U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
PageLab Network, Inc.
(Name of Small Business Issuer in its charter)
Minnesota 41-1596056
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
43 Main Street S.E., Suite 228
Minneapolis, Minnesota 55414
(Address of principal executive office) (Zip Code)
Issuer's telephone number (612) 362-9224
Securities to be registered under Section 12(g) of the Act:
Common Shares
Charles Clayton
527 Marquette
Minneapolis, Minnesota 55402
(612) 338-3738
(Agent for Service)
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
PageLab Network, Inc. is a Minnesota corporation. There was a
corporation of the same name formed in Nevada in June, 1999 by the present
President of the Company, that owned the technology of the Company. There was an
Asset Purchase Agreement in November of 1999, where the technology assets of the
Company were sold to Imcro, Inc., a Minnesota corporation formed originally in
1987, and Imcro, Inc. changed its name to PageLab Network, Inc.
As the new "e-commerce economy" evolves, markets are being divided
based upon traffic patterns. Search engines are and will remain the dominant
force for directing Internet traffic. An estimated 80% of all traffic and nearly
70% of all Internet sales come as a result of a search query. Any company that
can consistently influence placement of a particular search engine keyword or
phrase can dominate a market niche. Those who master the search engines will be
instrumental in the division of markets and will ultimately control huge revenue
segments of the "New Economy." Currently, PageLab has very few competitors and
its management intends to remain in the forefront to fully exploit its market
opportunities.
Over the past two years PageLab has mastered a number of complex
algorithmic processes that determine search engine placement for its clients --
an e-solution that increases its client's e-commerce-based business by
increasing search engine "findability" or "ranking."
The one characteristic that most differentiates PageLab from other
Internet service companies is its ability to generate a flow of traffic to its
clientele by positioning their products and services at or near the top of major
search engines. The Company guarantees results for its e-commerce clients. The
Company charges its customers a set up fee of $30 when each of the keyword
phrases of the customer first reaches the top 20. There is an additional fee of
$30 per month to the customers for each key word or phrase. If a customer
temporarily falls out of the top 20 there is a proportional reduction in the fee
charged. At this time the Company has provided these services to approximately
40 customers.
The PageLab system handles new client setup and most of the
registration process automatically. Equally significant, all client billings are
collected automatically on a monthly basis (or larger Affiliate Sales Fees on a
daily or weekly basis) by debiting the client's checking account, credit card or
pre-established escrow fund). This minimizes any need for accounts receivable
personnel and virtually eliminates the potential for non-collectable accounts.
Any non-paying client can be taken off the system immediately.
2
<PAGE>
ITEM 2. PLAN OF OPERATION
While the Company expands its present business, it has been in the
development of another "search engine" business.
Having each search engine database within its grasp, a "Meta Search"
can use other search engines' output as its source of data. Add to this a new
interface approach and the result is somewhat similar to AskJeeves.com, which is
an interesting example of what the public desires from an alternative to current
search engine technology. AskJeeves is an interactive system, which interacts
with the user to focus search results.
But, there is a remaining problem. All search engines in existence
today -- including AskJeeves expect to serve relevant content from a single
search term or sentence. This forces users to wade through many, possibly
hundreds, of matching pages to find exactly what they want. Today's search
engines continue to do what they do best -- elegantly provide massive
information overload.
The Company has established clear long term goals on parlaying its
expertise into the evolution of a hybrid Artificial Intelligence search engine
and has already performed extensive testing and development of a system called
Subjex (subjex.com).
Subjex.com, instead of delivering thousands of search results from a
short one-sentence query, will conduct dialogue with the user and learn from the
session facts to determine exactly what the user is looking for by using all
available search engines. The longer the session, the more it learns. Subjex.com
will then deliver a very limited number of search results -- under 10 and
perhaps as few as 1 or 2 -- having narrowed down the search to exactly what the
user wants, based entirely upon the user's dialogue with Subjex.com. This is an
Artificial Intelligence (AI) interface that learns the exact desires and
informational needs of the user. And, the system will retain the information and
even recommend specific sites, products and services in future search
interfaces, or it can be set up to send information automatically, based upon
known desires or information expressed by the user. Subjex will then tell the
user, "Based upon our conversation, Subjex recommends that you visit one of
these web sites (site1.com, site2.com or site3.com)." Subsequent interface
sessions will add to the user-specific database within Subjex.com.
Management believes that this type of Artificial Intelligence --
"Interview first - Then results" will be the standard for the next decade of
search engine portals. With inherent data acquisition systems in place compiling
detailed, user-specific demographics, potential additional revenue streams exist
and will be developed by the Company in the near future, either to be licensed
to other companies or developed internally for future "spin-off" as separate
entities.
Obviously, the developmental and operational essence of PageLab.net and
Subjex.com are confidential and proprietary. As the Company matures, all
3
<PAGE>
technologies and subsidiary operations will be evaluated to determine if they
should be retained and incorporated into operations of the Company, licensed or
"spun-off" as separate corporations.
Growth Plan
Strategic Growth Plan -- The Company's strategic growth plan is
comprised of two principal components that, together, enable the Company to
achieve its goals in the flow of Internet traffic, and the capitalization of
markets. They include:
A. Selective Use of Strategic Partnerships -- The single most important
aspect of PageLab's overall plan is its actively pursuing a diverse
clientele. The Company's marketing plan entails the introduction of its
products through the use of self-funding affiliations. Affiliates have
been and will continue to be sought out for their diverse traffic and
demographics. Our (Non-exclusive) affiliates will use traditional
multimedia advertising, banners and content based methods
(articles/reviews) to promote PageLab. Affiliates will receive a
commission of all recurring revenues generated from their site, not
including setup fees. This will create direct sales and build brand
awareness to diverse horizontal markets.
