effect on results of
operations or financial condition. However, increases in inflation over
historical levels or uncertainty in the general economy could decrease
discretionary consumer spending for products in direct response media.
Consequently, none of the Company's revenue growth is attributable to price
increases.
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Recent Accounting Pronouncements
- --------------------------------
Management does not believe any recently issued accounting pronouncements
have had a material impact on operations. Please see auditor's financial
statement footnote on recently issued Accounting Pronouncements.
Year 2000 Compliance
- --------------------
Management has completed a preliminary review of the Company's computer
systems and operations to determine the extent to which our business will be
vulnerable to potential errors and failures as a result of the year 2000
problem. Based on this limited review, Management has concluded that the
Company's computer programs and operations will not be materially affected by
the year 2000 problem.
The Company does not have any material contracts with external contractors
to assist in completing the year 2000 compliance effort. In addition, no
employees have been hired or reassigned to complete our year 2000 compliance. As
of the date hereof, the Company has not experienced any material year 2000
problems.
Description of Property
- -----------------------
The Company's principal executive facility is located at 1901 Avenue of the
Stars, Los Angeles, California. The Company leases approximately 3,700 square
feet of space pursuant to a thirty-seven (37) month lease that terminates on
April 30, 2003. In 1999, the rental cost for this space was $5,075 per month, of
which the Company paid 42% or $2,132. An unrelated private corporation paid the
remaining 58%, or $2,943, on a month-to-month basis. Starting with the year
ending December 31, 2000, the Company signed a new lease for $2.44 per square
foot with six months free rent, which comes out to $2.04 per square foot, or
averages $7600 per month for the three years ended April 30, 2003.
Security Ownership of Certain Beneficial Owners and Management
- --------------------------------------------------------------
The following table sets forth information regarding the beneficial
ownership of BMII's common stock as of the date hereof. The information in this
table provides the ownership information for:
o each person known by us to be the beneficial owner of more than 5% of
our common stock;
o each of our directors;
o each of our executive officers; and
o our executive officers and directors as a group.
Beneficial ownership has been determined in accordance with the rules and
regulations of the Securities and Exchange Commission and includes voting or
investment power with respect to the shares and may exceed 100%. Unless
otherwise indicated, the persons named in the table have sole voting and
investment power with respect to the number of shares indicated as beneficially
owned by them. The number of shares of common stock outstanding used in
computing beneficial ownership of each person listed below includes shares of
common stock held by that person as of April 1, 2000. The percentage of
beneficial ownership is based on 12,669,873 shares of common stock outstanding
as of January 31, 2000.
Also in February 2000, 1,250,000 shares of common stock were offered as
part of a Regulation D offering and approximately 770,000 shares of common stock
were issued for $616,000.
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Directors, Executive Officers, Promoters and Control Persons
- ------------------------------------------------------------
TABLE I
Name and Title Number of Shares
Of Beneficial Owner Beneficially Owned Percentage
- ------------------- ------------------ ----------
Robert Blagman, President, 8,200,000 64.7%
Chairman of the Board, Chief
Executive Officer (1)
All Executive Officers and 8,200,000 64.7%
Directors as a group (1 person)
(1) The stock is restricted shares under Rule 144 of the Securities and Exchange
Act of 1933, as amended.
MANAGEMENT
Directors and Executive Officers
- --------------------------------
The names and ages of the Company's directors and executive officers are
set below. Biographical information for each of these persons is also presented
below. There are no existing family relationships between or among any of our
executive officers or directors except for Leslie Blagman, wife of Robert
Blagman.
Name Age Position
---- --- --------
Robert Blagman 43 President, Chief Executive Officer
Chairman of the Board
Leslie Blagman 43 Secretary and Treasurer, C.O.O.
Jeffrey Wald 42 Director
Toni Knight 36 Director
Walter Lubars 58 Director
Andy Given 41 Director
Pursuant to BMII's bylaws, directors are to be elected at each annual
meeting and serve until their successors have been elected. We have not held an
annual meeting since the reverse merger. Officers are appointed by the board of
directors and serve for one-year terms.
Robert Blagman has served as Chief Executive Officer and chairman of the
board since the reverse acquisition in August 1999. From July 1999 through June
1994, Mr. Blagman served as chief executive officer of Blagman Media
International, Inc., a company he founded to develop and market direct response
advertising and advertising media. Prior to starting his own advertising agency
he served from 1980 to 1994 as national sales manager for KATZ Communications,
KCOP TC/Los Angeles and the Walt Disney/KCAL TV/Los Angeles. Mr. Blagman has
been a featured speaker at several key direct response advertising and Trade
Association meetings. He graduated from Boston University, Cum Laude with a BS
in communications and advertising. Mr. Blagman spends 100% of his time on
Company affairs.
11
<PAGE>
Leslie Blagman is the Chief operating officer and is principally in charge
of administration. She has worked in the advertising agency business since
joining Blagman International, Inc. in 1994. Prior experience includes ten years
(1978-1988) in sales and management positions at Katz Communications. From
1989-1994 she was self employed in event marketing.
Jeffrey Wald is the News Director for Tribune Broadcasting KTLA/Los Angeles
California. Mr. Wald is the recipient of seven Emmy awards, fourteen Golden Mike
awards and several Associated Press and United Press International awards. He
has appeared live on numerous radio and television programs concerning breaking
news stories: CNN, ABC, NBC, CBS, FOX, PBS, Larry King Live and Nightline. Mr.
Wald has been the News Director for the number one rated Los Angeles 10:00 PM
news for well over 11 years (1981-1990 and 1997-present).
Toni Knight is the President of Worldlink Incorporated. Ms. Knight, who
envisioned Worldlink as a one-stop solution for buyers and sellers of
infomercials and direct response programming, created the firm by "spinning out"
the infomercial/direct response department of the FOX Sports Network. Since its
inception Worldlink has grown fivefold and represents over 44% of all direct
response billing for cable networks worldwide. Ms. Knight has finalized
agreements with Lexus, Apple Computers, Dow Jones and Web TV for participation
on Worldlink represented networks. These companies represent a new direct
response revenue stream for Worldlink's networks.
Walter Lubars is a Professor Emeritus at Boston University. He was a
Professor of Communications from 1972 - 1994; Chairman of the Mass
Communications, Advertising & Public Relations Department for ten years; and
Dean ad interim of the College of Communication 1991-1992. He co-authored
Investigative Reporting and The Lessons of Watergate (1975); co-authored Guide
to Effective Writing (1978) and was researcher and co-author of a student and
teacher training guide, Critical TV Viewing (1980). Before joining Boston
University, he was senior copywriter at J. Walter Thompson and Doyl Dane
Bernbach.
Andy Givens is President of production for The Shooting Gallery and head of
Gun for Hire (Motion Picture/Television Production). [Former Senior Vice
President of Production, Universal Pictures.] Mr. Given has been with Universal
for 9 years, starting out as a production executive, and marching up the ranks
to Senior Vice President. Mr. Givens' unique ability to oversee and manage the
financial, planning and production aspects of movie making is vast. Mr. Given's
recent projects include Patch Adams, For the Love of the Game and Spike Lee's
Summer of Sam.
Officers and Directors Compensation
-----------------------------------
Stock Salary Other
Name Options Title Payouts Year Compensation Compensation
- ---- ------- ----- ------- ---- ------------ ------------
Robert Blagman 0 President, 0 1999 $ 240,000 $0
CEO
Leslie Blagman 0 COO 0 1999 $ 102,000 $0
Jeffrey Wald 0 Director 0 1999 $ 0 $0
Toni Knight 0 Director 0 1999 $ 0 $0
Walter Lubars 0 Director 0 1999 $ 0 $0
Andy Given 0 Director 0 1999 $ 0 $0
12
<PAGE>
The Blagmans did not receive salary compensation in 1998. The Company was a
sole proprietorship. Robert Blagman and Leslie Blagman drew $225,307
collectively.
Perks and other benefits for 1998 and 1998 were less than 10% of their
annual compensation and need not be reported here.
Compensation of Directors and Officers
- --------------------------------------
BMII's directors do not presently receive any cash compensation from us for
their service as directors. However, commencing in the year 2000, officers and
directors will receive equity in the form of stock options in lieu of cash, at
the discretion of the Board of Directors. As of March 2000, no formal plan has
been adopted for incentive pay including stock options.
At present, BMII has no employment agreements with our other officers or
directors, although we intend to enter into such agreements with our full time
management executives.
Certain Relationships and Related Transaction
- ---------------------------------------------
BMII received in September 1999 a loan of $66,545 from a related party. Mr.
Flynn, a shareholder, loaned the Company the $66,545 and will be given a note
payable, principal due on demand without stated interest.
The Company has advanced net funds of $38,948 and $5,253 as of December 31,
1999 and 1998, respectively, to the principal stockholder, Mr. Blagman. The
funds are uncollateralized, and no interest has been accrued on these advances.
Furthermore, there was an indemnity agreement in April 1999 between Unisat,
Inc., the predecessor company, and Capital Associates Investment Partners, Ltd.
controlled by Mr. Flynn, to hold Unisat, Inc. (now BMII) harmless from a law
suit filed by a Nevada corporation. The entity alleged tortuous interference
with a business contract involving another entity that was negotiating an
acquisition with BMII. Mr. Flynn on behalf of Capital Associates Investment
Partners, Ltd. agreed to indemnify BMII prior to completing the reverse
acquisition of BMII and Unisat, Inc. In March 2000, the legal action was
dismissed with prejudice.
Description of Securities
- -------------------------
The Company's authorized common stock consists of 100,000,000 shares of common
stock, par value $.001 per share and 5,000,000 shares of preferred stock, par
value $.001. Each holder of BMII common stock is entitled to one vote for each
share held on all matters to be voted upon by our stockholders. Holders of BMII
common stock have no cumulative voting rights. Holders of BMII common stock are
entitled to receive ratably dividends, if any, as may be declared from time to
time by the board of directors out of legally available funds, except that
holders of preferred stock may be entitled to receive dividends before the
holders of the common stock.
In the event of a liquidation, dissolution or winding up of company
business, holders of BMII's common stock would be entitled to share in our
assets remaining after the payment of liabilities and the satisfaction of any
liquidation preference granted the holders of any then outstanding shares of
preferred stock. Holders of BMII common stock have no preemptive or conversion
rights or other subscription rights. In addition, there are no redemption or
sinking fund provisions applicable to our common stock. All outstanding shares
of BMII common stock are duly authorized, validly issued, fully paid and
nonassessable.
13
<PAGE>
The rights, preferences and privileges of the holders of common stock may
be adversely affected by the rights of the holders of shares of any series of
preferred stock that we designate in the future.
Preferred Stock
- ---------------
The Company's Board of Directors is authorized to issue 5,000,000 shares of
preferred stock in series with the rights, privileges and preferences determined
from time to time. The Company has issued 600,000 shares of Series A Preferred
Stock as part of the consideration for the purchase of Mullinger Media &
Communications Limited. The Series A Preferred Stock has rights of conversion
based on earnings before interest, taxes, debt and administration, right of
redemption at the price of $1.00 per share or an aggregate of $600,000, and
other rights set forth on the Certificate of Designation of Rights, Preferences
and Privileges filed with the Secretary of State of Nevada and attached hereto
as Exhibit 2.
Transfer Agent
- --------------
Signature Stock Transfer of Dallas, Texas is the transfer agent and
registrar for BMII's share of common stock. Phone No. (972) 788-4193. Address:
14675 Midway Road, Suite 221, Dallas, Texas 75244
PART II
Market for Common Equity and Related Stockholder Matters
- --------------------------------------------------------
The principal market where the Company trades its common stock shares is
Over the Counter Bulletin Board; there are approximately four market makers. The
trading symbol is BB: BMII. The Company has approximately 12,600,000 shares
outstanding, of which 3,800,000 are in the public float. The Company went public
through a reverse acquisition on August 2, 1999.
The highs and lows on bid are prices for sales of the Company's common
stock shares during the past two years ended December 31, as follows:
Bid Prices Ask Prices
1998 High Low High Low
---- ---- --- ---- ---
First quarter $ 4.5 1.5 $ 8.0 5.0
Second Quarter 4.5 1.5 8.0 5.0
Third Quarter 6.68 2.25 7.0 3.43
Fourth Quarter 5.37 2.25 5.62 2.5
Bid Prices Ask Prices
1999 High Low High Low
---- ---- --- ---- ---
First quarter $ 4.75 1.12 $ 4.87 1.25
Second Quarter 2.62 0.37 2.87 0.56
Third Quarter 0.30 0.12 0.87 0.37
Fourth Quarter 3.12 0.20 3.25 0.24
High and low bid information for BMII's common stock reflects inter-dealer
quotes, without retail markup, markdown or commission and may not represent
actual transactions. Prior to the third quarter of 1999 bid prices were not
researched and is believed that high and low bid prices were trading less than
$1.00 per share.
BMII is filing this Form 8-K with Form 10-SB disclosures included for the
purpose of enabling its shares to continue to trade on the OTC Bulletin Board.
If BMII's Form 8-K has not been declared effective by the Securities and
Exchange Commission prior to May 3, 2000, then BMII may be required to file
appropriate documentation with NASDAQ in order for BMII's shares to be quoted on
the 'pink sheets' and following the effective date of the Form 8-K, BMII will
then file to have BMII's shares quoted again on the OTC Bulletin Board.
14
<PAGE>
Approximate Number of Holders
- -----------------------------
As of January 31, 2000, BMII had approximately 324 registered holders of
record of BMII common stock. Some of those registered holders are brokers who
are holding shares for multiple clients in street name. Accordingly, BMII
believes the number of actual shareholders of its common stock exceeds the
number of registered holders of record.
Dividends
- ---------
BMII has never paid any cash or stock dividends. BMII presently intends to
reinvest earnings, if any, to fund the development and expansion of its business
and therefore, does not anticipate paying dividends on our common stock in the
foreseeable future. The declaration of dividends will be at the discretion of
our board of directors and will depend upon our earnings, capital requirements,
financial position, general economic conditions and other pertinent factors.
