<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ----------------
Commission file number 2-74785-B
Next Generation Media Corp.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Nevada 88-0169543
- ------------------------------ --------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
900 N. Stafford St., Suite 2003
Arlington, VA 22203 (703) 516-9888
- ---------------------------------- ----------------
(Address of principal executive offices) (Registrant's telephone number, including area code)
</TABLE>
Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01
par value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
----- -----
Indicate by check mark if disclosure of delinquent filers to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
State issuer's revenues for its most recent fiscal year: $476,226.
The aggregate market value at January 16, 1998 of the Common Stock of
the issuer, its only class of voting stock, was $1,245,380, of which
$427,008.40 was held by non-affiliates, calculated on the basis of a recent
private sale of Common Stock as of December 30, 1997. The total number of
issued and outstanding shares of the issuer's common stock, par value $0.01, as
of January 16, 1998 was 3,113,450.
Documents incorporated by reference: None.
<PAGE> 2
PART I
ITEM 1. BUSINESS.
This Annual Report on Form 10-K contains certain forward-looking
statements with respect to the Company's business, financial condition and
results of operations. The words "estimate," "project," "intend," "expect,"
"anticipate" and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
contemplated in such forward-looking statements. Such risks include, but are
not necessarily limited to, the ability of the Company to compete in the
community newspaper business, the Company's ability to acquire new businesses
and generate new cash flows therefrom, and the Company's ability to obtain
additional capital to support its operations and growth.
Next Generation Media Corp. (the "Company") was incorporated on
November 21, 1980 under the laws of the State of Nevada in the name Micro Tech
Industries Inc. Pursuant to a Stock Purchase Agreement dated as of February 6,
1997, by and between Pocotopaug Investment, Inc. and Joel P. Sens, Mr. Sens
acquired control of 6,686,551 of the 8,008,890 outstanding shares of common
(equivalent to 668,655 shares after the March 19, 1997 reverse split)
stock (85.72%) of the Company for $50,000 in personal funds. In connection with
this transaction, John S. McAvoy, the then sole director of the Company
resigned effective as of the date of such transaction, and new members of the
board of directors were elected and new management appointed. Current
management believes that the Company was a "shell" company for at least five
years prior to February 6, 1997, without assets or liabilities. Current
management is unaware of any operating history of the Company prior to February
6, 1997.
Currently, the Company operates as a publicly owned holding company
with a single wholly owned operating subsidiary, Independent News Inc. ("INI").
The Company had no revenues from operations prior to its acquisition of certain
assets and liabilities of Pompton Valley Publishing Company, Inc. ("Pompton
Valley") as of September 29, 1997. These assets and liabilities were acquired
through INI which was formed to operate the acquired business. The acquisition
was funded with cash, with common stock of the Company and by means of INI's
assumption of certain of Pompton Valley's liabilities. The cash portion of the
purchase price was funded by means of a loan from Mr. Sens.
INI engages in the community newspaper publishing business. It
produces and issues weekly free newspapers distributed via the mail to
approximately 67,761 homes in northern New Jersey. INI generates all of its
revenues from the sale of advertisements which generally are placed by local
merchants in the communities which the newspapers serve. The newspapers
generally are identical in editorial content but are varied according to
advertising content. Therefore, a local merchant or other advertiser may
target the audience for its advertisements in a relatively close geographic
vicinity by placing advertisements in the version of the INI community
newspaper serving its local community. The New Jersey
2
<PAGE> 3
townships that INI's community newspapers serve include Wayne, Fairfield,
Lincoln Park, Pequannock, Pompton Plains, Montville, Towaco, Bloomingdale,
Riverdale, Butler, Kinnelon, Smoke Rise, Pompton Lakes, Little Falls, Totowa
and West Patterson.
INI had $476,226 in revenues and an operating loss of $26,866 from September
29, 1997 through December 31, 1997, representing substantially all of the
Company's revenues and operating losses for the year. Prior to the acquisition
of its community newspaper business through INI, the Company had no operating
revenues.