Principal components of the Company's strategic growth plan are its
strategic partnership programs. Because we will neither grant nor
require exclusivity, we will gain greater influence upon the way our
service is displayed/advertised. By effectively utilizing these
partnerships, without further obligation for rewarding the secondary
referrals, PageLab will mitigate the substantial costs normally
required to develop and establish a client base.
B. Keeping the Technology Proprietary -- The Company's proprietary
strategy involves relationships for outsourcing certain non-core
temporary (project based) development activities, including tracking
programming and some database management software. It will allow us to
develop new angles and strategies based upon market changes, without
necessitating large staff additions, which bring security risks. The
Company is actively investigating opportunities to acquire a small
number of interns and part time graduate students. Small software
companies that have developed inexpensive tracking products, which fall
within the Company's principal strategy for tracking, will be hired on
a temporary project basis. Management's goal is to keep a core employee
base of 5-6 full time people, with an outsourcing pool of 10 to 20
people when needed. We expect our development cycle on new key products
to span only 30 to 60 days.
C. Marketing -- A significant aspect of PageLab's overall plan is its
marketing program. Because virtually every company is a potential
client, it is necessary to discourage vertical growth and encourage
horizontal growth.
4
<PAGE>
Some of the Company's best and most diverse clientele have come as
referrals from other clients. Most significant about this is that
clients prefer not to tell their competitors about the Company's
services, generally only referring other types of businesses. This,
along with a traditional direct sales targeting approach is how the
Company will grow horizontally.
The Company encourages these types of referrals by giving its clients a
CD multimedia presentation about the Company for use on any standard
PC. It will be a short (4-minute) movie that will "AutoPlay" when
inserted into a CD-ROM. This movie will be a fully produced digital
commercial, capable of intuitively telling the PageLab story.
Search engine portal systems are here to stay and will continue to
power most of Internet commerce.
ITEM 3. DESCRIPTION OF PROPERTY
The Company leases 2,500 square feet of office space in Minneapolis,
Minnesota for a monthly rental of $1,100.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There are presently 10,407,665 shares of the Company's common shares
outstanding. The following table sets forth the information as to the ownership
of each person who, as of February 1, 2000, owns of record, or is known by the
Company to own beneficially, more than five per cent of the Company's common
stock, and the officers and directors of the Company.
Shares of Percent of
Name Common Stock Ownership
- --------------------------------------------------------------------------------
Andrew Dean Hyder 5,000,000 48%
43 Main Street SE
Minneapolis, MN
Richard A. Kling 270,766 3%
43 Main Street SE
Minneapolis, MN
Directors and Officers 5,270,766 51%
as a group
5
<PAGE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The executive officers and directors of the company, with a brief
description are as follows:
Name Age Position
- ---- --- --------
Andrew Dean Hyder 32 President, CEO and Chairman
Sharon Rae Hyder 56 Secretary/Treasurer, Director
John J. Brand 43 Chief Financial Officer
Richard A. Kling 60 Director
Jonathan Henckel 34 Chief Technology Officer
Andrew Dean Hyder, Mr. Hyder is President, CEO and Chairman of the
Board of Directors. Mr. Hyder was employed by Interactive Host from 1994 to the
end of 1998, beginning in January 1, 1999 he was employed by Commission Junction
through the end of May, 1999, when he formed PageLab Network, Inc. (Nevada).
Sharon Rae Hyder, Ms Hyder is Secretary, Treasurer and a Director. Ms
Hyder is the mother of Andrew Dean Hyder. Ms Hyder was the head of Hyder
Bookkeeping & Tax Service of Coeburn, Virginia from 1983 to the present time,
and began to work for the Company in August, 1999.
John J. Brand, Mr. Brand is Chief Financial Officer. Mr. Brand is a
Certified Public Accountant, and received a BA degree in Accounting from St.
Cloud State University. He worked for Comdisco, Inc. as Division Controller from
1995 to March, 1999. From April, 1999 to February, 2000 he was President and
Chief Financial Officer of PowerBanc Corporation. He joined PageLab Network,
Inc. in February, 2000.
Richard A. Kling, Mr. Kling is a Director. Mr. Kling has been head of
Kling & Associates from 1994 to the present, and in July, 1999 became associated
with Corporate Development Associates.
Jonathan Henckel, Mr. Henckel is Chief Technology Officer. Mr. Henkel
was a staff software engineer for IBM from 1988 to 1999. From February, 1999 to
the end of 1999 he was a physics simulation researcher for Industrial Mindworks
of Atlanta, Georgia. He joined the Company in January, 2000.
6
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
There are no officers or directors that received compensation in excess
of $60,000 or more during the last year. The Company has agreed, however, to pay
$5,000 per month to Andrew Dean Hyder, $3,333 per month to Sharon Rae Hyder and
$5,416 per month to Jonathan Henckel and John J. Brand.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 8, 1999 the Company's principal shareholder, in a private
transaction, agreed to acquire, for 5,666,665 shares, all issued and outstanding
shares held by shareholders of PageLab (Nevada). Upon completion of this
transaction, Mr. Hyder, with 5,000,000 shares, became the Company's principal
shareholder and its President, CEO and Chairman of the Board of Directors. He
then brought PageLab (Nevada) into the Company, and changed the name of the
Minnesota corporation to PageLab Network, Inc.