Legal Proceedings
- -----------------
BMII is not currently subject to any legal proceedings. BMII may from time
to time become a party to various legal proceedings arising in the ordinary
course of business. Recently, a legal action against Unisat, Inc., the
predecessor company, was dismissed with prejudice. No further action on this
matter is required.
Changes in and Disagreement with Accountants
- --------------------------------------------
On February 10, 2000, BMII appointed Weinberg & Company, PA as our
independent accountants for the purpose of conducting an audit. There are no
disagreements to report.
Recent Sales of Unregistered Securities
- ---------------------------------------
During the past three years, and subsequent to the reverse acquisition
transaction through which BMII came to be, we have issued securities in the
following transactions:
(1) As of the date hereof, BMII has agreed to issue 1,250,000 shares of common
stock at $.80 per share and repriced warrants to three accredited investors
for a total sum of $1,000,000. As of March 2000, 770,000 shares have been
issued for which the Company has received $616,000. The balance of $389,000
has been fully subscribed but not yet paid and the 480,000 shares subject
to the subscription agreement been issued. The Company issued warrants with
this offering which can be converted into common stock based on the
following conditions: The number of repricing shares shall be equal to the
number of purchased common shares multiplied by a fraction (a) the
numerator, which is the closing bid price on the closing date, minus the
average market price and (b) the denominator, which is the average market
price. Average market price is the average of the closing bid prices for
common stock for each trading day in a 20-day trading period commencing on
the closing date. This offering is pursuant to Regulation D promulgated
under of the Securities Act of 1933, as amended.
(2) In January 2000, BMII acquired another advertising company, Mullinger Media
& Communications Limited, by issuing 600,000 shares of Series A Preferred
stock in exchange for 100% of that Company's common stock outstanding.
15
<PAGE>
(3) On December 2, 1999, the Company negotiated with Chris Kurstin for public
relations advice. According to the contract he was to receive 50,000 shares
of common stock. The contract was terminated on March 12, 2000 and the
50,000 shares have been issued.
(4) On August 2, 1999, as a result of a reverse acquisition and a tax free
recapitalization of its common stock, Unisat, Inc. exchanged 8,200,000 of
its common stock for Blagman's outstanding stock. The Entity who arranged
the acquisition received 50,000 shares of common stock at $.25 per share
based on quoted market prices for BMII stock or a total of $12,500 for
services rendered. Prior to the above reverse acquisition, Unisat, Inc. had
3,819,973 shares of common stock outstanding.
Indemnification of Officers and Directors
- -----------------------------------------
Our certificate of incorporation and bylaws contain provisions indemnifying
our directors and executive officers against liabilities. In our certificate of
incorporation, we have to the extent permitted by Nevada law eliminated the
personal liability of our directors and executive officers to Blagman Media
International, Inc. and our stockholders for monetary damages for breach of
their fiduciary duty, including acts constituting gross negligence. However, in
accordance with Nevada law, a director will not be indemnified for a breach of
his/her duty of loyalty, acts or omissions not in good faith or involving
intentional misconduct or a knowing violation or any transaction from which the
director derived improper personal benefit. In addition, our bylaws further
provide that we may advance to our directors and officers expenses incurred in
connection with proceedings against them for which they are entitled to
indemnification.
We do not currently maintain Directors and Officers Liability Insurance,
although we plan to obtain such insurance within the next three months.
We have also agreed to indemnify, defend, and hold harmless each of our
officers and directors to the fullest extent permissible by law with regard to
any and all loss, expense or liability, including payment and advancement of
reasonable attorney's fees, arising out of or relating to claims of any kind,
whether actual or threatened, relating in any way to their service to us. We
plan to memorialize these agreements as written contracts.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted for directors, officers and controlling
persons of the Company, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy and is therefore,
unenforceable.
16
<PAGE>
Continuation of Form 8-K
------------------------
Item 3. Bankruptcy or Receivership
- ----------------------------------
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant
- -----------------------------------------------------
Not Applicable.
Item 5. Other Events
- --------------------
(a) Successor Issuer Election. In accordance with Rule 12g-3(a) of the
General Rules and Regulations of the Securities and Exchange Commission, Blagman
became the successor issuer to MNS for reporting purposes under the Securities
Exchange Act of 1934 and elects to report under the Act effective with the
filing of this 8-K report.
(b) Important Information about the Registrant. The information reported in
this item is the same information that is reported in a Form 10-SB Registration
Statement under the Securities Exchange Act of 1934, as amended. This
information may be found in Item 2 of this Form 8-K.
Item 6. Resignations of Registrant's Directors
- ----------------------------------------------
Not Applicable.
Item 7. Financial Statement, Proforma, Financial Information and Exhibits
- -------------------------------------------------------------------------
(a) The financial statements of Blagman Media International, Inc. and MNS
Eagle Equity Group I, Inc.
(b) Exhibits
Exhibit number
--------------
2.0 Exchange Agreement
3.1 Amended Articles
3.2 Certificate of Designation
3.3 Bylaws
Item 8. Change in Fiscal Year
- -----------------------------
Not Applicable.
17
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BLAGMAN MEDIA INTERNATIONAL, INC.
By: /s/ Robert Blagman
----------------------
Name: Robert Blagman
Title: Chief Executive Officer
Dated: April 25, 2000
18
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC.
AND SUBSIDIARY
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 (CONSOLIDATED)
AND 1998
CONTENTS
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 BALANCE SHEETS AT DECEMBER 31, 1999
(CONSOLIDATED) AND 1998
PAGE 3 STATEMENTS OF OPERATIONS FOR THE YEARS
ENDED DECEMBER 31, 1999 (CONSOLIDATED) AND 1998
PAGE 4 STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1999 (CONSOLIDATED) AND 1998
PAGE 5 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999
(CONSOLIDATED) AND 1998
PAGES 6 - 14 NOTES TO FINANCIAL STATEMENTS
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Blagman Media International, Inc.
We have audited the accompanying balance sheets of Blagman Media International,
Inc. and Subsidiary and the pre-incorporated sole proprietorship owned by Robert
Blagman as of December 31, 1999 (consolidated) and 1998 and the related
statements of operations, changes in stockholders' deficiency and cash flows for
the years ended December 31, 1999 (consolidated) and 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits 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 that our audits provide 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 Blagman Media International, Inc.
and Subsidiary and the pre-incorporated sole proprietorship owned by Robert
Blagman as of December 31, 1999 (consolidated) and 1998 and the results of their
operations and their cash flows for the years ended December 31, 1999
(consolidated) and 1998 in conformity with generally accepted accounting
principles.
/s/ WEINBERG & COMPANY, P.A.
- ----------------------------
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
March 23, 2000
F-2
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
--------------------------
ASSETS
------
(Consolidated)
1999 1998
--------- ---------
CURRENT ASSETS
Cash $ -- $ 67,342
Accounts receivable 479,054 19,974
Other current assets 1,918 --
Loan receivable - stockholder 38,948 5,253
--------- ---------
Total Current Assets 519,920 92,569
PROPERTY & EQUIPMENT - NET 6,942 11,893
--------- ---------
TOTAL ASSETS $ 526,862 $ 104,462
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
----------------------------------------
CURRENT LIABILITIES
Notes and loans payable - current portion $ 80,152 $ 30,985
Line of credit 74,713 64,771
Accounts payable and accrued expenses 460,587 49,848
--------- ---------
Total Current Liabilities 615,452 145,604
LONG-TERM LIABILITIES
Notes and loans payable 50,000 --
--------- ---------
Total Liabilities 665,452 145,604
--------- ---------
STOCKHOLDERS' DEFICIENCY
Common stock, $.001 par value, 100,000,000 shares
authorized, 12,069,873 and 8,200,000 shares issued
and outstanding in 1999 and 1998, respectively 12,070 8,200
Additional paid in capital 24,630 --
Accumulated deficit (175,290) (49,342)
--------- ---------
Total Stockholders' Deficiency (138,590) (41,142)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
$ 526,862 $ 104,462
========= =========
See accompanying notes to financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
STATEMENTS OF OPERATIONS
------------------------
(CONSOLIDATED)
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
REVENUES - NET $ 3,182,099 $ 1,605,957
COST OF REVENUES 2,543,241 1,046,167
----------- -----------
GROSS PROFIT 638,858 559,790
----------- -----------
OPERATING EXPENSES
Officers' compensation 278,700 225,307
Consulting and commissions 131,859 117,192
Employee compensation and taxes 84,293 34,336
Travel and entertainment 80,020 59,208
Other general and administrative 50,628 24,551
Professional fees 28,809 2,579
Rent 28,356 21,653
Utilities 18,074 18,592
Advertising 17,975 15,573
Loan fee 16,000 --
Auto 15,799 9,926
Depreciation 4,951 5,322
----------- -----------
Total Operating Expenses 755,464 534,239
----------- -----------
(LOSS) INCOME FROM OPERATIONS (116,606) 25,551
----------- -----------
OTHER INCOME (EXPENSE)
Interest expense (10,812) (9,885)
Interest income 1,470 564
----------- -----------
Total Other (Expense) (9,342) (9,321)
----------- -----------
NET (LOSS) INCOME $ (125,948) $ 16,230
=========== ===========
Net (loss) Income per common share - basic and
diluted $ (0.013) $ 0.002
=========== ===========
Weighted average number of common shares
outstanding - basic and diluted 9,800,961 8,200,000
=========== ===========
See accompanying notes to financial statements
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 1999 (CONSOLIDATED) AND 1998
-------------------------------------------------------------
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
------ ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 8,200,000 $ 8,200 $ -- $ (65,572) $ (57,372)
Net Income 1998 -- -- -- 16,230 16,230
---------- ---------- ---------- ---------- ----------
Balance, December 31,1998 8,200,000 8,200 -- (49,342) (41,142)
Recapitalization 3,819,873 3,820 (3,820) -- --
Stock issued for services 50,000 50 12,450 -- 12,500
Stock options issued as a loan
fee -- -- 16,000 -- 16,000
Net Loss 1999 -- -- -- (125,948) (125,948)
---------- ---------- ---------- ---------- ----------
BALANCE, DECEMBER 31, 1999 12,069,873 $ 12,070 $ 24,630 $ (175,290) $ (138,590)
========== ========== ========== ========== ==========
See accompanying notes to financial statements.
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
------------------------
(CONSOLIDATED)
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net (Loss) Income $(125,948) $ 16,230
Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating
activities:
Depreciation 4,951 5,322
Stock issued for services 12,500 --
Stock options issued as a loan fee 16,000 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (459,081) (13,233)
Other current assets (1,918) --
Loan receivable - stockholder (33,695) (5,253)
Increase (Decrease) in:
Accounts payable and accrued expenses 410,739 26,478
--------- ---------
Net cash (used in) provided by operating
activities (176,452) 29,544
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment -- (3,890)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds 116,546 --
Repayment of loans (17,378) (51,564)
Line of credit - net 9,942 64,771
--------- ---------
Net cash provided by financing activities 109,110 13,207
--------- ---------
NET (DECREASE) INCREASE IN CASH (67,342) 38,861
CASH - BEGINNING OF YEAR 67,342 28,481
--------- ---------
CASH - END OF YEAR $ -- $ 67,342
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for - Interest $ 10,812 $ 9,885
========= =========
See accompanying notes to financial statements
F-6
</TABLE>
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
- --------------------------------------------------------------------
(A) Organization
----------------
Blagman Media International, Inc. (the "Company") was formed on January 29,
1999 upon incorporation from a sole partnership. The Company is a global
direct response marketing and advertising agency that produces
response-driven infomercials, and provides product placement, media buying,
medical marketing, production and syndication of television programming,
and other associated transactional media business pursuits.
On August 2, 1999 one hundred percent of the issued and outstanding common
stock of Blagman Media International, Inc. was acquired by Unisat, Inc. in
a transaction accounted for as a recapitalization of Blagman Media
International, Inc. Unisat, Inc. subsequently changed its name to Blagman
Media International, Inc. (See Note 10)
All capital stock quantities, amounts, and per share data in the
accompanying financial statements have been retroactively restated for the
effects of the above.
(B) Principles of Consolidation
-------------------------------
The accompanying 1999 consolidated financial statements include the
accounts of the Company and its wholly owned inactive subsidiary. All
significant inter-company transactions and balances have been eliminated in
consolidation.
(C) Use of Estimates
--------------------
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reported period.
Actual results could differ from those estimates.
(D) Cash and Cash Equivalents
-----------------------------
For purposes of the cash flow statements, the Company considers all highly
liquid investments with original maturities of three months or less at the
time of purchase to be cash equivalents.
F-7
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
(E) Fair Value of Financial Instruments
---------------------------------------
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments", requires disclosures of information
about the fair value of certain financial instruments for which it is
practicable to estimate the value. For purposes of this disclosure, the
fair value of a financial instrument is the amount at which the instrument
could be exchanged in a current transaction between willing parties other
than in a forced sale or liquidation.
The carrying amounts of the Company's accounts receivable, loan receivable,
accounts payable and accrued liabilities, and notes and loans payable,
approximates fair value due to the relatively short period to maturity for
these instruments.
(F) Property and Equipment
--------------------------
Property and equipment are stated at cost and depreciated, using
accelerated methods over the estimated economic useful lives of 5 to 7
years. Expenditures for maintenance and repairs are charged to expense as
incurred. Major improvements are capitalized.
(G) Revenue Recognition
-----------------------
The Company recognizes revenue from the sale of media time to advertising
clients when the related advertisement is broadcasted. In addition, they
earn commissions in connection with the procurement of media time on behalf
of advertising clients. Such commissions are also considered earned when
the underling advertisement is broadcasted. Additionally, the Company has
entered into contractual agreements with other advertising firms to share
revenues based upon the terms of the specific agreements. The income
produced by these revenue-sharing contracts are recognized as media or
commission income depending upon the nature of the income earned from the
agreement.