INI's working capital is provided primarily from operations. INI sales are
made by its sales representatives on credit with payment terms due in 30 days.
No single customer of INI represents 10% or more of its revenues.
The advertising business, including the community newspaper business, is
highly competitive with many firms competing in various forms of media and
possessing substantial resources. The Company's community newspaper business has
several direct competitors servings its local markets, although management
believes that INI has no direct competitor offering a 100% mailed (as opposed to
delivery) weekly newspaper. The circulation of other newspapers in the local
markets in which INI operates includes: The New Jersey Star Ledger, circulation
11,889, The Herald & News, circulation 8,983, The Record, circulation 8,131 and
The Suburban Trends, circulation 7,401.
INI had approximately twelve employees as of December 31, 1997. The Company
has a President and a Secretary/Treasurer who did not receive any compensation
in 1997.
The Company's business strategy is to grow through new acquisitions while
continuing to operate INI as a wholly-owned subsidiary. The Company is currently
considering new acquisitions that may occur in 1998, although no assurance can
be given. The success of such an acquisition is dependent upon a number of
factors including obtaining adequate financing, possibly through the sale of
securities, and successful negotiations with any such potential target
corporation.
ITEM 2. PROPERTIES.
The Company's principal property is a 3,500 square foot facility located in
Pompton Lakes, New Jersey. The building consists of two stories with the
administration and production unit on one level and sales staff on the other
level. INI has a five year lease on the property that runs through October,
2002.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not involved in any pending or, to management's knowledge,
threatened legal proceedings.
3
<PAGE> 4
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of the fiscal year
to a vote of security holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Current management has no knowledge of any sales of the Company's securities
prior to February 6, 1997. On February 6, 1997, Mr. Joel Sens acquired
6,686,551 shares (equivalent to 668,655 shares after the March 19, 1997 reverse
split) of the Company's common stock, par value $0.001, for $50,000, in a
transaction exempt from registration under Section 4(1) of the Securities Act
of 1933, as amended (the "Securities Act"). On March 19, 1997, the Company
executed a 10:1 reverse split of its common stock, increasing the par value of
the common stock to $0.01 per share. This transaction was exempt from
registration under Section 3(9) of the Securities Act. Also as of March 19,
1997, the Company's Board of Directors authorized the issuance of 2,150,000
additional shares of common stock to Mr. Sens in exchange for a promissory note
in the principal amount of $359.050.00, bearing interest at the rate of 5.83%
and due three years from the date of issuance. This offer and sale was a
private transaction exempt from registration under Section 4(2) of the
Securities Act.
On September 29, 1997, the Company issued 100,000 shares of common stock to
Joseph Pellegrino (27,500), Joseph Nicastro (27,500), Ron Higgins (15,000), Roy
Peragallo (15,000), Michele Koptyra (10,000) and Joseph Ouimet (5,000) as
partial payment for the community newspaper business purchased from Pompton
Valley that is now operated by INI. This transaction was exempt from
registration under Section 4(2) of the Securities Act.
On December 30, 1997, the Company consummated a transaction in which Mr.
Kevin Rubin acquired 62,500 shares of the Company's common stock for $25,000.
Mr. Rubin also receive 37,500 warrants exercisable for a period of two years
from the date of grant to purchase one share of common stock each at a price of
$0.60 per share. This transaction was exempt from registration under Section
4(2) of the Securities Act.
None of the above-described transactions were effected through an
underwriter, and none involved any underwriting discount or commission.
There is no established public trading market for the Company's common
stock. As of January 16, 1998, there were approximately 532 holders of the
Company's common stock.
There have been no cash dividends paid on the Company's common stock since
February 6, 1997, and current management is unaware of any dividend paid prior
to that date.