On October 30, 1999, the Company entered into a five-year Employment
Agreement with Mr. Hyder containing certain non-compete, non-disclosure and
non-circumvention provisions, as well as providing a salary, reimbursement of
expenses and a full range of benefits consistent with the position of President
and CEO. The Company will enter into shorter-term employment agreements with
similar non-compete, non-disclosure and non-circumvention provisions with all
officers, professional, & technical employees and consultants who may have
access to any intellectual properties, the disclosure of which could have an
adverse effect on the Company.
Mr. Andrew Hyder, President and CEO, has advanced a total of $206,000
to the Company in a series of Senior long-term loans (5 year) with interest at
6% per annum, payable quarterly on March 31, June 30, September 30 and December
31 of each year. These loans are secured by essentially all assets of the
Company. A portion of these loans ($150,000) was used by the Company to purchase
the Company's current technology, its primary asset, from Commission Junction,
Inc., now located in Santa Barbara, California. The Company may prepay these
loans, without penalty, in whole or in part, prior to the due dates.
An additional 1,000,000 shares was granted to the Company by the former
principal shareholder for establishment of the Company's Investment Account, to
be reserved for use in making future acquisitions. These shares, which are
unrestricted shares, will remain available for that purpose through December 31,
2003, whereupon any unused shares will revert to the Company's Treasury.
Subsequent to these transactions, the Company granted Options for a
total of 1,200,000 shares to directors, officers, consultants, certain key
employees and others
7
<PAGE>
who formerly held options to purchase shares of PageLab (Nevada). These Options
can be exercised on or before the close of business on July 31, 2004 for $.20
per share.
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock does not trade.
There are 136 holders of the common stock of the Company. There have
never been any dividends, cash or otherwise, paid on the common shares of the
Company.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Name Date Shares Cost
David Hanson 12/99 275,000 $55,000
Adrian Johnson 12/99 175,000 $35,000
Lori Baron 1/00 75,000 $15,000
Steven Anderson 1/00 150,000 $30,000
Ronald King 1/00 150,000 $30,000
Ronald Ryan 12/99 150,000 $30,000
Per Davidson 1/00 450,000 $90,000
John Ardoyno 1/00 150,000 $30,000
David and Joan Morris 12/99 75,000 $15,000
Richard Collins 12/99 75,000 $15,000
Dara and Leann Gault 1/00 150,000 $30,000
Gail McNutt and Bryan Johnson 1/00 75,000 $15,000
Cordie McNutt 1/00 75,000 $15,000
Roy Yeater 1/00 50,000 $10,000
Peter Atsidakos 1/00 25,000 $5,000
Ari Katras 1/00 25,000 $5,000
Andrew Atsidakos 1/00 25,000 $5,000
Selfless Service, Inc. 1/00 150,000 $30,000
Ronald Stidham 1/00 250,000 $50,000
Applied Venture Services, Inc. 1/00 150,000 $30,000
All of the above sales were pursuant to a private placement, all to
accredited investors. There was a fee paid on the sales of 10%.
8
<PAGE>
Applied Venture Services, Inc. 10/99 166,665 $833
John Anderson 10/99 166,665 $833
Richard Kling 10/99 166,665 $833
William Tartaglia 10/99 166,665 $833
All of the above sales were made as isolated transactions, all to
residents of the State of Minnesota, all were partially in consideration of
services rendered, there were no commissions paid on any of the sales.
The registrant believes that all transactions were transactions not
involving any public offering within the meaning of Section 4(2) of the
Securities Act of 1933, since (a) each of the transactions involved the offering
of such securities to a substantially limited number of persons; (b) each person
took the securities as an investment for his own account and not with a view to
distribution; (c) each person had access to information equivalent to that which
would be included in a registration statement on the applicable form under the
Act; (d) each person had knowledge and experience in business and financial
matters to understand the merits and risk of the investment; therefore no
registration statement need be in effect prior to such issuances.
ITEM 11. DESCRIPTION OF SECURITIES
The Company has authorized 50,000,000 shares of common stock, no par
value. Each holder of common stock has one vote per share on all matters voted
upon by the shareholders. Such voting rights are noncumulative so that
shareholders holding more than 50% of the outstanding shares of common stock are
able to elect all members of the Board of Directors. There are no preemptive
rights or other rights of subscription.
Each share of common stock is entitled to participate equally in
dividends as and when declared by the Board of Directors of the Company out of
funds legally available, and is entitled to participate equally in the
distribution of assets in the event of liquidation. All shares, when issued and
fully paid, are nonassessable and are not subject to redemption or conversion
and have no conversion rights.
Risk Factor - Penny Stock Regulation. Broker-dealer practices in
connection with transactions in "penny stocks" are regulated by certain penny
stock rules adopted by the Securities and Exchange Commission. Penny stock
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer must also
9
<PAGE>
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. If the Company's securities become subject to the penny stock
rules, investors in this offering may find it more difficult to sell their
securities.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Minnesota Statutes contain an extensive indemnification provision
which requires mandatory indemnification by a corporation of any officer,
director and affiliated person who was or is a party, or who is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a member, director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a member,
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
and against judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding if
he acted, or failed to act, in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. In some instances a court must approve such
indemnification.