(H) Income Taxes
----------------
The Company accounts for income taxes under the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" ("Statement 109"). Under Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
F-8
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(I) Concentration of Credit Risk
--------------------------------
The Company maintains its cash in bank deposit accounts, which, at times,
may exceed federally insured limits. The Company has not experienced any
losses in such accounts and believes it is not exposed to any significant
credit risk on cash and cash equivalents.
(J) Earnings (Loss) Per Share
-----------------------------
Net income (loss) per common share for the years ended December 31, 1999
and 1998 is computed based upon the weighted average common shares
outstanding as defined by Financial Accounting Standards No. 128, "Earnings
Per Share". There were no common stock equivalents outstanding at December
31, 1998 common stock equivalents have not been included in the computation
of diluted earnings per share since the effect would be anti-dilutive. At
December 31, 1999 there were 100,000 common stock options outstanding which
could potentially dilute future earnings per share.
(K) Segment Information
-----------------------
The Company follows Statement of Financial Accounting Standards No. 131
"Disclosures about Segments of an Enterprise and Related Information."
During 1999 and 1998, the Company only operated in one segment, therefore,
segment disclosure has not been presented.
(L) Recent Accounting Pronouncements
------------------------------------
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended by Statement No. 137,
establishes accounting and reporting standards for derivative instruments
and related contracts and hedging activities. This statement is effective
for all fiscal quarters and fiscal years beginning after June 15, 2000. The
Company believes that its adoption of pronouncement No. 133, as amended by
No. 137, will not have a material effect on the Company's financial
position or results of operations.
F-9
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
(M) Stock Options
-----------------
In accordance with Statement of Financial Accounting Standards No. 123,
"Accounting For Stock Based Compensation" ("SFAS 123"), the Company has
elected to account for Stock Options issued to a loan guarantor in
accordance with SFAS 123.
NOTE 2 LOAN RECEIVABLE - STOCKHOLDER
- --------------------------------------
The loans are uncollateralized and non-interest bearing.
NOTE 3 PROPERTY AND EQUIPMENT
- -------------------------------
The following is a summary of property and equipment at December 31:
1999 1998
---- ----
Computer equipment $ 8,514 $ 8,514
Furniture and fixtures 9,770 9,770
Office equipment 12,217 12,217
-------- --------
30,501 30,501
Less: Accumulated depreciation (23,559) (18,608)
-------- --------
Property and equipment - net $ 6,942 $ 11,893
======== ========
Depreciation expense was $4,951 and $5,322 in 1999 and 1998, respectively.
NOTE 4 NOTES AND LOANS PAYABLE
- --------------------------------
The following schedule reflects notes and loans payable at December 31:
1999 1998
---- ----
Note payable, interest at 6% due March 31, 2001. In
addition, the Company provided an option to purchase
up to 100,000 shares of common stock, at $0.25 per
share, at any time until September 1, 2000.
(See Note 6) $ 50,000 $ --
Note payable - related party, due on demand with no
interest. 66,545 --
Loan payable, interest at 9.5%, due on demand. 13,607 30,985
-------- --------
130,152 30,985
Less current portion 80,152 30,985
-------- --------
Notes and loans payable $ 50,000 $ --
======== ========
F-10
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
Future maturities of the notes and loans payable in each of the next two
years are as follows:
Year ending December 31
-----------------------
2000 $ 80,152
2001 50,000
-----------
$ 130,152
===========
NOTE 5 LINE OF CREDIT
- -----------------------
The Company had a line of credit agreement with a bank that provides that
it may borrow up to $75,000 at 2% over Prime. The line matured on February
7, 2000 and all principal and interest due was paid.
NOTE 6 EQUITY
- ---------------
(A) Common Stock Issuance
-------------------------
The Company issued 50,000 shares of common stock as consideration for
services. The shares were valued, for financial accounting purposes, at
$.25 per share, based upon the quoted trading price at the grant date,
resulting in a consulting expense of $12,500.
(B) Stock Options Granted Under Loan Guarantee Agreement
--------------------------------------------------------
For options issued in connection with a note (See Note 4), the Company
applies SFAS 123. Accordingly, a loan fee of $16,000 was charged to
operations during the year ended December 31, 1999.
For financial statement disclosure purposes and for purposes of valuing
stock options issued to new employees, the fair market value of each stock
option granted estimated on the date of grant using the Black-Scholes
Options-Pricing Model in accordance SFAS 123, using the following
weighted-average assumptions: expected dividend yield of 0%, risk-free rate
of 5.2%, volatility of 180% and expected term of one year.
F-11
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
A summary of the options under the loan guarantee agreement as of December
31, 1999 is presented below:
Number of Weighted Average
Options Exercise Price
------- --------------
Stock Options
-------------
Balance at beginning of year -- $ --
Granted 100,000 0.25
Exercised -- --
Forfeited -- --
------- --------
Balance at end of year 100,000 $ 0.25
======= ========
Options exercisable at end of year 100,000 $ 0.25
Weighted average fair value of options
granted during the year -- $ 0.16
The following table summarizes information about stock options outstanding
at December 31, 1999:
Options Outstanding Options Exercisable
---------------------------------------------- -----------------------
Number Weighted
Outstanding Average Weighted Number Weighted
Range of at Remaining Average Exercisable Average
Exercise December Contractual Exercise at December Exercise
Price 31, 1999 Life Price 31, 1999 Price
----- -------- ---- ----- -------- -----
$ 0.25 100,000 0.75 Year $ 0.25 100,000 $ 0.25
NOTE 7 COMMITMENTS AND CONTINGENCIES
- --------------------------------------
(A) Operating Leases
--------------------
On December 31, 1999 the Company entered into a new lease agreement for
corporate office space. The lease term is a month - to - month lease
tenancy with monthly base rent of $9,313 commencing January 1, 2000 (See
subsequent Note 11 for Long Term Lease Agreement).
F-12
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
Rent expense under operating leases for the years ended December 31, 1999
and 1998 was $28,356 and $21,653, respectfully.
(B) Consulting Agreement
------------------------
On December 2, 1999, the Company entered into a six-month agreement with a
consulting firm to provide management consulting, business advisory,
shareholder information and public relations advice. The agreement calls
for compensation based on proposed fees for services to be rendered.
On December 1, 1999, the Company entered into a five-year agreement with a
consultant where the consultant will provide advisory business services.
The agreement called for the consultant to receive 25,000 shares of the
Company's common stock upon execution of the agreement, and an additional
25,000 shares upon expiration of each quarter year during the first year
term to an aggregate of 100,000 shares. None of the above shares were
issued. On March 21, 2000, the parties entered into a settlement agreement
and mutual release and the Company issued 50,000 shares of common stock as
consideration.
(C) Legal Actions
-----------------
On April 1, 1999, a Nevada Corporation filed suit against the Company, its
former Chairman of the Board and a former director in the Second Judicial
District Court of the State of Nevada, in and for the County of Washoe. In
the complaint, the plaintiff alleged intentional interference with
contractual relations between the Company and a third party, intentional
interference with prospective economic advantage, conspiracy, unfair
business practices, breach of fiduciary duty, unjust enrichment, rescission
of contract, incomplete accounting and permanent injunction. On February 7,
2000, the parties to the legal action stipulated that the alleged
complaints in the lawsuit be dismissed without prejudice.
NOTE 8 CONCENTRATIONS
- -----------------------
Approximately 51% and 47% of revenues were derived from four customers for
the years 1999 and 1998, respectively. Approximately 68% of accounts
receivable was due from one during 1999.
NOTE 9 INCOME TAXES
- ---------------------
In 1998, the Company was a sole-proprietorship and the proprietor was
responsible for all taxes personally.
F-13
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
There was no income tax (benefit) for the year ended December 31, 1999 as
the Company incurred a loss.
The tax effects of temporary differences that gave rise to significant
proportions of deferred tax assets and liabilities at December 31, 1999 are
as follows:
Deferred tax assets:
Net operating loss carryforward $ 32,370
--------
Total gross deferred tax assets 32,370
Less valuation allowance (32,370)
--------
Net deferred tax assets $ --
========
At December 31, 1999, the Company had a net operating loss carryforward of
approximately $126,000 for U.S. federal income tax purposes available to
offset future taxable income expiring on various dates beginning in 2016
through 2018.
There was no valuation allowance at January 1, 1999. The net change in the
valuation allowance during the year ended December 31, 1999 was an increase
of approximately $32,370.
NOTE 10 ACQUISITION AND RECAPITALIZATION
- ------------------------------------------
Under a Stock Exchange Agreement (the "Agreement") consummated on August 2,
1999, Unisat, Inc., ("Unisat"), a non-reporting public shell with no
operations at that time, acquired one hundred percent of the issued and
outstanding common stock (9,000,000 shares) of Blagman Media International,
Inc. ("Blagman") in exchange for 8,200,000 shares of the $0.001 par value
common stock of Unisat. As a result of the exchange, the Company became a
wholly owned subsidiary of Unisat and the stockholders of Blagman become
stockholders of approximately sixty-eight percent of Unisat. Generally
Accepted Accounting Principles require that the Company whose shareholders
retain a majority interest in a business combination be treated as the
acquiror for accounting purposes. As a result, the exchange was treated as
an acquisition of Unisat by Blagman, and a recapitalization of Blagman. The
Company's consolidated financial statements immediately following the
acquisition were as follows: (1) The Balance Sheet consists of Blagman's
net assets at historical cost and Unisat's net assets at historical cost
and (2) the Statement of Operations includes Blagman's operations for the
period presented and Unisat's operations from the date of acquisition. The
Company filed an amendment to its articles of incorporation to change its
name from Unisat, Inc. to Blagman Media International, Inc.
F-14
<PAGE>
BLAGMAN MEDIA INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------
NOTE 11 SUBSEQUENT EVENTS
- ---------------------------
(A) Operating Lease
-------------------
On February 29, 2000, the Company entered into a new lease agreement for
corporate offices. The lease term is for 37 months. The monthly base rent
is $9,089 commencing March 1, 2000. Minimum annual rentals under this lease
are as follows:
Years Ending December 31 Amount
------------------------ ------
2000 $ 90,890
2001 109,068
2002 109,068
2003 27,267
(B) Common Stock Offering
-------------------------
On February 16, 2000, the Board of Directors agreed to offer up to
1,250,000 shares of common stock, pursuant to Regulation D, Section 4(6) of
the Securities Act of 1933, as amended, at $0.80 per share. The offer was
fully subscribed to by March 23, 2000 and $616,000 of the total
subscription of $1,000,000 had been received.
(C) Acquisition
---------------
Under a Stock Exchange Agreement (the "Agreement) consummated in January
2000, the Company purchased Mullinger Media & Communications, Ltd. ("MMC")
in exchange for 600,000 shares of Series A Preferred Stock of the Company.
As a result of the exchange, MMC became a wholly owned subsidiary of the
Company.
In connection with the acquisition, the Company is in the process of
amending its State of Nevada Articles of Incorporation calling for the
authorization of 10,000,000 shares of preferred stock at $.001 par value.
As of March 23, 2000, that has not been files with the state.
F-15
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------ -----------
2.0 Exchange Agreement
3.1 Amended Articles
3.2 Certificate of Designation
3.3 Bylaws
STOCK EXCHANGE AGREEMENT
STOCK EXCHANGE AGREEMENT (the "Agreement") dated as of April 19, 2000 by and
between Blagman Media International, Inc., a Nevada corporation ("BMII" or the
"Company"), MNS Eagle Equity Group I, Inc. ("MNS") and those shareholders of MNS
who have executed a counterpart of this Agreement (the "MNS Holders").
WITNESSETH:
WHEREAS, BMII wishes to acquire all of the issued and outstanding stock of
MNS (the "MNS Shares") in exchange for total consideration of 50,000 shares of
common stock of BMII and $100,000 in cash; and
WHEREAS, BMII and the MNS Holders are entering into this Agreement to
provide for the acquisition by BMII of the 613,794 shares of MNS held by the MNS
Holders (the "MNS Control Shares"), which today do and as of the closing of the
transactions herein contemplated shall constitute 89.933% of the total MNS
Shares, in exchange for payment to them of their prorata share of the total
consideration; and
WHEREAS, it is the intention of the parties that (i) MNS be operated as a
wholly owned subsidiary with its own board of directors but including
representatives of BMII; and that (ii) the transaction be tax free under either
Section 368 or Section 351 of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the sufficiency of which is acknowledged, the parties
hereto hereby agree that:
1. Purchase and Sale of Securities.
1.1 Purchase and Sale of Shares. On the terms and subject to the
conditions set forth in this Agreement, BMII hereby purchases all of the 613,794
MNS Control Shares from the MNS Holders, and the MNS Holders hereby sell the MNS
Control Shares to BMII (the "Exchange").
1.2 Purchase Price. In payment for the MNS Control Shares, BMII hereby
agrees to ratably pay and deliver to the MNS Holders at closing their respective
prorata shares of the total consideration, amounting to a total of US$89,933.00
in cash and 44,967 shares of the common stock of BMII (the "BMII Shares") in the
proportions set forth on SCHEDULE 1.2; and the MNS Holders hereby agree to
convey and deliver all of the MNS Control Shares to BMII at closing. All of the
MNS Control Shares and the BMII Shares must at closing be duly authorized, fully
paid and validly issued, free of all liens, claims and encumbrances. The MNS
Control Shares, and the cash and BMII Shares payable to the MNS Holders, shall
be delivered to Brasher & Company, Attorneys at Law, 90 Madison Street, Suite
707, Denver, Colorado 80206, for delivery to the proper parties, and delivery to
such firm shall constitute delivery to the parties. The "Closing" shall be the
date the MNS Control Shares, cash and BMII Shares are delivered to such firm.