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The Company intends to retain all future earnings, if any, for use in the
development of its business, and the Company does not anticipate paying cash
dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
The following statement of operations data for the year ended December 31,
1997 and balance sheet data as of December 31, 1997 are derived from the
Company's Consolidated Financial Statements, audited by BDO Seidman LLP,
independent certified public accountants, which are included elsewhere in this
Form 10-K. Management believes that the Company was a public shell until
February 6, 1997, the date when Mr. Joel Sens acquired a majority interest in
the Company and new management was appointed. Therefore, management believes
that the Company had no operating revenues, assets or liabilities prior to that
date. The data presented below therefore, is for fiscal year 1997, the only year
for which management believes the Company had revenues, assets or liabilities
out of the last five years.
<TABLE>
<CAPTION>
YEAR ENDED
----------
DECEMBER 31, 1997
-----------------
(U.S. DOLLARS)
STATEMENT OF OPERATIONS
DATA:
<S> <C>
Sales 476,226
Cost of sales 139,012
Gross profit(loss) 337,214
Operating expenses:
Selling, general and administrative 427,890
Depreciation and amortization 15,883
Total operating expenses 443,773
Operating income (loss) (106,559)
Financial income (expenses),
net
Other expenses (income) 11,381
Net income (loss) (95,178)
Basic and diluted income (loss) per share (0.04)
</TABLE>
5
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<TABLE>
<CAPTION>
YEAR ENDED
----------
DECEMBER 31, 1997
-----------------
(U.S. DOLLARS)
BALANCE SHEET DATA:
<S> <C>
Total Assets 474,549
Long-term obligations 136,932
Capital Leases 0
Redeemable Preferred Stock 0
Cash Dividends Declared Per Share 0
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Management cannot fully assess material changes in the registrant's
financial condition from the end of the preceding year to the end of fiscal year
1997, or in the registrant's results of operations with respect to the 1997
fiscal year from the preceding fiscal years, for the following reasons.
Mr. Joel P. Sens purchased 6,686,551 shares (equivalent to 668,655 shares
after the March 19, 1997 reverse split) of the issuer's common stock, par value
$0.001, as of February 6, 1997, from Pocotopaug Investment, Inc. All
then-existing officers and directors resigned as of February 6, 1997, and all
current officers and a majority of the current directors were first appointed as
of February 6, 1997, in connection with that sale. To the best of management's
knowledge, no audited or unaudited financial statements for the issuer were
prepared by former management for all or any portion of fiscal year 1996 or any
recent preceding years.
The following discussion is based on assumptions made by management as to
the issuer's results of operations and financial condition as of December 31,
1996 and for the period then ended. No assurances can be given as to the
accuracy of such assumptions. However, management has no knowledge of any
information that would make reliance on such assumptions unwarranted.
Management assumes that the issuer had no assets as of December 31, 1996,
the end of its last fiscal year. The Company had total assets of $474,549
including $67,781 in net property and equipment and $192,648 in net intangible
assets, primarily goodwill, as of December 31, 1997.
Management assumes that the issuer had no current liabilities as of December
31, 1996. As of December 31, 1997, the company had $341,095 in current
liabilities. In addition, the Company had long term debt of $136,932 and a total
stockholders' equity deficit of $3,478 as of the end of the fiscal year.
6
<PAGE> 7
Management assumes that the issuer had no revenues or expenses during the
1996 fiscal year. As of the end of the fiscal year, the Company had $476,226 in
total revenues, all of which was generated by its subsidiary INI. The Company
incurred a net loss of $95,178 for fiscal year 1997, resulting in a basic and
diluted loss per common share of $0.04. The Company generated $95,957 in
financing activities in 1997 primarily from an increase in checks issued against
future deposits, proceeds of loans from shareholders and employees and proceeds
from an issuance of common stock. These gains from financing activities were
used to cover deficits in net cash used in operating activities of $46,803 and
net cash used in investing activities of $49,154.