As to indemnification for liabilities arising under the Securities Act
of 1933 for directors, officers or persons controlling the company, the company
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy and unenforceable.
ITEM 13. FINANCIAL STATEMENTS
Please see the attached Financial Statements.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
10
<PAGE>
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Please see the attached Financial Statements
(b) Exhibits:
3. Articles of Incorporation and bylaws
11
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: February 24, 2000 PageLab Network, Inc.
/s/ Andrew Dean Hyder
-----------------------------------------
Andrew Dean Hyder, President, Director
/s/ Sharon Rae Hyder
-----------------------------------------
Sharon Rae Hyder, Secretary, Director
/s/ Richard A. Kling
-----------------------------------------
Richard A. Kling, Director
/s/ John J. Brand
-----------------------------------------
John J. Brand, Chief Financial Officer
12
<PAGE>
[LOGO] PAGELAB.NET
NETWORK
PAGELAB NETWORK, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
ARTHUR B. CARLSON III, CPA
7400 METRO BOULEVARD
SUITE 100
EDINA, MINNESOTA 55439
To the Board of Directors
PageLab Network, Inc.
Minneapolis, Minnesota
I have audited the accompanying balance sheet of Pagelab Network, Inc. as of
December 31, 1999, and the related statements of operations, stockholder's
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit 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.
I believe that my audit provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Pagelab Network, Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Arthur B. Carlson III, CPA
Edina, Minnesota
January 14, 2000
<PAGE>
PAGELAB NETWORK, INC.
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 18,441
Accounts receivable 3,247
Prepaid expenses 1,628
--------------
Total current assets 23,316
PROPERTY AND EQUIPMENT, NET 17,195
INTANGIBLES, NET 235,034
--------------
TOTAL ASSETS $ 275,545
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 9,035
Current portion, long-term debt 36,879
--------------
Total current liabilities 45,914
LONG-TERM DEBT, NET OF CURRENT PORTION 161,569
STOCKHOLDERS' EQUITY
Common Stock, 40,000,000 shares authorized,
10,407,665 issued and outstanding,
no par or stated value 307,500
Accumulated (deficit) (239,438)
--------------
68,062
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 275,545
==============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
<PAGE>
PAGELAB NETWORK, INC.
FOR THE YEAR ENDED DECEMBER 31, 1999
STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
REVENUES $ 19,886
EXPENSES
Selling, general and administrative 119,065
Research and development 3,330
Depreciation and amortization 18,169
Interest expense 1,260
--------------
141,824
--------------
NET LOSS $ (121,938)
==============
EARNINGS PER SHARE $ (0.02)
==============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
<PAGE>
PAGELAB NETWORK, INC.
FOR THE YEAR ENDED DECEMBER 31, 1999
STATEMENT OF CASH FLOWS
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATIONS
Net loss $ (121,938)
Adjustments required to reconcile net loss to
net cash required by operating activities
Depreciation and amortization 18,169
(Increase) decrease in:
Accounts receivable (3,247)
Prepaid expenses (2,170)
Increase (decrease) in:
Accrued expenses 9,035
--------------
NET CASH USED IN OPERATIONS (100,151)
--------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (18,141)
Purchase of intangibles (1,715)
--------------
NET CASH USED IN INVESTING ACTIVITIES (19,856)
--------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and warrants 75,000
Proceeds from long-term debt 131,000
Payment of long-term debt (7,552)
Payment to stockholder in reorganization (60,000)
--------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 138,448
--------------
INCREASE IN CASH AND CASH EQUIVALENTS 18,441
BEGINNING CASH BALANCE --
--------------
CASH BALANCE, ENDING $ 18,441
==============
LONG-TERM DEBT ISSUED FOR INTANGIBLES $ 150,000
COMMON STOCK ISSUED FOR INTANGIBLES $ 100,000
LONG-TERM DEBT CONVERTED TO COMMON STOCK $ 75,000
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
<PAGE>
PAGELAB NETWORK, INC.
FOR THE YEAR ENDED DECEMBER 31, 1999
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK COMMON ACCUMULATED STOCKHOLDERS'
OUTSTANDING STOCK (DEFICIT) EQUITY
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 1,041,000 $ 117,500 $ (117,500) $ --
COMMON STOCK ISSUED, JULY/AUGUST 1999 5,666,665 103,334 103,334
BRIDGE LOAN CONVERSION, NOVEMBER 1999 375,000 75,000 75,000
COMMON STOCK WITH WARRANTS, DECEMBER 1999 375,000 75,000 75,000
REORGANIZATION COST -- (60,000) (60,000)
STOCK SUBSCRIPTION NOTE RECEIVABLE -- (3,334) (3,334)
COMMON STOCK ISSUED BUT UNSUBSCRIBED - NOTE 4 1,950,000 -- -- --
INVESTMENT ACCOUNT SHARES ISSUED - NOTE 4 1,000,000 -- -- --
NET LOSS (121,938) (121,938)
------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1999 10,407,665 $ 307,500 $ (239,438) $ 68,062
============= ============= ============= =============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
<PAGE>
PageLab Network, Inc.
Notes to Financial Statements
NOTE 1 - NATURE OF THE BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF THE BUSINESS
PageLab Network, Inc. provides e-commerce solutions to merchants and sales
affiliate networks using the Internet.
NAME CHANGE
In November 1999, the name of the company was changed from Imcro, Inc. to
PageLab Network, Inc.