2. Company's Representations and Warranties. The Company represents and
warrants to MNS and the MNS Holders that:
2.1 Due Organization. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation, and has all requisite corporate power and authority to own,
operate, and lease its respective properties and assets and to conduct its
respective businesses as now conducted, and is qualified to do business in the
state or other jurisdiction where the nature of its properties, assets, or
businesses as now conducted, and is qualified to do business in the state or
<PAGE>
other jurisdiction where the nature of its properties, assets, or businesses
requires such qualification other than where the failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
the condition, financial or otherwise, of the business, operations, affairs,
properties, or assets. This shall be referred to as the "Condition of the
Company."
2.2 Compliance with Law. The Company has obtained and maintains in
full force and effect all permits, licenses, consents, approvals, registrations,
memberships, authorizations, and qualifications under all federal, state, local,
and foreign laws and regulations, and with all federal, state, local, and
foreign governmental or regulatory authorities ("Authority") required for the
conduct by it of its businesses and the ownership or possession by it of its
properties and assets other than where the failure to obtain or maintain such
permits, licenses, consents, approvals, registrations, memberships,
authorizations, or qualifications could not, individually or in the aggregate,
have a material adverse effect on the Condition of the Company. The Company is
in compliance with all laws, regulations, ordinances, orders, and decrees
(including, without limitation, all environmental and occupational, health, and
safety laws) of any Authority applicable to the conduct by the Company of its
business and to its ownership and possession of its properties and assets other
than where the failure so to comply would not, individually or in the aggregate,
have a material adverse effect on the Condition of the Company.
2.3 Authorization, Execution, and Delivery of Agreement. (a) The
execution and delivery of this Agreement, the issuance and sale of the Shares to
MNS, and the consummation of the transactions contemplated hereby (i) are within
the corporate power and authority of the Company, (ii) do not require the
approval or consent of any stockholders of the Company, and (iii) have been duly
authorized by all necessary corporate power on the part of the Company. This
Agreement has been duly authorized by all necessary corporate power on the part
of the Company. This Agreement has been duly executed and delivered by the
company, and this Agreement constitutes the legal, valid, binding, and
enforceable obligation of the Company, subject to applicable bankruptcy,
insolvency, and similar laws affecting creditors' rights generally, and subject
as to enforceability under general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(b) The Shares have been duly authorized by all necessary
corporate action on the part of the Company and are validly issued, fully paid,
and nonassessable, and MNS will acquire valid title to such shares, free and
clear of any encumbrances.
2.4 Financial Statements. The Company's audited financial statements
for the periods ending December 31, 1998 and 1999 are true, correct and
complete, and have been prepared in accordance with generally accepted
accounting principles and standards and all applicable SEC rules.
2.5 No Misrepresentation. This Agreement and the Company's Form 8-K
report previously furnished contain no untrue statement of a material fact, nor
omit to state a material fact about the Company necessary to make the statements
contained herein and therein not misleading.
2.6 Capitalization. The Company has authorized 50,000,000 shares of
common stock of which 12,600,000 are issued and outstanding and 5,000,000 shares
of Preferred Stock of which 600,000 shares of Series A Preferred Stock are
issued and outstanding. The Board of Directors has the right to issue preferred
stock in series with the relative rights, designations and preferences
determined by the Board of Directors from time to time.
3. Representations and Warranties of MNS and the MNS HOLDERS. MNS and the
MNS Holders severally represent and warrant to the Company that:
<PAGE>
3.1 Execution and Deliver of Agreement. This Agreement has been duly
executed and delivered by and constitutes a legal, valid, binding, and
enforceable obligation of MNS and each of the MNS Holders, subject to applicable
bankruptcy, insolvency, and similar laws affecting creditors' rights generally,
and subject as to enforceability under general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at law).
3.2 Purchase Entirely for Own Account. The MNS Holders each confirm
that they are acquiring the BMII Shares for their respective own accounts and
not as a nominee or agent for any person, and each is acquiring the BMII Shares
for investment and not with a view to the resale or distribution of any part
thereof, other than as permitted by applicable federal and state securities
laws, and no MNS Holder is a party to any contract, undertaking, agreement, or
arrangement with any person to sell, transfer, or grant participation to such
person or to any third person with respect to any of the BMII Shares.
3.3 Representations and Warranties Correct. To the best knowledge of
each of the MNS Holders, the representations and warranties of MNS herein are
true and correct, and MNS has full power and authority to enter into this
Agreement.
3.4 Receipt of Documents. The MNS Holders each acknowledge that his,
her or its investment is based solely on the description of the Company given by
the agents of the Company without any written disclosures, but also by inviting
the MNS Holders to discuss the Company with the Company's officers or its
professional advisors.
3.5. Access to Information about Company. The MNS Holders each have
had the opportunity to discuss the Company's business and affairs with such
officers or other officials of the Company and/or agents as they have deemed
necessary or appropriate, and each believes that he, she or it has received all
the information considered necessary or appropriate for deciding whether to
purchase the BMII Shares. Notwithstanding the foregoing, MNS and the MNS Holders
represent and warrant that MNS has no assets or liabilities, no contracts or
agreements respecting MNS or the MNS Control Shares, MNS has engaged in no
business of any kind since its inception, there are no preemptive rights as to
the MNS Control Shares, and no options or other rights exist whereby any person
is entitled to buy or acquire the MNS Controll Shares or any other shares of
MNS.
3.6 Restricted Securities. Each MNS Holders understands and
acknowledges that the BMII Shares he or she is purchasing are characterized as
restricted securities under the U.S. federal securities laws because they were
acquired from the Company in a transaction not involving a public offering, and
that under such laws and applicable regulations the securities may be resold or
otherwise transferred without registration under the Securities Act of 1933 and
other applicable laws only in certain limited circumstances.
3.7 Legend. The MNS Holders each understand and acknowledge that all
certificates evidencing the BMII Shares shall, unless and until removed in
accordance with law, bear a legend in substantially the following form:
"These securities have not been registered under the Securities Act of
1933. They may not be sold, offered for sale, pledged, or hypothecated in the
absence of a registration statement in effect with respect to the securities
under such Act or an opinion of counsel satisfactory to Company that such
registration is not required or unless sold under Rule 144 of the Securities
Act."
3.8 Ownership of MNS Control Shares; Etc. Each MNS Holder owns good
and merchantable title to the MNS Control Shares, free and clear of all liens,
claims and encumbrances of third persons, and each owns the number of shares set
forth next to his, her or its respective name.
<PAGE>
4. Covenants.
4.1 BMII's Right to Unwind Exchange. BMII shall have the right to
rescind and unwind the Exchange within 30 days following the Closing (the date
all items needed for closing have been delivered to Brasher & Company, Attorneys
at Law), if it has not by then received all desired approvals from the SEC and
NASD. Notice of unwinding must be given in writing to Brasher & Company on
behalf of the MNS Holders no later than the 30th day following Closing.
Unwinding shall be accomplished as follows: (i) the MNS Holders shall return the
BMII Shares to BMII and shall also return to BMII all of the cash portion of the
Exchange price except for the sum of $25,000.00, which the MNS Holders shall
retain as damages and which amount shall be distributed prorata to the MNS
Holders , and (ii) BMII shall return the MNS Control Shares to the MNS Holders.
All such shares must be free of all liens, claims and encumbrances of third
persons. Except for such deliveries, no party shall have any liability to any
other party if the Exchange is rescinded.
4.2 Covenants of MNS. MNS hereby covenants and agrees to perform or do
after Closing the following: (i) nominate and elect a board of directors wherein
Robert Blagman will serve as Chairman and there shall be two directors
designated by Robert Blagman; (ii) MNS shall cooperate with BMII in any respect
required to carry out the purposes of this Agreement, including the execution
and delivery of any additional documents deemed by counsel to the Company to be
required.
5. General Provisions.
5.1 Survival of Representations, Warranties and Agreement.
Notwithstanding any investigation conducted or notice or knowledge obtained by
or on behalf of any party hereto, the representation and warranty in this
Agreement shall survive the sale of the BMII Shares under the terms of this
Agreement.
5.2 Expenses. Each party hereto shall pay its, his or her own expenses
incidental to the preparation of this Agreement, the carrying out of the
provisions hereof, and the consummation of the transaction contemplated hereby.
5.3 Laws. This Agreement shall be governed and interpreted in
accordance with the laws of the State of California, United States of America.
5.4. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties, and supersedes and integrates
all prior oral or written agreements, if any, and may only be modified by
written amendment signed by an authorized representative of each party.
5.5. No Conflicting Agreements. Each party states that there is no
agreement between itself and any other person, firm, or corporation which would
cause this Agreement not to have full force and effect.
Remainder of page intentionally left blank - Signature Page follows
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
BLAGMAN MEDIA INTERNATIONAL INC. MNS Eagle Eguity Group I, Inc. ("MNS")
("Company")
By By
- ------------------------------- --------------------------------------
Chief Executive Officer Stephen M. Siedow, Pres., CEO
SIGNATURES of the MNS HOLDERS:
Stephen M. Siedow (269,689) John D. Brasher Jr. (246,689)
X X
- ------------------------------- --------------------------------------
Signature Signature
Linda M. Siedow (12,500) Nicole A. Siedow (5,000)
X X
- ------------------------------- --------------------------------------
Signature Signature
Linda M. Siedow CF Linda M. Siedow CF
Stephen J. Siedow (5,000) Michael R. Siedow (5,000)
X X
- ------------------------------- --------------------------------------
Signature Signature
Lisa K. Brasher (10,000) Lisa K. Brasher Children's Trust
(5,000)
X X
- ------------------------------- --------------------------------------
Signature Signature
MNS Eagle Equity Group, Inc. YAKIMA CORP. (20,000)
(34,916)
By By
- ------------------------------- --------------------------------------
Stephen M. Siedow, Pres. John Brasher, Vice Pres.
<PAGE>
SCHEDULE 1.2
DELIVERIES TO THE MNS HOLDERS
Cash BMII Shares
---- -----------
Stephen M. Siedow $ 39,514.78 19,758
John D. Brasher Jr $ 36,144.83 18,073
Linda M. Siedow $ 1,831.50 916
Nicole A. Siedow $ 732.60 366
Linda M. Siedow CF Stephen J. Siedow $ 732.60 366
Linda M. Siedow CF Michael R. Siedow $ 732.60 366
Lisa K. Brasher $ 1,465.20 733
Lisa K. Brasher Children's Trust $ 732.60 366
MNS Eagle Equity Group, Inc. $ 5,115.89 2,558
YAKIMA CORP $ 2,930.40 1,465
------------- ------
TOTALS $ 89,933.00 44,967
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Of
COMBINED COMPANIES, INC.
(After Issuance of Stock)
We the undersigned, Gregory Johnson, President and Robert Heidmann,
Secretary of Combined Companies, Inc. do hereby certify:
That the Board of Directors of Combined Companies, Inc. by unanimous board
action, and on February 24, 1998, adopted the following resolution to amend the
original articles of incorporation as follows:
Article VI hereby amended to read as follows:
The aggregate number of shares which this corporation shall have authority
to issue is 100,000,000 shares of stock, all of one class, each with a par
value of $0.001 per share, which shall be known as "common stock". All of
the voting power of the capital stock of this corporation will reside in
the common stock. No capital stock of this corporation will be subject to
assessment and no holder of any share or shares will have preemptive rights
to subscribe to any or all issues of shares of securities of this
corporation.
Article XII is hereby added as follows:
At each election of directors, every shareholder entitled to vote at such
election has the right to vote in person or by proxy the number of shares
of stock held by such shareholder for as many persons as there are
directors to be elected. No cumulative voting for directors will be
permitted.
The number of shares of said corporation outstanding and entitled to vote
on the amendment to the Articles of Incorporation is 9,664: that the said change
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Gregory Johnson
--------------------
Gregory Johnson, President
STATE OF ARIZONA )
) ss:
County of )
Articles of Amendment:1
<PAGE>
On this 27th day of February, 1998, personally appeared before me, a Notary
Public, Gregory Johnson, President of Combined Companies, Inc., who acknowledged
that they signed the above instrument.
/s/ L. J. Hausser
-----------------
NOTARY PUBLIC in and for the
State of Arizona, residing at:
Comm. Expires: July 27, 2001
Articles of Amendment:2
<PAGE>
/s/ Robert Heidmann
-------------------
Robert Heidmann, Secretary
STATE OF MINNESOTA )
) ss:
County of Crowling
On this 2nd day of February, 1998, personally appeared before me, a Notary
Puvlic, Robert Heidmann, Secretary of Combined Companies, Inc., who acknowledged
that they signed the above instrument.
/s/ Suzanne M. Sundquist
------------------------
NOTARY PUBLIC in and for the
State of Nevada, residing at:
Comm. Expires: Jan. 31, 2000
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Of
COMBINED COMPANIES, INC.
(After Issuance of Stock)
We the undersigned, William Robertson, President and Tammy Cloutier,
Secretary of Combined Companies, Inc. do hereby certify:
That the Board of Directors of Combined Companies, Inc. by unanimous board
action, and on April 27, 1998, adopted the following resolution to amend the
original articles of incorporation as follows:
FIRST: hereby amended to read as follows:
The name of the corporation is UNISAT, INC.
The number of shares of said corporation outstanding and entitled to vote
on the amendment to the Articles of Incorporation is 790,000 that the said
amendment has been consented to and approved by a majority vote of the
stockholders.
/s/ William Robertson
--------------------
William Robertson, President
STATE OF CALIFORNIA )
) ss:
County of San Bernadino )
On this 7th day of May, 1998, personally appeared before me, a Notary
Public, William Robertson, President of Combined Companies, Inc., who
acknowledged that they signed the above instrument.
/s/ Grace Olcese
-----------------
NOTARY PUBLIC in and for the
State of California,
residing at: 1425 W.Foothill Blvd.
Upland CA 91786
Comm. Expires: 11-3-2000
Articles of Amendment: 1
<PAGE>
/S/ Tammy Cloutier
------------------
Tammy Cloutier, Secretary
Province of British )
Columbia )ss:
Canada )
On this 5 day of May, 1998, personally appeared before me, a Notary Public,
Tammy Cloutier, Secretary of Combined Companies, Inc., who acknowledged that she
signed the above instrument.
/s/ Dianna-Lynn Lund
------------------------
NOTARY PUBLIC in and for the
Province of British Columbia, residing at:
Comm. Expires: n/a
Articles of Amendment: 2
<PAGE>
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 02 1999
/s/ Dean Heller
---------------
Dean Heller
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
of
UNISAT, INC.
(After Issuance of Stock)
We the undersigned, Robert Blagman, President and Tammy Cloutier, Secretary
of Unisat, Inc. do hereby certify:
That the Board of Directors of Unisat, Inc. by unanimous board action, and
on May 6, 1999, adopted the following resolution to amend the original articles
of incorporation as follows:
Article I hereby amended to read as follows:
The name of the corporation outstanding and entitled to vote on the
amendment to the Articles of Incorporation is 3,819,873; that the said change
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Robert Blagman
------------------
Robert Blagman, President
STATE OF CALIFORNIA )
) ss:
County of Los Angeles )
On this 12th day of July, 1999, personally appeared before me, a Notary
Public, Robert Blagman, President of Unisat, Inc., who acknowledged that he
signed the above instrument.
/s/ Martha Arellano
-------------------
NOTARY PUBLIC in and for the
State of California, residing at:
Comm. Expires:
Articles of Amendment: 1
<PAGE>
/s/ Tammy Cloutier
------------------
Tammy Cloutier, Secretary
PROVINCE OF BRITISH COLUMBIA )
) ss:
CITY OF NORTH VANCOUVER )
On this 8th day of July, 1999, personally appeared before me, a Notary
Public, Tammy Cloutier, Secretary of Unisat, Inc., who acknowledged that she
signed the above instrument.
/s/ William N. Perrault
-----------------------
A Notary Public in and for
the Province of British Columbia
102 - 1975 Lonsdale Avenue
North Vancouver, B.C. V7M 2K3
Ph. (604) 987-8101 Fax 987-1794
Articles of Amendment: 2
<PAGE>
State of California )
) ss:
County of Los Angeles )
On July 12th, before me, Martha Arellano personally appeared Robert Blagman,
proved to me on the basis of satisfactory evidence to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal Martha Arellano
Commission # 1209672
/s/ Martha Arellano Notary Public - California
- ------------------- Los Angeles County
Martha Arellano My Comm. Expires Feb. 1, 2003
- --------------------------------------------------------------------------------
OPTIONAL
- --------------------------------------------------------------------------------
Though the information below is not required by law, it may prove valuable
to persons relying on the document and could prevent fraudulent removal and
reattachment of this form to another document.
Description of Attached Document
Title or Type of Document: Cert. of Amendment of Articles of Incorporation
Occurrent Date: July 12, 1999 Number of Pages: 1
Signer(s) Other Than Named Above: None
Capacity(ies) Claimed by Signer
Signer's Name: Robert Blagman
[x] Individual
[ ] Corporate Officer - Title(s):
[ ] Partner - [ ] Limited [ ] General
[ ] Attorney in Fact
[ ] Trustee
[ ] Guardian or Conservator
[ ] Other:
Signer Is Representing:
CERTIFICATE OF DESIGNATION
of
Rights, Preferences and Privileges
of
BLAGMAN MEDIA INTERNATIONAL INC.
SERIES A SUPER CONVERTIBLE REDEEMABLE PREFERRED STOCK
$0.001 Par Value
- --------------------------------------------------------------------------------
Pursuant to Section 78.195 of the
Nevada Revised Statutes, as Amended
- --------------------------------------------------------------------------------
The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors of Blagman Media International Inc., a Nevada
Corporation (the "Corporation"), with the designations, powers, preferences,
rights, qualifications, limitations and restrictions having been fixed by the
Board of Directors:
RESOLVED, that pursuant to the authority vested in the Board of Directors of the
Corporation by Article Four of the Corporation's Articles of Incorporation, as
amended, a series of preferred stock of the Corporation be, and it hereby is,
created out of the authorized but unissued shares of the capital stock of the
Corporation, such series to be designated Series A Super Convertible Redeemable
Preferred Stock (the "Series "A" Preferred Stock"), to consist of such number of
shares of the Corporation's shares (par value $0.001 per share) of Series A as
shall be equal to the purchase price under that certain Acquisition Agreement
dated 12/29/99 between the Company and Mullinger Media & Communications Limited
or 600,000 shares initially, of which the preferences and relative and other
rights, and the qualifications, limitations or restrictions thereof, shall be
(in addition to those set forth in the Corporation's Articles of Incorporation,
as amended) as follows:
1. Certain Definitions. Unless the context otherwise requires, the terms
defined in this paragraph 1 shall have, for all purposes of this resolution, the
meanings herein specified.
Board of Directors. The term "Board of Directors" shall mean the Board of
Directors of this Corporation, and, to the extent permitted by law and the
Articles of Incorporation and Bylaws of this Corporation, any committee of such
Board of Directors authorized to exercise the powers of such Board of Directors.
Common Stock. The term "Common Stock" shall mean all shares now or
hereafter authorized of any class of Common Stock of the Corporation and any
other stock of the Corporation, howsoever designated, authorized after the Issue
Date, which has the right (subject always to prior rights of any class or series
of preferred stock) to participate in the distribution of the assets and
earnings of the Corporation without limit as to per share amount.
Dividend Payment Date. The term "Dividend Payment Date" shall have the
meaning set forth in subparagraph 2(a) below.
Dividend Period. The term "Dividend Period" shall have the meaning set
forth in subparagraph 2(a) below.
Dividend Rate. The term "Dividend Rate" shall mean the annual rate used to
determine the amount of dividends payable in cash each year on each outstanding
full share of Series "A" Preferred Stock.
<PAGE>
Event of Exercise. The term "Event of Exercise" shall mean notice of
intention to convert each share of the Series "A" Super Convertible Preferred
Stock into shares of Common Stock at the conversion rate of shares of Common
Stock for each share of Series "A" Preferred Stock set forth as follows:
EBITDA of: Conversion Rate
---------- ---------------
$ 500,000 - 649,999 1: 1.5
650,000 - 799,999 1: 1.75
800,000 - 999,999 1: 2
1,000,000 - 1,249,999 1: 2.5
1,250,000 - 1,499,999 1: 3
1,500,000 - 1,999,999 1: 4
2,000,000 - up 1: 5
Issue Date. The term "Issue Date" shall mean the date that shares of Series
"A" Preferred Stock are first issued by the Corporation.
Junior Stock. The term "Junior Stock" shall mean the Common Stock and any
other class or series of stock of the Corporation issued after the Issue Date
not entitled to receive any dividends in any Dividend Period unless all
dividends required to have been paid or declared and set apart for payment on
the Series "A" Preferred Stock shall have been so paid or declared and set apart
for payment and not entitled to receive any assets upon the liquidation,
dissolution or winding up of the affairs of the Corporation until the Series "A"
Preferred Stock shall have received the entire amount to which such stock is
entitled upon such liquidation, dissolution or winding up.
Liquidation Price. The term "Liquidation Price" shall mean $1.00, times the
number of shares of Series "A" Senior Preferred Stock.
Parity Stock. The term "Parity Stock" shall mean any other class or series
of stock of the Corporation issued after the Issue Date entitled to receive
payment of dividends on a parity with the Series "A" Preferred Stock and
entitled to receive assets upon the liquidation, dissolution or winding up of
the affairs of the Corporation on a parity with the Series "A" Preferred Stock.
Preferred Stock. The term "Preferred Stock" shall mean the Series "A" Super
Convertible Redeemable Preferred Stock, $0.001 par value per share, of this
Corporation.
Put. The term "Put" shall mean the right of the holder of the Series "A"
Preferred Stock to demand that the Corporation pay the holder the Redemption
Price.
Record Date. The term "Record Date" shall mean, with respect to dividends
payable on Dividend Payment Dates, the date fixed by the Board of Directors for
purposes of determining the holders of outstanding Series "A" Preferred Stock
entitled to the payment of dividends, not exceeding 45 days nor less than 10
days preceding each such Dividend Payment Date.
Redemption Agent. The term "Redemption Agent" shall have the meaning set
forth in subparagraph 4(d) below.
Redemption Date. The term "Redemption Date" shall have the meaning set
forth in subparagraph 4(c) below.
Redemption Price. The term "Redemption Price" shall mean the price to be
paid upon redemption of the Series "A" Super Preferred Stock, which shall be in
the sole discretion of the Company either (i) $600,000 or $1.00 per share or
(ii) 600,000 shares of common stock of the Company.
<PAGE>
Senior Stock. The term "Senior Stock" shall mean any class or series of
stock of the Corporation issued after the Issue Date ranking senior to the
Series "A" Preferred Stock in respect of the right to receive dividends, and in
respect of the right to receive assets upon the liquidation, dissolution or
winding up of the affairs of the Corporation.
Subsidiary. The term "Subsidiary" shall mean any corporation of which
shares of stock possessing at least a majority of the general voting power in
electing the board of directors are, at the time as of which any determination
is being made, owned by the Corporation, whether directly or indirectly through
one or more Subsidiaries.
2. Dividends.
(a) Subject to the prior preferences and other rights of any Senior Stock,
the holders of Series "A" Preferred Stock shall be entitled to receive, out of
funds legally available for that purpose, cash dividends at the rate of ___
percent (__%) per annum, and no more. Such dividends shall be cumulative from
the Issue Date, and shall be payable in arrears, when and as declared by the
Board of Directors, on December 31 of each year commencing in 2000 (such date
being herein referred to as a "Dividend Payment Date"). The period between
consecutive Dividend Payment Dates shall hereinafter be referred to as a
"Dividend Period." Each such dividend shall be paid to the holder of record of
the Series "A" Preferred Stock as each holder's name appears on the share
register of the Corporation on the corresponding Record Date. Dividends on
account of arrears for any past Dividend Periods may be declared and paid at any
time, without reference to any Dividend Payment Date, to holders of record on
such date, not exceeding 50 days preceding date thereof, as may be fixed by the
Board of Directors.
(b) In the event that full cash dividends are not paid or made available to
the holders of all outstanding shares of Series "A" Preferred Stock and of any
Parity Stock, and funds available shall be insufficient to permit payment in
full in cash to all such holders of the preferential amounts to which they are
then entitled, the entire amount available for payment of cash dividends shall
be distributed among the holders of the Series "A" Preferred Stock and of any
Parity Stock ratably in proportion to the full amount to which they would
otherwise be respectively entitled, and any remainder not paid in cash to the
holders of the Series "A" Preferred Stock shall cumulate as provided in
subparagraph 2(c) below.
(c) If, on any Dividend Payment Date, the holders of the Series "A"
Preferred Stock shall not have received the full dividends provided for in the
other provisions of this paragraph 2, then such dividends shall cumulate,
whether or not earned or declared, with additional dividends thereon for each
succeeding full Dividend Period during which such dividends shall remain unpaid.
Unpaid dividends for any period less than a full Dividend Period shall cumulate
on a day-to-day basis and shall be computed on the basis of a 360 day year.
(d) So long as any shares of Series "A" Preferred Stock shall be
outstanding, the Corporation shall not declare or pay on any Junior Stock any
dividend whatsoever, whether in cash, property or otherwise (other than
dividends payable in shares of the class or series upon which such dividends are
declared or paid, or payable in shares of Common Stock with respect to Junior
Stock other than Common Stock, together with cash in lieu of fractional shares),
nor shall the Corporation make any distribution on any Junior Stock, nor shall
any Junior Stock be purchased or redeemed by the Corporation or any Subsidiary,
nor shall any monies be paid or made available for a sinking fund for the
purchase or redemption of any Junior Stock, unless all dividends to which the
holders of Series "A" Preferred Stock shall have been entitled for all previous
Dividend Periods shall have been paid or declared and a sum of money sufficient
for the payment thereof set apart.
3. Distributions Upon Liquidation, Dissolution or Winding Up. In the event
of any voluntary or involuntary liquidation, dissolution or other winding up of
the affairs of the Corporation, subject to the prior preferences and other
rights of any Senior Stock, but before any distribution or payment shall be made
to the holders of Junior Stock, the holders of the Series "A" Preferred Stock
<PAGE>
shall be entitled to be paid the liquidation price, plus any accrued and unpaid
dividends thereon to such date, and no more, in cash or in property taken at its
fair value as determined by the Board of Directors. If such payment shall have
been made in full to the holders of the Series "A" Preferred Stock, and if
payment shall have been made in full to the holders of any Senior Stock and
Parity Stock of all amounts to which such holders shall be entitled, the
remaining assets and funds of the Corporation shall be distributed among the
holders of Junior Stock, according to their respective shares and priorities.
If, upon any such liquidation, dissolution or other winding up of the affairs of
the Corporation, the net assets of the Corporation distributed among the holders
of all outstanding shares of the Series "A" Preferred Stock and of any Parity
Stock shall be insufficient to permit the payment in full to such holders of the
preferential amounts to which they are entitled, then the entire net assets of
the Corporation remaining after the distribution to holders of any Senior Stock
of the full amounts to which they may be entitled shall be distributed among the
holders of the Series "A" Preferred Stock and of any Parity Stock ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled. Neither the consolidation or merger of the Corporation into or with
another corporation or corporations, nor the sale of all or substantially all of
the assets of Corporation to another corporation or corporations shall be deemed
a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this paragraph 3.
4. Redemption by the Corporation.
(a) The Corporation, any time after the expiration of five (5) years from
the Issue Date, at the election of the Board of Directors, may redeem in whole
the Series "A" Preferred Stock outstanding by paying redemption price of
$600,000, plus all dividends accrued, unpaid and accumulated up to the date of
redemption.