MERGER ACTIVITY/INCEPTION OF BUSINESS
In November 1999, a plan of acquisition was arranged between Imcro, Inc.
and a private operating company, PageLab Network, Inc., a Nevada corporation.
Imcro had not engaged in operating activities in the last three fiscal years.
The financial statements for 1999 include the accounts of PageLab Network since
its inception of operating activities in July 1999.
CASH AND CASH EQUIVALENTS
The Company considers all cash accounts not subject to withdrawal
restrictions or penalties and all highly liquid debt instruments purchased with
a maturity of three months or less to be cash and cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization
are computed on the straight-line method. Estimates useful lives for property
and equipment are the term of the lease for leasehold improvements and five
years for equipment.
INTANGIBLES
Intangibles consist primarily of software and related technology used by
the Company in its business activities. The technology was originally developed
by the majority stockholder of the Company. The technology was transferred to
PageLab in July 1999 in exchange for notes and stock as a part of an Asset
Purchase Agreement. The Company has valued the intangibles based on the
developer's reacquisition cost of the technology from a previous employer. The
basic rights are being amortized over five years, while certain protected assets
are amortized over 20 years.
The Company has also registered a number of trademarks and domain names
which it uses both in marketing and in the Internet presentation of its product.
Domain names are subject to annual renewal and are treated as expenses, though
with renewal and development of recognition, future benefits may be realized.
<PAGE>
PageLab Network, Inc.
Notes to Financial Statements
NOTE 1 - NATURE OF THE BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
IMPAIRMENT OF LONG-LIVED ASSETS
The Company will record impairment losses on long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those asseets are less than the assets'
carrying amount.
USE OF ESTIMATES
The preparations of financial statements in conformity of generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INCOME TAX ACCOUNTING
Income taxes are provided for the tax effects of transactions reported in
the financial statements and consist of taxes currently due plus changes in
deferred taxes. Deferred taxes are recognized for differences between the basis
of assets and liabilities for financial statement purposes and their basis for
income tax purposes.
EARNINGS PER SHARE
Earnings per share is computed using the weighted average shares of common
stock outstanding during the period as reduced by all shares held by the
Company. The warrants and stock options are anti-dilutive and were excluded from
the calculation. As such basic earnings per share is the same as diluted
earnings per share. Shares converted from long-term debt have been included in
the weighted average from the date of the original investment. Shares
outstanding prior to the merger have been adjusted pro rata to the post-merger
relationships.
STOCK-BASED COMPENSATION
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," but applies Accounting Principles Board Opinion No. 25 (APB 25)
and related interpretations in accounting for its plan. Under APB 25, when the
exercise price of employee stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.
RESEARCH AND DEVELOPMENT
All research and development costs are charged to expense as incurred.
<PAGE>
PageLab Network, Inc.
Notes to Financial Statements
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment includes $16,960 in office and computer equipment
and $1,181 in leasehold improvements, reduced by $946 of accumulated
depreciation.
NOTE 3 - LONG-TERM DEBT
Long term debt consists of notes payable to the majority stockholder and
CEO of the Company. The notes relate to the transfer of technology rights and
working capital contributions by the stockholder. There are three separate
notes, each providing for payment of principal and interest in monthly
installments over a five-year period. Interest on the notes is at 6% per annum.
Aggregate monthly payments are $3,983, including interest. Future maturities of
long-term debt are as follows:
For the year ending December 31:
2000 $ 36,879
2001 39,153
2002 41,568
2003 44,132
2004 36,716
--------
Total $198,448
========
NOTE 4 - COMMON STOCK
In connection with the November 1999 reverse acquisition of Imcro, Inc. by
PageLab Network, the recapitalization of the Company includes common stock
issued to the previous shareholders of Imcro in exchange for its net assets. The
majority stockholder of Imcro, Inc. received $60,000 under a plan of
reorganization. As a part of this reorganization, it was agreed that 1,000,000
shares of common stock be issued and held in an Investment Account by PageLab
Network, Inc. for purposes of future acquisitions. These shares will remain
available for that purpose through December 31, 2003 whereupon any unused shares
will revert to the Company's treasury as additional authorized shares. In
addition, the reorganization also called for the issuance of 2,700,000 shares to
be used for stock subscriptions in conjunction with an exempt offering of common
stock and the bridge loan conversion. At December 31, 1999, the Company had
issued 750,000 of these shares. Subsequent to year-end, the remaining 1,950,000
shares of common stock were subscribed through accredited investors resulting in
additional capital of $390,000.
As a part of the exempt offering of common stock which took place in
December 1999 and January 2000, the company agreed to issue warrants to purchase
1,010,000 shares of common stock at $.20 per share expiring June 30, 2001.
The number of authorized shares of capital stock is 50,000,000 shares. Of
this amount, 40,000,000 shares have been designated as common stock.
<PAGE>
PageLab Network, Inc.
Notes to Financial Statements
NOTE 5 - STOCK OPTIONS AND WARRANTS
Stock Options
During 1999, the Company adopted the PageLab Network, Inc. Stock Option and
Stock Award Plan that allows for the granting of incentive and nonqualified
stock options, restricted stock and stock appreciation rights to employees,
individuals or entities who perform services for the Company. A total of
2,500,000 shares have been reserved under the plan through the period ending
December 31, 2001. The Board of Directors establishes the terms and conditions
of all stock option grants, subject to applicable plan provisions and the
Internal Revenue Code. Incentive stock options and nonqualfied options will be
granted at an exercise price not less than the fair market value of the Common
Stock on the grant date according to the plan provisions. The options granted to
participants owning more than 10% of the Company's outstanding voting stock must
be granted at an exercise price not less than 110% of fair market value of the
common stock on that date. The options shall expire on the date determined by
the Board of Directors, but not greater than ten years from the grant date.