(b) The Corporation shall not redeem less than all of the outstanding
shares of Series "A" Preferred Stock pursuant to the first paragraph of
subparagraph 4(a) above at any time unless all cumulative dividends on the
Series "A" Preferred Stock for all previous quarterly Dividend Periods have been
paid or declared and funds therefor set apart for payment.
(c) Notice of every proposed redemption of Series "A" Preferred Stock shall
be sent by or on behalf of the Corporation, by first class mail, postage
prepaid, or delivered in person, to the holders of record of the shares to be
redeemed at their respective addresses as they shall appear on the records of
the Corporation, not less than five (5) days nor more than sixty (60) days prior
to the date fixed for redemption (the "Redemption Date") (i) notifying such
holders of the election of the Corporation to redeem such shares and of the date
of redemption, (ii) stating the date on which the shares cease to be
convertible, (iii) stating the place or places at which the shares called for
redemption shall, upon presentation and surrender of the certificates evidencing
such shares, be redeemed, and the Redemption Price therefor, and (iv) stating
the name and address of any Redemption Agent selected by the Corporation in
accordance with subparagraph 4(d) below, and the name and address of the
Corporation's transfer agent for the Series "A" Preferred Stock.
(d) The Secretary of the Corporation may act as the redemption agent to
redeem the Series "A" Preferred Stock. Thereafter, the Corporation may appoint a
bank or trust company to act as the Redemption Agent. Following such appointment
and prior to any redemption, the Corporation shall deliver to the Redemption
Agent irrevocable written instructions authorizing the Redemption Agent, on
behalf and at the expense of the Corporation, to cause such notice of redemption
to be duly mailed as herein provided as soon as practicable after receipt of
such irrevocable instructions and in accordance with the above provisions. All
funds necessary for the redemption shall be deposited with the Redemption Agent
in trust at least two business days prior to the Redemption Date, for the pro
rata benefit of the holders of the shares so called for redemption, so as to be
and continue to be available therefor. Neither failure to mail any such notice
to one or more such holders nor any defect in any notice shall affect the
sufficiency of the proceedings for redemption as to other holders.
(e) If notice of any redemption by this corporation pursuant to
Subparagraph 4(c) shall have been mailed, then, on and after the close of
business on the date fixed for redemption, unless and except to the extent that
default shall be made by this corporation in providing funds at the time and
<PAGE>
place specified for the payment of the Redemption Price pursuant to said notice
upon presentation and surrender of the stock certificates for the shares being
redeemed, the shares of Series "A" Preferred Stock called for redemption,
notwithstanding that any certificate therefor shall not have been surrendered
for cancellation, shall no longer be deemed outstanding, and all rights with
respect to such shares shall forthwith cease and terminate, except the right of
the holders thereof to receive upon presentation and surrender of their
certificates the amounts payable upon redemption thereof (without interest from
the Redemption Date); provided, however, that in case fewer than all the shares
represented by any such certificate are redeemed, a certificate shall be issued
representing the unredeemed shares without cost to the holder thereof.
5. Conversion Rights. The Series "A" Preferred Stock shall be convertible
into Common Stock as follows:
(a) (i) Optional Conversion. Subject to and upon compliance with the
provisions of this paragraph 5, the holder of any shares of Series "A" Preferred
Stock shall have the right at such holders' option, at any time during the five
(5) year period from the Issue Date, or from time to time thereafter, to convert
any of such shares of Series "A" Preferred Stock into fully paid and
nonassessable shares of Common Stock upon the terms hereinafter set forth. In
case any share of Series "A" Preferred Stock is called for redemption (which may
not occur prior to the expiration of five (5) years from date of issue, such
right of conversion shall terminate at the close of business on the Redemption
Date;
OR
(ii) Mandatory Redemption. At the election of the holder of the Series
"A" Preferred Stock, the holder may demand redemption of the shares of Series
"A" Preferred Stock for the amount of the Redemption Price, provided that not
less than five (5) years have passed since the Issue Date.
(b) Conversion Price. Each share of Series "A" Preferred Stock shall be
converted into such number of shares of Common Stock as set forth in the
schedule under Event of Exercise.
(c) Mechanics of Conversion. The holder of any shares of Series "A"
Preferred Stock may exercise the conversion right specified in subparagraph 5(a)
by surrendering to the Corporation or any transfer agent of the Corporation the
certificate or certificates for the shares to be converted, accompanied by
written notice specifying the number of shares to be converted. Conversion shall
be deemed to have been effected on the date when delivery of notice of an
election to convert and certificates for the Series "A" Preferred Stock are
delivered to the Corporation, and such date is referred to herein as the
"Conversion Date." As promptly as practicable thereafter [and after surrender of
the certificate or certificates representing shares of Series "A" Preferred
Stock to the Corporation or any transfer agent of the Corporation] the
Corporation shall issue and deliver to or upon the written order of such holder
a certificate or certificates for the number of full shares of Common Stock to
which such holder is entitled and a check or cash with respect to any fractional
interest in a share of Common Stock as provided in subparagraph 5(e). The person
in whose name the certificate or certificates for Common Stock are to be issued
shall be deemed to have become a holder of record of such Common Stock on the
applicable Conversion Date. Upon conversion of only a portion of the number of
shares covered by a certificate representing shares of Series "A" Preferred
Stock surrendered for conversion [in the case of conversion pursuant to
subparagraph 5(a)], the Corporation shall issue and deliver to or upon the
written order of the holder of the certificate so surrender for conversion, at
the expense of the Corporation, a new certificate covering the number of shares
of Series "A" Preferred Stock representing the unconverted portion of the
certificate so surrendered.
(d) Fractional Shares. No fractional shares of Common Stock shall be issued
upon conversion of shares of Series "A" Preferred Stock. If more than one share
of Series "A" Preferred Stock, shall be surrendered for conversion at any one
time by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Series "A" Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
shares of Series "A" Preferred Stock, the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to that
fractional interest of then Current Market Price, as determined by the Board of
Directors, in its sole discretion.
<PAGE>
(e) Treasury Stock. For the purposes of this paragraph 5, the sale or other
disposition of any Common Stock theretofore held in the Corporation's treasury
shall be deemed to be an issuance thereof.
(f) Costs. The Corporation shall pay all documentary, stamp, transfer or
other transactional taxes attributable to the issuance or delivery of shares of
Common Stock upon conversion of any shares of Series "A" Preferred Stock;
provided that the Corporation shall not be required to pay any taxes which may
be payable in respect of any transfer involved in the issuance or delivery of
any certificate for such shares in a name other than that of the holder of the
shares of Series "A" Preferred Stock in respect of which such shares are being
issued.
(g) Reservation of Shares. The Corporation shall reserve at all times so
long as any shares of Series "A" Preferred Stock remain outstanding, free from
preemptive rights, out of its treasury stock (if applicable) or its authorized
but unissued shares of Common Stock, or both, solely for the purpose of
effecting the conversion of the shares of Series "A" Preferred Stock, sufficient
shares of Common Stock (up to 3,000,000) to provide for the conversion of all
outstanding shares of Series "A" Preferred Stock.
(h) Approvals. If any shares of Common Stock to be reserved for the purpose
of conversion of shares of Series "A" Preferred Stock require registration with
or approval of any governmental authority under any Federal or state law before
such shares may be validly issued or delivered upon conversion, then the
Corporation will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be. If, and so long as,
any Common Stock into which the shares of Series "A" Preferred Stock are then
convertible is listed on any national securities exchange, the Corporation will,
if permitted by the rules of such exchange, list and keep listed on such
exchange, upon official notice of issuance, all shares of such Common Stock
issuable upon conversion.
(i) Valid Issuance. All shares of Common Stock which may be issued upon
conversion of the shares of Series "A" Preferred Stock will upon issuance by the
Corporation be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges with respect to the issuance thereof, and the
Corporation shall take no action which will cause a contrary result.
(j) Registration Rights. All shares of Common Stock which may be issued
upon the conversion of the shares of Series "A" Preferred Stock shall have
"piggy-back registration rights" with any registration that the Corporation
undertakes and one demand registration right on terms and conditions set forth
in the Shareholder's Rights Agreement, attached hereto as Exhibit "A" and
incorporated herein by this reference.
6. Voting Rights. The holders of the issued and outstanding shares of
Series "A" Preferred Stock shall have voting rights equal to one share of Common
Stock for each share of Series "A" Preferred Stock.
7. Capital. On any redemption of Series "A" Preferred Stock, the
Corporation's capital shall be reduced by an amount equal to redemption price
per share multiplied by the number of shares of Series "A" Preferred Stock
redeemed on such date. The provisions of this paragraph 7 shall apply to all
certificates representing Series "A" Preferred Stock whether or not all such
certificates have been surrendered to the Corporation.
8. Exclusion of Other Rights. Except as may otherwise be required by law,
the shares of Series "A" Preferred Stock shall not have any preferences or
relative, participating, optional or special rights, other than those
specifically set forth in this resolution (as such resolution may be amended
from time to time) and in the Corporation's Articles of Incorporation. The
shares of Series "A" Preferred Stock shall have no preemptive or subscription
rights.
9. Headings of Subdivisions. The heading of the various subdivisions hereof
are for convenience of reference only and shall not affect the interpretation of
any of the provisions hereof.
10. Severability of Provisions. If any right, preference or limitation of
the Series "A" Preferred Stock set forth in this resolution (as such resolution
may be amended from time to time) is invalid, unlawful or incapable of being
<PAGE>
enforced by reason of any rule of law or public policy, all other rights,
preferences and limitations set forth in this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable right,
preference or limitation shall, nevertheless, remain in full force and effect,
and no right, preference or limitation herein set forth shall be deemed
dependent upon any other such right, preference or limitation unless so
expressed herein.
11. Status of Reacquired Shares. Shares of Series "A" Preferred Stock which
have been issued and reacquired in any manner shall (upon compliance with any
applicable provisions of the laws of the State of Nevada) have the status of
authorized and unissued shares of Series "A" Preferred Stock issuable in series
undesignated as to series and may be redesignated and reissued.
IN WITNESS WHEREOF, said Blagman Media International Inc. has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by its a
majority of the Board of Directors and attested by its Secretary, John Holt
Smith, this 10th day of January 2000.
BLAGMAN MEDIA INTERNATIONAL INC.
By
------------------------------------
President, Director
ATTEST:
By:
- ------------------------------------
John Holt Smith, Assistant Secretary
BY-LAWS
of
BLAGMAN MEDIA INTERNATIONAL, INC.
a Nevada Corporation
ARTICLE I
OFFICES
-------
Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
business of the Corporation is hereby fixed and located at 1901 Avenue of the
Stars, Suite 1710, County of Los Angeles, State of California, 90067. The
location maybe changed by approval of a majority of the authorized Directors,
and additional offices may be established and maintained at such other place or
places, either within or without California, as the Board of Directors may from
time to time designate.
Section 2. OTHER OFFICES. Branch or subordinate offices may at any time be
established by the Board of Directors at any place or places where the
Corporation is qualified to do business.
ARTICLE II
DIRECTORS - MANAGEMENT
----------------------
Section 1. RESPONSIBILITY OF BOARD OF DIRECTORS. Subject to the provisions
of the Nevada Revised Statutes and to any limitations in the Articles of
Incorporation of the Corporation relating to action required to be approved by
the Shareholders, by the outstanding shares, the business and affairs of the
Corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the Board of Directors.
Section 2. STANDARD OF CARE. Each Director shall perform the duties of a
Director, including the duties as a member of any committee of the Board upon
which the Director may serve, in good faith, in a manner such Director believes
to be in the best interests of the Corporation, and with such care, including
reasonable inquiry, as an ordinary prudent person in a like position would use
under similar circumstances.
Section 3. NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of
Directors shall be not less than THREE (3) nor greater than SEVEN (7) until
changed by a duly adopted amendment to the Articles of Incorporation or by an
amendment to this By-law adopted by the vote or written consent of holders of a
majority of the outstanding shares entitled to vote.
Section 4. ELECTION AND TERM OF OFFICE OF DIRECTORS. Directors shall be
elected at each annual meeting of the Shareholders to hold office until the next
annual meeting. Each Director, including a Director elected to fill a vacancy,
shall hold office until the expiration of the term for which elected and until a
successor has been elected and qualified.
<PAGE>
Section 5. VACANCIES. Vacancies in the Board of Directors may be filled by
a majority of the remaining Directors, though less than a quorum, or by a sole
remaining Director, except that a vacancy created by the removal of a Director
by the vote or written consent of the Shareholders or by court order may be
filled only by the vote of a majority of the shares entitled to vote represented
at a duly held meeting at which a quorum is present, or by the written consent
of holders of a majority of the outstanding shares entitled to vote. Each
Director so elected shall hold office until the next annual meeting of the
Shareholders and until a successor has been elected and qualified.
A vacancy or vacancies in the Board of Directors shall be deemed to exist
in the event of the death, resignation, or removal of any Director, or if the
Board of Directors by resolution declares vacant the office of a Director who
has been declared of unsound mind by an order of court or convicted of a felony,
or if the authorized number of Directors is increased, or if the shareholders
fail, at any meeting of shareholders at which any Director or Directors are
elected, to elect the number of Directors to be voted for at that meeting.
The Shareholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors, but any such election by
written consent shall require the consent of a majority of the outstanding
shares entitled to vote.
No reduction of the authorized number of Directors shall have the effect of
removing any Director before that Director's term of office expires.
Section 6. REMOVAL OF DIRECTORS. The entire Board of Directors or any
individual Director may be removed from office as provided by Nevada Revised
Statutes. In such case, the remaining Board members may elect a successor
Director to fill such vacancy for the remaining unexpired term of the Director
so removed.
Section 7. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board of
Directors may be called by the Chairman of the Board, or the President, or any
Vice President, or the Secretary, or any two (2) Directors and shall be held at
the principal executive office of the corporation, unless some other place is
designated in the notice of the meeting. Members of the Board may participate in
a meeting through use of a conference telephone or similar communications
equipment so long as all members participating in such a meeting can hear one
another. Accurate minutes of any meeting of the Board of any committee thereof,
shall be maintained by the Secretary of other Officer designated for that
purpose.
Section 8. ORGANIZATION MEETINGS. The organization meetings of the Board of
Directors shall be held immediately following the adjournment of the annual
meeting of the Shareholders.
<PAGE>
Section 9. OTHER REGULAR MEETING. Regular meetings of the Board of
Directors shall be held at the corporate offices, or such other place as may be
designated by the Board of Directors, as follows:
TIME OF REGULAR MEETING: 11:00 a.m.
DATE OF REGULAR MEETING: 2nd Tuesday in January
If said day shall fall upon a holiday, such meetings shall be held on the
next succeeding business day thereafter. No notice need be given of such regular
meetings.
Section 10. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of the
Board may be called at any time by any of the aforesaid officers, i.e., by the
Chairman of the Board, the President or, if he or she is absent or unable or
refuses to act, by any Vice President or the Secretary or by any two (2)
Directors.
At least forty-eight (48) hours notice of the time and place of special
meetings shall be delivered personally to the Directors or personally
communicated to them by a corporate Officer by telephone or telegraph. If the
notice is sent to a Director by letter, it shall be addressed to him or her at
his or her address as it is shown upon the records of the Corporation, or if it
is not so shown on such records or is not readily ascertainable, at the place in
which the meetings of the Directors are regularly held. In case such notice is
mailed, it shall be deposited in the United States mail, postage prepaid, in the
place in which the principal executive office of the corporation is located at
least four (4) days prior to the time of the holding of the meeting. Such
mailing, telegraphing, telephoning or delivery as above provided shall be due,
legal and personal notice to such Director.
When all of the Directors are present at any Directors' meeting, however
called or noticed, and either (i) sign a written consent thereto on the records
of such meeting, or (ii) if a majority of the Directors are present and if those
not present sign a waiver of notice of such meeting or a consent to holding the
meeting or an approval of the minutes thereof, whether prior to or after the
holding of such meeting, which said waiver, consent or approval shall be filed
with the Secretary of the corporation, or, (iii) if a Director attends a meeting
without notice but without protesting, prior thereto or at its commencement, the
lack of notice, then the transactions thereof are as valid as if had at a
meeting regularly called and noticed.
Section 11. SOLE DIRECTOR PROVIDED BY ARTICLES OF INCORPORATION OR BY-LAWS.
In the event only one (1) Director is required by the By-Laws or Articles of
Incorporation, then any reference herein to notices, waivers, consents, meetings
or other actions by a majority or quorum of the Directors shall be deemed to
refer to such notice, waiver, etc., by such sole Director, who shall have all
the rights and duties and shall be entitled to exercise all of the powers given
to a Board of Directors.
Section 12. DIRECTORS ACTION BY UNANIMOUS WRITTEN CONSENT. Any action
required or permitted to be taken by the Board of Directors may be taken without
a meeting and with the same force and effect as if taken by a unanimous vote of
Directors, if authorized by a writing signed individually or collectively by all
members of the Board. Such consent shall be filed with the regular minutes of
the Board.
<PAGE>
Section 13. QUORUM. A majority of the number of Directors as fixed by the
Articles of Incorporation or By-Laws shall be necessary to constitute a quorum
for the transaction of business, and the action of a majority of the Directors
present at any meeting at which there is a quorum, when duly assembled, is valid
as a corporate act; provided that a minority of the Directors, in the absence of
a quorum, may adjourn from time to time, but may not transact any business. A
meeting at which a quorum is initially present may continue to transact
business, notwithstanding the withdrawal of Directors, if any action taken is
approved by a majority of the required quorum for such meeting.
Section 14. NOTICE OF ADJOURNMENT. Notice of the time and place of holding
an adjourned meeting need not be given to absent Directors if the time and place
be fixed at the meeting adjourned and held within twenty-four (24) hours, but if
adjourned more than twenty-four (24) hours, notice shall be given to all
Directors not present at the time of the adjournment.
Section 15. COMPENSATION OF DIRECTORS. Directors, as such, shall not
receive any stated salary for their services, but by resolution of the Board a
fixed sum and expense of attendance, if any, may be allowed for attendance at
each regular and special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 16. COMMITTEES. Committees of the Board may be appointed by
resolution passed by a majority of the whole Board. Committees shall be composed
of two (2) or more members of the Board, and shall have such powers of the Board
as may be expressly delegated to it by resolution of the Board of Directors,
except those powers expressly made non-delegable by Nevada Revised Statutes.
Section 17. ADVISORY DIRECTORS. The Board of Directors from time to time
may elect one or more persons to be Advisory Directors who shall not by such
appointment be members of the Board of Directors. Advisory Directors shall be
available from time to time to perform special assignments specified by the
President, to attend meetings of the Board of Directors upon invitation and to
furnish consultation to the Board. The period during which the title shall be
held may be prescribed by the Board of Directors. If no period is prescribed,
the title shall be held at the pleasure of the Board.
Section 18. RESIGNATIONS. Any Director may resign effective upon giving
written notice to the Chairman of the Board, the President, the Secretary or the
Board of Directors of the corporation, unless the notice specifies a later time
for the effectiveness of such resignation. If the resignation is effective at a
future time, a successor may be elected to take office when the resignation
becomes effective.
<PAGE>
ARTICLE III
OFFICERS
--------
Section 1. OFFICERS. The Officers of the Corporation shall be a President,
a Secretary, and a Chief Financial Officer. The Corporation may also have, at
the discretion of the Board of Directors, a Chairman of the Board, one or more
Vice Presidents, one or more Assistant Secretaries, one or more Assistant
Treasurers, and such other officers as may be appointed in accordance with the
provisions of Section 3 of this Article III. Any number of offices may be held
by the same person.
Section 2. ELECTION. The Officers of the Corporation, except such Officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article, shall be chosen annually by the Board of Directors, and each
shall hold office until he or she shall resign or shall be removed or otherwise
disqualified to serve, or a successor shall be elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint
such other Officers as the business of the corporation may require, each of whom
shall hold office for such period, have such authority and perform such duties
as are provided in the By-Laws or as the Board of Directors may from time to
time determine.
Section 4. REMOVAL AND RESIGNATION OF OFFICERS. Subject to the rights, if
any, of an Officer under any contract of employment, any Officer may be removed,
either with or without cause, by the Board of Directors, at any regular or
special meeting of the Board, or, except in case of an Officer chosen by the
Board of Directors, by any Officer upon whom such power of removal may be
conferred by the Board of Directors.
Any Officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Officer is a
party.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the By-Laws for regular appointments to that office.
Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned by the Board of Directors or prescribed by the By-Laws. If
there is no President, the chairman of the Board shall in addition be the Chief
Executive Officer of the Corporation and shall have the powers and duties
prescribed in Section 7 of this Article III.
<PAGE>
Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the Chairman of the Board, if there be such
an Officer, the President shall be the Chief Executive Officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and Officers of the
corporation. He or she shall preside at all meetings of the Shareholders and in
the absence of the Chairman of the Board, or if there be none, at all meetings
of the Board of Directors. The President shall be ex officio a member of all the
standing committees, including the Executive Committee, if any, and shall have
the general powers and duties of management usually vested in the office of
President of a corporation, and shall have such other powers and duties as may
be prescribed by the Board of Directors or the By-Laws.
Section 8. VICE PRESIDENT. In the absence or disability of the President,
the Vice Presidents, if any, in order of their rank as fixed by the Board of
Directors, or if not ranked, 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. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors or the By-Laws.
Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, at the
principal office, or such other place as the Board of Directors may order, of
all meetings of Directors and Shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at Directors' meetings, the number of shares
present or represented at Shareholders' meetings and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office or
at the office of the corporation's transfer agent, a share register, or
duplicate share register, showing the names of the Shareholders and their
addresses; the number and classes of shares held by each; the number and date of
certificates issued for the same; and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the Shareholders and of the Board of Directors required by the By-Laws or by
law to be given. He or she shall keep the seal of the corporation in safe
custody, and shall have such other powers and perform such other duties as may
be prescribed by the Board of Directors or by the By-Laws.
Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall keep
and maintain, or cause to be kept and maintained in accordance with generally
accepted accounting principles, adequate and correct accounts of the properties
and business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, earnings (or
surplus) and shares. The books of account shall at all reasonable times be open
to inspection by any Director.
<PAGE>
This Officer shall deposit all moneys and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the Board of Directors. He or she shall disburse the funds of the corporation as
may be ordered by the Board of Directors, shall render to the President and
Directors, whenever they request it, an account of all of his or her
transactions and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board of Directors or the By-Laws.
ARTICLE IV
SHAREHOLDERS' MEETINGS
----------------------
Section 1. PLACE OF MEETINGS. All meetings of the Shareholders shall be
held at the principal executive office of the corporation unless some other
appropriate and convenient location be designated for that purpose from time to
time by the Board of Directors.
Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders shall
be held, each year, at the time and on the date following:
TIME OF MEETING: 10:00 a.m.
DATE OF MEETING: 2nd Tuesday in January
If this day shall be a legal holiday, then the meeting shall be held on the
next succeeding business day, at the same hour. At the annual meeting, the
Shareholders entitled to vote shall elect a Board of Directors, consider reports
of the affairs of the Corporation and transact such other business as may be
properly brought before the meeting.
Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may be
called at any time by the Board of Directors, the Chairman of the Board, the
President, a Vice President, the Secretary, or by one or more Shareholders
holding not less than one-tenth (1/10) of the voting power of the Corporation.
Upon receipt of a written request addressed to the Chairman, President,
Vice President, or Secretary, mailed or delivered personally to such Officer by
any person (other than the Board) entitled to call a special meeting of
Shareholders, such Officer shall cause notice to be given, to the Shareholders
entitled to vote, that a meeting will be held at a time requested by the person
or persons calling the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of such request. If such notice is not given
within twenty (20) days after receipt of such request, the persons calling the
meeting may give notice thereof in the manner provided by these By-Laws.
Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or
special, shall be given in writing not less than ten (10) nor more than sixty
(60) days before the date of the meeting to Shareholders entitled to vote. Such
notice shall be given by the Secretary or the Assistant Secretary, or if there
be no such Officer, or in the case of his or her neglect or refusal, by any
Director or Shareholder.
<PAGE>
Such notices or any reports shall be given personally or by mail or other
means of written communication as provided in the Nevada Revised Statutes and
shall be sent to the Shareholder's address appearing on the books of the
corporation, or supplied by him or her to the corporation for the purpose of
notice, and in the absence thereof, as provided in the Nevada Revised Statutes.
Notice of any meeting of Shareholders shall specify the place, the day and
the hour of meeting, and (1) in case of a special meeting, the general nature of
the business to be transacted and no other business may be transacted, or (2) in
the case of an annual meeting, those matters which the Board at date of mailing,
intends to present for action by the Shareholders. At any meetings where
Directors are to be elected, notice shall include the names of the nominees, if
any, intended at date of notice to be presented by management for election.
If a Shareholder supplies no address, notice shall be deemed to have been
given if mailed to the place where the principal executive office of the
Corporation, in California, is situated, or published at least once in some
newspaper of general circulation in the County of said principal office.
Notice shall be deemed given at the time it is delivered personally or
deposited in the mail or sent by other means of written communication. The
Officer giving such notice or report shall prepare and file an affidavit or
declaration thereof.
When a meeting is adjourned for forty-five (45) days or more, notice of the
adjourned meeting shall be given as in case of an original meeting. Save, as
aforesaid, it shall not be necessary to give any notice of adjournment or of the
business to be transacted at an adjourned meeting other than by announcement at
the meeting at which such adjournment is taken.
Section 5. WAIVER OF NOTICE OR CONSENT BY ABSENT SHAREHOLDERS. The
transactions of any meeting of Shareholders, however called and noticed, shall
be valid as though had at a meeting duly held after regular call and notice, if
a quorum be present either in person or by proxy, and if, either before or after
the meeting, each of the Shareholders entitled to vote, not present in person or
by proxy, sign a written waiver of notice, or a consent to the holding of such
meeting or an approval of the minutes thereof. All such waivers, consents or
approvals shall be filed with the corporate records or made a part of the
minutes of the meeting. Attendance shall constitute a waiver of notice, unless
objection shall be made as provided in the Nevada Revised Statutes.
Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING DIRECTORS. Any action
which may be taken at a meeting of the Shareholders, may be taken without a
meeting or notice of meeting if authorized by a writing signed by Shareholders
holding at least a majority of the voting power, and filed with the Secretary of
the corporation. Directors may be elected by the written consent of persons
holding a majority of shares entitled to vote for the election of Directors.
<PAGE>
Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided in
the Nevada Revised Statutes or the Articles, any action which may be taken at
any annual or special meeting of Shareholders may be taken without a meeting and
without prior notice, if a consent in writing, setting forth the action so
taken, signed by the holders of outstanding shares having not less than the
minimum number of votes would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Unless the consents of all Shareholders entitled to vote have been
solicited in writing,
(1) Notice of any Shareholder approval pursuant to without a meeting by
less than unanimous written consent shall be given at least ten (10)
days before the consummation of the action authorized by such
approval, and
(2) Prompt notice shall be given of the taking of any other corporate
action approved by Shareholders without a meeting by less than
unanimous written consent, to each of those Shareholders entitled to
vote who have not consented in writing.
Any Shareholder giving a written consent, or the Shareholder's
proxyholders, or a transferee of the shares of a personal representative of the
Shareholder or their respective proxyholders, may revoke the consent by a
writing received by the Corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the Corporation.