A summary of outstanding options under the Plan is as follows:
Weighted average
Shares available Options exercise price
for grant outstanding per share
--------- ----------- ---------
Balance, December 31, 1998 -- -- --
Shares reserved 2,500,000 -- --
Granted (1,200,000) 1,200,000 $ .20
---------- ----------
Balance, December 31, 1999 1,300,000 1,200,000
========== ==========
All stock options granted are exercisable as of December 31, 1999. Pro forma
information regarding net loss is required by Statement No. 123, and has been
determined as if the Company had accounted for its stock options under the fair
value method of that Statement. The effect of applying Statement No. 123's fair
value method of the Company's stock-based awards results in a net loss that is
not materially different than the amounts reported for the year ending December
31, 1999. The effects of applying Statement No. 123 for recognizing compensation
cost may not be representative of the effects on reported net income or loss for
future years because of future option grants and vesting provisions.
Warrants
In connection with the conversion of a bridge financing loan to common stock in
November 1999, the Company issued warrants to two individuals to purchase
150,000 shares of common stock at $.20 per share. The warrants expire June 30,
2001.
<PAGE>
PageLab Network, Inc.
Notes to Financial Statements
NOTE 6 - INCOME TAXES
At December 31, 1999, the Company had net operating loss carryforwards in the
approximate amount of $140,000. Deferred tax assets are subject to assessment of
their realization through reduction of future tax obligations. This assessment
considers the likelihood of future profitability and limitations that restrict
the utilization of net operating loss carryforwards. For purposes of the 1999
financial statements, a valuation allowance of $38,000 has been estimated to
offset the related deferred tax benefits.
NOTE 7 - LEASE COMMITMENT
The Company leases office space on a month-to-month basis at the rate of
approximately $1,100 per month. Rent expense for 1999 was approximately $5,000.
EXHIBIT 3
9E-411
(handwritten number)
State of Minnesota
Office of the Secretary of State
MODIFICATION OF STATUTORY REQUIREMENTS
OR AMENDMENT OF ARTICLES
Corporate Name: IMCRO, Inc.
Date of Adoption of Amendments/Modifications: October 25, 1999
Effective Date, if any, of Amendments /modifications: SAME
Amendments/Modifications Approved by Corporate: Shareholders
and Directors
Pursuant to the provisions of Minnesota Statutes, Sections 302A.133 and
302A.135, the following amendments of articles or modifications to the statutory
requirements regulating the above corporation were adopted: (Insert full text of
newly amended or modified article(s), indicating which article(s) is (are) being
amended or added. If the full text of the amendment will not fit into the space
provided, please do not use this form. Instead, retype the amendment on a
separate sheet or sheets, using this format.)
ARTICLE 1 - Name
1.1 The name of the corporation shall be PageLab Network, Inc.
ARTICLE 3 - Capital Stock
3.1 Authorized Shares. The aggregate number of Shares that the
corporation has authority to issue shall be Fifty Million
(50,000,OOC) shares of which forty million shares shall be deemed to
be common stock. The other ten million shares at this time shall
have no type, class, or series; but can be designated as to type,
class, or series in the future, if need be. All such shares shall
not have any par value, except that they shall have a par value of
ten thousand of a cent (.0001) per share solely for the purpose of a
statute or regulation imposing a tax or fee based upon the
capitalization of a corporation, and except that they shall have
such par value as may be fixed by the corporation's Board of
Directors for the purpose of a statute or regulation requiring the
shares of the corporation to have a par value.
031633
(stamped number)
<PAGE>
I swear that the foregoing is true and accurate and that I have the authority to
sign this document on behalf of the corporation.
Signed: Peter Kisch
Position: Counsel to
STATE OF MINNESOTA ) The foregoing instrument was
)ss. acknowledged before me on this____
County of __________________) day of October 1999
(Notarial
Seal)
---------------------------------------
(Notary Public)
STATE OF MINNESOTA
DEPARTMENT OF STATE
FILED
OCT 28 1999
Signed: Mary K.
Secretary of State
<PAGE>
See instructions at bottom
of page for completing
this form.
State of Minnesota
Office of the Secretary of State
SEAL
5S - 224
MODIFICATION OF STATUTORY REQUIREMENTS
OR AMENDMENT OF ARTICLES
5313
(stamped number)
Corporate Name: St. Albans Investment Ventures, Inc.
Date of Adoption of Amendments/Modifications
February 24, 1989
Effective Date if any, of Amendments/Modifications*
February 28, 1989
Amendments/Modifications Approved by Corporate: _x_ Shareholders
___ Incorporators _x_ Directors
Pursuant to the provisions of Minnesota Statutes, Sections 302A.133 and
302A.135, the following amendments of articles or modifications to the statutory
requirements regulating the above corporation were adopted: (Insert full text of
newly amended or modified article(s), indicating which article(s) is(are) being
amended or added. if the, full text of the amendment will not fit into the space
provided, please do not use this form. Instead. retype the amendment on a
separate sheet or sheets, using this format.)
ARTICLE 1
"l.1 The name of the corporation shall be IMCRO, Inc."