Section 8. QUORUM. The holders of a majority of the shares entitled to vote
thereat, present in person, or represented by proxy, shall constitute a quorum
at all meetings of the Shareholders for the transaction of business except as
otherwise provided by law, by the Articles of Incorporation, or by these
By-Laws. If, however, such majority shall not be present or represented at any
meeting of the Shareholders, the Shareholders entitled to vote thereat, present
in person, or by proxy, shall have the power to adjourn the meeting from time to
time, until the requisite amount of voting shares shall be present. At such
adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
a meeting as originally notified.
If a quorum be initially present, the Shareholders may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
Shareholders to leave less than a quorum, if any action taken is approved by a
majority of the Shareholders required to initially constitute a quorum.
<PAGE>
Section 9. VOTING. Only persons in whose names shares entitled to vote
stand on the stock records of the Corporation on the day of any meeting of
Shareholders, unless some other day be fixed by the Board of Directors for the
determination of shareholders of record, and then on such other day, shall be
entitled to vote at such meeting.
Provided the candidate's name has been placed in nomination prior to the
voting and one or more Shareholder has given notice at the meeting prior to the
voting of the Shareholder's intent to cumulate the Shareholder's votes, every
Shareholder entitled to vote at any election for Directors of any corporation
for profit may cumulate their votes and give one candidate a number of votes
equal to the number of Directors to be elected multiplied by the number of votes
to which his or her shares are entitled, or distribute his or her votes on the
same principle among as many candidates as he or she thinks fit.
The candidates receiving the highest number of votes up to the number of
Directors to be elected are elected.
The Board of Directors may fix a time in the future not exceeding thirty
(30) days preceding the date of any meeting of Shareholders or the date fixed
for the payment of any dividend of distribution, or for the allotment of rights,
or when any change or conversion or exchange of shares shall go into effect, as
a record date for the determination of the Shareholders entitled to notice of
and to vote at any such meeting, or entitled to receive any such dividend or
distribution, or any allotment of rights, or to exercise the rights in respect
to any such change, conversion or exchange of shares. In such case only
Shareholders of record on the date so fixed shall be entitled to notice of and
to vote at such meeting, or to receive such dividends, distribution or allotment
of rights, or to exercise such rights, as the case may be notwithstanding any
transfer of any share on the books of the corporation after any record date
fixed as aforesaid. The Board of Directors may close the books of the
corporation against transfers of shares during the whole or any part of such
period.
Section 10. PROXIES. Every Shareholder entitled to vote, or to execute
consents, may do so, either in person or by written proxy, executed in
accordance with the provisions of the Nevada Revised Statutes and filed with the
Secretary of the Corporation.
Section 11. ORGANIZATION. The President, or in the absence of the
President, any Vice President, shall call the meeting of the Shareholders to
order, and shall act as chairman of the meeting. In the absence of the President
and all of the Vice Presidents, Shareholders shall appoint a chairman for such
meeting. The Secretary of the corporation shall act as Secretary of all meetings
of the Shareholders, but in the absence of the Secretary at any meeting of the
Shareholders, the presiding Officer may appoint any person to act as Secretary
of the meeting.
Section 12. INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders the Board of Directors may, if they so elect, appoint inspectors of
election to act at such meeting or any adjournment thereof. If inspectors of
election be not so appointed, or if any persons so appointed fail to appear or
refuse to act, the chairman of any such meeting may, and on the request of any
<PAGE>
Shareholder or his or her proxy shall, make such appointment at the meeting in
which case the number of inspectors shall be either one (1) or three (3) as
determined by a majority of the Shareholders represented at the meeting. Any
other provisions of the Nevada Revised Statutes or these By-Laws may be altered
or waived thereby, but to the extent they are not so altered or waived, these
By-Laws shall be applicable.
ARTICLE V
CERTIFICATES AND TRANSFER OF SHARES
-----------------------------------
Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of
such form and device as the Board of Directors may designate and shall state the
name of the record holder of the shares represented thereby; its number; date of
issuance; the number of shares for which it is issued; a statement of the
rights, privileges, preferences and restrictions, if any; a statement as to the
redemption or conversion, if any; a statement of liens or restrictions upon
transfer or voting, if any; if the shares be assessable or, if assessments are
collectible by personal action, a plain statement of such facts.
All certificates shall be signed in the name of the corporation by the
Chairman of the Board or Vice Chairman of the Board or the President or Vice
President and by the Chief Financial Officer or an Assistant Treasurer or the
Secretary or any Assistant Secretary, certifying the number of shares and the
class or series of shares owned by the Shareholder.
Any or all of the signatures on the certificate may be facsimile. In case
any Officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed on a certificate shall have ceased to be that Officer,
transfer agent, or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an Officer,
transfer agent, or registrar at the date of issue.
Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, 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 upon its books.
Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a
certificate of stock to be lost or destroyed shall make an affidavit or
affirmation of that fact and shall, if the Directors so require, give the
corporation a bond of indemnity, in form and with one or more sureties
satisfactory to the Board, in at least double the value of the stock represented
by said certificate, whereupon a new certificate may be issued in the same tenor
and for the same number of shares as the one alleged to be lost or destroyed.
<PAGE>
Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may
appoint one or more transfer agents or transfer clerks, and one or more
registrars, which shall be an incorporated bank or trust company, either
domestic or foreign, who shall be appointed at such times and places as the
requirements of the corporation may necessitate and the Board of Directors may
designate.
Section 5. CLOSING STOCK TRANSFER BOOK - RECORD DATE. In order that the
corporation may determine the Shareholders entitled to notice of any meeting or
to vote or entitled to receive payment of any dividend or other distribution or
allotment of any rights or entitled to exercise any rights in respect of any
other lawful action, the Board may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days prior to the date of
such meeting nor more than sixty (60) days prior to any other action.
If no record date is fixed, the record date for determining Shareholders
entitled to notice of or to vote at a meeting of Shareholders shall be at the
close of business on the business day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the business day
next preceding the day on which the meeting is held. The record date for
determining Shareholders entitled to give consent to corporate action in writing
without a meeting, when no prior action by the Board is necessary, shall be the
day on which the first written consent is given.
The record date for determining Shareholders for any other purpose shall be
at the close of business on the day on which the Board adopts the resolution
relating thereto, or the sixtieth (60th) day prior to the date of such other
action, whichever is later.
Section 6. LEGEND CONDITION. In the event any shares of this corporation
are issued pursuant to a permit or exemption therefrom requiring the imposition
of a legend condition, the person or persons issuing or transferring said shares
shall make sure said legend appears on the certificate and shall not be required
to transfer any shares free of such legend unless an amendment to such permit or
a new permit be first issued so authorizing such a deletion.
Section 7. PROVISION RESTRICTING TRANSFER OF SHARES. Before there can be a
valid sale or transfer of any of the shares of this corporation by the holders
thereof, the holder of the shares to be sold or transferred shall first give
notice in writing to sell or transfer such shares. Said notice shall specify the
number of shares to be sold or transferred, the price per share and the terms
upon which such holder intends to make such sale or transfer. The Secretary
shall within five (5) days thereafter, mail or deliver a copy of said notice to
each of the other Shareholders of record of this corporation. Such notice may be
delivered to such Shareholders personally or may be mailed to the last known
addresses of such Shareholders, as the same may appear on the books of this
corporation. Within fifteen (15) days after the mailing or delivery of said
notices to such Shareholders, any such Shareholder or Shareholders desiring to
acquire any part or all of the shares referred to in said notice shall deliver
by mail or otherwise to the Secretary of this corporation a written offer or
offers to purchase a specified number or numbers of such shares at the price and
upon the terms stated in such notice.
<PAGE>
If the total number of shares specified in such offers exceeds the number
of shares referred to in said notice, each offering Shareholder shall be
entitled to purchase such proportion of the shares referred to in said notice to
the Secretary, as the number of shares of this corporation, which he or she
holds, bears to the total number of shares held by all shareholders desiring to
purchase the shares referred to in said notice to the Secretary.
If all of the shares referred to in said notice to the Secretary are not
disposed of under such apportionment, each Shareholder desiring to purchase
shares in a number in excess of his or his proportionate share, as provided
above, shall be entitled to purchase such proportion of those shares which
remain thus undisposed of, as the total number of shares which he or she holds
bears to the total number of shares held by all of the Shareholders desiring to
purchase shares in excess of those to which they are entitled under such
apportionment.
The aforesaid right to purchase the shares referred to in the aforesaid
notice to the secretary shall apply only if all of the shares referred to in
said notice are purchased. Unless all of the shares referred to in said notice
to the Secretary are purchased, as aforesaid, in accordance with offers made
within said fifteen (15) days, the Shareholder desiring to sell or transfer may
dispose of all shares of stock referred to in said notice to the Secretary to
any person or persons whomsoever; provided, however, that he or she shall not
sell or transfer such shares at a lower price or on terms more favorable to the
purchaser or transferee than those specified in said notice to Secretary.
Any sale or transfer, or purported sale or transfer, of the shares of said
corporation shall be null and void unless the terms, conditions and provisions
of this section are strictly observed and followed.
ARTICLE VI
RECORDS - REPORTS - INSPECTION
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Section 1. RECORDS. The Corporation shall maintain, in accordance with
generally accepted accounting principles, adequate and correct accounts, books
and records of its business and properties. All of such books, records and
accounts shall be kept at its principal executive office in the State of
California, as fixed by the Board of Directors from time to time.
Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records shall be
open to inspection of the Directors and Shareholders from time to time and in
the manner provided under the provisions of the Nevada Revised Statutes.
Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a copy
of these By-Laws, as amended or otherwise altered to date, certified by the
Secretary, shall be kept at the Corporation's principal executive office and
shall be open to inspection by the Shareholders of the corporation at all
reasonable times during office hours.
<PAGE>
Section 4. CHECKS, DRAFTS, ETC. All checks, drafts, or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the Corporation, shall be signed or endorsed by such person or
persons and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
Section 5. CONTRACTS, ETC. - HOW EXECUTED. The Board of Directors, except
as in the By-Laws otherwise provided, may authorize any Officer or Officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the corporation. Such authority may be general or
confined to specific instances. Unless so authorized by the Board of Directors,
no Officer, agent or employee shall have any power or authority to bind the
corporation by any contract or agreement, or to pledge its credit, or to render
it liable for any purpose or to any amount, except as provided in the Nevada
Revised Statutes.
ARTICLE VII
ANNUAL REPORTS
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Section 1. REPORT TO SHAREHOLDERS, DUE DATE. The Board of Directors shall
cause an annual report to be sent to the Shareholders not later than one hundred
twenty (120) days after the close of the fiscal or calendar year adopted by the
Corporation. This report shall be sent at least fifteen (15) days before the
annual meeting of Shareholders to be held during the next fiscal year and in the
manner specified in Section 4 of Article IV of these By-Laws for giving notice
to Shareholders of the Corporation. The annual report shall contain a balance
sheet as of the end of the fiscal year and an income statement and statement of
changes in financial position for the fiscal year, accompanied by any report of
independent accountants or, if there is no such report, the certificate of an
authorized Officer of the Corporation that the statements were prepared without
audit from the books and records of the Corporation.
Section 2. WAIVER. The annual report to Shareholders is expressly dispensed
with so long as this corporation shall have less than one hundred (100)
Shareholders. However, nothing herein shall be interpreted as prohibiting the
Board of Directors from issuing annual or other periodic reports to the
Shareholders of the corporation as they consider appropriate.
ARTICLE VIII
AMENDMENTS TO BY-LAWS
---------------------
Section 1. AMENDMENT BY SHAREHOLDERS. New By-Laws may be adopted or these
By-Laws may be amended or repealed by the vote or written consent of holders of
a majority of the outstanding shares entitled to vote; provided, however, that
if the Articles of Incorporation of the Corporation set forth the number of
authorized Directors of the Corporation, the authorized number of Directors may
be changed only by an amendment of the Articles of Incorporation.
<PAGE>
Section 2. POWERS OF DIRECTORS. Subject to the right of the Shareholders to
adopt, amend or repeal By-Laws, as provided in Section 1 of this Article VIII,
the Board of Directors may adopt, amend or repeal any of these By-Laws other
than a By-Law or amendment thereof changing the authorized number of Directors.
Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-law is
adopted, it shall be copied in the book of By-Laws with the original By-laws, in
the appropriate place. If any By-Law is repealed, the fact of repeal with the
date of the meeting at which the repeal was enacted or written assent was filed
shall be stated in said book.
ARTICLE IX
CORPORATE SEAL
--------------
The corporate seal shall be circular in form, and shall have inscribed
thereon the name of the Corporation, the year of its incorporation, and the word
"Nevada".
ARTICLE X
MISCELLANEOUS
-------------
Section 1. REPRESENTATION OF SHARES IN OTHER CORPORATIONS. Shares of other
corporations standing in the name of this corporation may be voted or
represented and all incidents thereto may be exercised on behalf of the
Corporation by the Chairman of the Board, the President or any Vice President
and the Secretary or an Assistant Secretary.
Section 2. SUBSIDIARY CORPORATIONS. Shares of this corporation owned by a
subsidiary shall not be entitled to vote on any matter. A subsidiary for these
purposes is defined as a corporation, the shares of which possessing more than
25% of the total combined voting power of all classes of shares entitled to
vote, are owned directly or indirectly through one (1) or more subsidiaries.
Section 3. INDEMNIFICATION AND LIABILITY. The liability of the Directors of
the Corporation for monetary damages shall be eliminated to the fullest extent
permissible under Nevada law. The Corporation is authorized to provide
indemnification of agents for breach of duty to the Corporation and Shareholders
through by-law provisions or through agreements with the agents, or both, in
excess of the indemnification otherwise permitted pursuant to Nevada law,
subject to any limits on such excess indemnification set forth in the Nevada
Revised Statutes.
Section 4. ACCOUNTING YEAR. The accounting year of the corporation shall be
fixed by resolution of the Board of Directors.