*Note: Effective date may be any date within 30 days after the filing date. If
no date is specified, the effective date is the filing date.
I swear that the foregoing is true and accurate and that I have the authority to
sign, this document on behalf of the corporation.
Signed: Michael L. Lipschultz
Position: President
STATE OF MINNESOTA The foregoing instrument was acknowledged
before me on this 28th day of February,
1989
County of Hennepin
(Notarial Seal) PATTI S. BOLLER
.......NOTARY PUBLIC - MINNESOTA
HENNEPIN COUNTY (signed) Patti S. Boller
My Commission Expires Aug. 22, 199 (Notary Public)
INSTRUCTIONS FOR USE BY SECRETARY OF STATE
1. Type Or print with dark black ink.
2. Filing Fee: $15.00.
3. Make check for the filing fee payable to the STATE OF MINNESOTA
Secretary of State. DEPARTMENT OF STATE
FILED
4. Mail OR bring completed form to:
Secretary OF State FEB 28 1989
Corporation Division
180 State Office Building (signed) Joan Anderson Growe
St. Paul, MN 55155
(612) 296-2803 Secretary of State
<PAGE>
5S224
795
ARTICLES OF INCORPORATION
OF
ST. ALBANS INVESTMENT VENTURES, INC.
The undersigned, being a natural person of full age, for the purpose of
forming a corporation under and pursuant to Chapter 302A of Minnesota Statutes,
as amended, hereby adopts the following Articles of Incorporation:
ARTICLE 1 - NAME
1.1 The name of the corporation shall be St. Albans Investment
Ventures, Inc.
ARTICLE 2 - REGISTERED OFFICE
2.1 The location and office address of the registered office of the
corporation in this state shall be 2624 American National Bank Building, St.
Paul, Minnesota 55101.
ARTICLE 3 - CAPITAL STOCK
3.1 Authorized Shares. The aggregate number of shares that the
corporation has authority to issue shall be Twenty-Five Million (25,000,000)
shares of common stock. Such shares shall not have any par value, except that
they shall have a par value of one cent ($.01) per share solely for the purpose
of a statute or regulation imposing a tax or fee based upon the capitalization
of a corporation, and except that they shall have such par value as may be fixed
by the corporation's Board of Directors for the purpose of a statute or
regulation requiring the shares of the corporation to have a par value.
1
<PAGE>
796
3.2 Issuance of Shares. The Board of Directors of the corporation is
authorized from time to time to accept subscriptions for, issue, sell and
deliver shares of stock of any class or series of the corporation, and rights to
purchase securities of the corporation, to such persons, at such time, for such
consideration, and upon such terms and conditions as the Board shall determine.
ARTICLE 4 - RIGHTS OF SHAREHOLDERS
4.1 No Preemptive Rights. No shareholder of the corporation shall have
any preemptive right to subscribe for, purchase or acquire any shares of stock
of any class or series of the corporation now or hereafter authorized or issued
by the corporation.
4.2 No Cumulative Voting Rights. No shareholder shall have the right to
cumulate votes for the election of directors or for any other purpose.
ARTICLE 5 - WRITTEN ACTION BY DIRECTORS
5.1 Any action required or permitted to be taken at a Board meeting may
be taken by written action signed by all of the directors or, in cases where the
action need not be approved by the shareholders, by written action signed by the
number of directors that would be required to take the same action at a meeting
of the Board at which all directors were present.
2
<PAGE>
797
ARTICLE 6 - LIMITATION OF DIRECTOR LIABILITY
6.1 A director shall not be personally liable to the corporation or to
its stockholders for monetary damages for any breach of fiduciary duty as a
director, except to the extent that elimination or limitation of liability is
not permitted under Section 302A.251, the Minnesota Business Corporation Act, as
the same exists or may hereafter be amended. Any repeal or modification of the
provisions of this Article shall not adversely affect any right or protection of
a director of the Corporation existing at the time of such repeal or
modification.
ARTICLE 7 - MERGER, EXCHANGE, SALE OF ASSETS AND DISSOLUTION
7.1 Where approval of shareholders is required by law, the affirmative
vote of the holders of at least a majority of the voting power of all shares
entitled to vote shall be required to authorize the corporation (i) to merge
into or with one or more other corporations, (ii) to exchange its shares for
shares of one or more other corporations, (iii) to sell, lease, transfer or
otherwise dispose of all or substantially all of its property and assets,
including its good will, or (iv) to commence voluntary dissolution.
ARTICLE 8 - AMENDMENT OF ARTICLES OF INCORPORATION
8.1 Any provision contained in these Articles of Incorporation may be
amended, altered, changed or repealed by the Affirmative vote of the holders of
at least a majority of the
3
<PAGE>
798
voting power of the shares present and entitled to vote at a duly held meeting
or such greater percentage as may be otherwise prescribed by the laws of the
State of Minnesota.
ARTICLE 9 - INCORPORATOR
9.1 The name and post office address of the incorporator are as
follows:
Richard P. Keller 2624 American National Bank Bldg.
St. Paul, Minnesota 55101
IN WITNESS WHEREOF, the undersigned incorporator has hereunto
set his hand this Fifth day of October, 1987.
Subscribed and sworn to before me
this Fifth day of October, 1987.
Notary Public
STATE OF MINNESOTA
DEPARTMENT OF STATE
FILED
OCT 5 - 1987
(signed) Joan Anderson Growe
Secretary of State
4
<PAGE>
BY-LAWS
OF
PAGELAB NETWORK, INC.
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Regular Meetings. Regular meetings of shareholders may be called by the
Chief Executive Officer, the Secretary, the Board of Directors, or by
shareholder demanded in accordance with Minnesota Statutes Section
302A.431, subdivision 2. No meeting shall be designated a regular
meeting unless specifically described as such in the notice of meeting
or unless all the shareholders are present in person or by proxy, and
none of them objects to this designation.
1.2 Special Meetings. Special meetings of the shareholders may be called
for any purpose or purposes at any time by the Chief Executive Officer,
Chief Financial Officer, two or more directors, or by shareholder
demand in accordance with Minnesota Statutes, Section 203A.433,
subdivision 2.
1.3 Time and Place of Shareholder Meeting. Except as otherwise provided by
statute, any meeting of shareholders shall be held on the date and at
the time and place fixed by the Chief Executive Officer or the Board of
Directors of the corporation.
1.4 Notice of Shareholder Meeting. Except as otherwise provided by statute,
written notice of the date, time, and place of any meeting of
shareholders shall be given to every holder of voting shares at such
address as appears on the stock book of the corporation at least five
days prior to the meeting if by mail, or two days prior to the meeting
if by telex, telegram, or in person.
1.5 Voting. Except where a greater percentage is required by statute, the
shareholders shall take action by the affirmative vote of the holders
of a majority of the votes of the shares present.
1
<PAGE>
ARTICLE II
DIRECTORS
2.1 Number, Term of Office. The number of directors of the corporation
shall be as determined from time to time by the shareholders. Directors
need not be shareholders. Each director shall hold office for an
indefinite term, not to exceed five years, that expires at the regular
meeting of shareholders next held after the director's election and
until a successor is elected and has qualified, or until the earlier
death, resignation, removal, or disqualification of the director.
2.2 Removal. The Board of Directors or the shareholders may remove any
director of the corporation at any time, for cause or without cause.
New directors may be elected at a meeting at which directors are
removed.
2.3 Board Meetings, Notice. The Chief Executive Officer (if a director),
the Chairman of the Board of Directors (if one is elected) or Directors
comprising at least one third of the number of directors then in office
may call a Board meeting by giving five days notice if by mail, or two
days notice if by telephone, telex, telegram, or in person, to all
directors of the day or date and time of the meeting. Meetings of the
Board of Directors may be held at the day or date, time, and place, as
shall be determined by the Board. If the day or date, time, and place
have been announced at a previous meeting of the Board, or if a meeting
schedule is adopted by the Board, no notice is required. In absence of
a designation by the Board of Directors, Board meetings shall be held
at the principal executive offices of the corporation.
2.4 (a) Advance Written Consent or Opposition. Any member of the Board or a
committee thereof, as the case may be, may give advance written consent
or opposition to a proposal to be acted on at a Board or committee
meeting. If a director or committee member is not present at the
meeting, advance written consent or opposition to a proposal does not
constitute presence for the purpose of determining whether a quorum
exists, but such advance written consent or opposition shall be a vote
in favor of or against the proposal or resolution acted upon at the
meeting is substantially the same or has substantially the same effect
as the proposal or resolution to which the member of the Board or
committee has consented or objected.
(b) Action Without Meeting. Any action, other than an action requiring
shareholder approval, may be taken by written action signed by the
number of directors that would be required to take the same action at a
meeting of the Board at which all directors were present. An action
2
<PAGE>
requiring shareholder approval required or permitted to be taken at a
board meeting may be taken by written action signed by all the
directors. Any such written action is effective when signed by the
required number of directors, unless a different effective time is
provided in the written action. When written action is taken by less
than all directors, all directors shall be notified immediately of its
text and effective date. Failure to provide the notice does not
invalidate the written action. A director who does not sign or consent
to the written action has no liability for the action or actions taken.
ARTICLE III
OFFICERS
3.1 Election; Term of Office; Removal. The Board of Directors shall elect a
Chief Executive Officer and Chief Financial Officer, and may elect such
other officers as it may deem necessary for the operation and
management of the corporation, each of whom shall have the duties and
responsibilities incident to the offices which they hold or as
determined by the Board. Officers need not be directors or
shareholders. Without limiting the foregoing, the Board may elect a
Chairman of the Board, President, one or more Vice Presidents, a
Treasurer, a Secretary and such assistant officers as it may designate
with titles to describe their duties, functions or special
responsibilities. Officers shall hold office at the will of the Board
for an indefinite term until their successors are elected and
qualified. Any officer elected or appointed by the Board of Directors
may be removed by the Board at any time with or without cause.
ARTICLE IV
AMENDMENTS
4.1 Subject to the power of shareholders to adopt, amend, or repeal these
Bylaws as provided in Minnesota Statutes, Section 302A.181, Subdivision
3, any Bylaw may be amended or repealed by the Board of Directors at
any meeting, provided that, after adoption of the initial Bylaws, the
Board shall not adopt, amend, or repeal a Bylaw fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors
or filling vacancies in the Board, or fixing the number of directors or
their classifications, qualifications, or terms of office. The Board
may adopt or amend a Bylaw to increase the number of directors.
3
<PAGE>
ARTICLE V
INDEMNIFICATION
5.1 The corporation shall indemnify persons for such expenses and
liabilities in such manner, under such circumstances, and to the extent
required by Minnesota Statutes, Section 302A.521.