The Company is currently considering new acquisitions that may occur in
1998, although no assurance can be given. If the Company is successful in
completing such an acquisition, management believes that its business, financial
condition and results of operations may change significantly. Any such
acquisition may be financed by issuance of stock of the Company but may also
require new capital resources. Failure of the Company to obtain new sources of
capital, through a public offering or private placement of its stock, or
otherwise, could materially adversely affect the Company's ability to make new
acquisitions and to continue operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
7
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[NEXT GENERATION MEDIA
CORPORATION LOGO]
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1997
<PAGE> 9
NEXT GENERATION MEDIA
CORPORATION
CONTENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT 3
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets 4
Consolidated statements of operations 5
Consolidated statements of stockholders' equity 6
Consolidated statements of cash flows 7-8
Summary of accounting policies 9-11
Notes to consolidated financial statements 12-18
Independent Auditor's Report on Financial Statement 19
Schedule
Schedule II - Valuation and Qualifying Accounts 20
</TABLE>
2
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INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
NEXT GENERATION MEDIA CORPORATION
We have audited the accompanying consolidated balance sheet of NEXT GENERATION
MEDIA CORPORATION as of December 31, 1997 and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of NEXT GENERATION MEDIA
CORPORATION at December 31, 1997, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.
BDO Seidman, LLP
Washington, D.C.
April 13, 1998
3
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<TABLE>
<CAPTION>
December 31, 1997
=========================================================================================================================
ASSETS
<S> <C>
CURRENT
Accounts receivable, less allowance for doubtful
accounts of $42,560 $198,335
Accrued interest receivable 15,785
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 214,120
- -------------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT (Note 1) 71,135
Less: Accumulated depreciation 3,354
- -------------------------------------------------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 67,781
- -------------------------------------------------------------------------------------------------------------------------
OTHER
Intangibles, net (Note 3) 192,648
- -------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER 192,648
- -------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $474,549
=========================================================================================================================
</TABLE>
<PAGE> 12
NEXT GENERATION MEDIA
CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, 1997
=========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES
Checks issued against future deposits $ 44,821
Accounts payable 248,666
Notes payable (Note 4) 25,449
Due to shareholders (Note 6) 10,255
Accrued interest payable 235
Note payable-employee (Note 5) 11,669
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 341,095
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM DEBT
Note payable - employees (Note 5) 85,027
Due to shareholders (Note 6) 24,400
Note payable (Note 4) 27,505
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LONG TERM DEBT 136,932
- -------------------------------------------------------------------------------------------------------------------------
Commitments (Note 11)
STOCKHOLDERS' EQUITY (Note 8)
Common stock, $.01 par value, 50,000,000 authorized
3,113,450 issued and outstanding 31,134
Additional paid in capital 419,616
Accumulated deficit (95,178)
Less stock subscription receivable (359,050)
- -------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (3,478)
- -------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $474,549
=========================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
4
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NEXT GENERATION MEDIA
CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C>
SALES $ 476,226
- ------------------------------------------------------------------------------------------------------------------------
COST OF GOODS SOLD 139,012
- ------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 337,214
- ------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Selling,general and administrative 427,890
Depreciation and amortization 15,883
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 443,773
- ------------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest income 16,719
Interest expense (5,338)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OTHER INCOME (EXPENSE) 11,381
- ------------------------------------------------------------------------------------------------------------------------
NET LOSS (95,178)
- ------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER COMMON SHARE $ (.04)
- ------------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING $2,452,839
========================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
5
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NEXT GENERATION MEDIA
CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Stock
---------------------- paid-in Accumulated Subscription
Shares Amount capital deficit Receivable Total
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1997 - $ - $ - $ - $ - $ -
Acquisition of Microtech 800,889 8,009 41,991 - 50,000
Issuance of common stock 2,312,561 23,125 377,625 (359,050) 41,700
Net loss - - - (95,178) - (95,178)
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 1997 3,113,450 $ 31,134 $ 419,616 $ (95,178) $(359,050) $ (3,478)
===============================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
6
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NEXT GENERATION MEDIA
CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31, 1997
===========================================================================================
<S> <C>
OPERATING ACTIVITIES
Net loss $ (95,178)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
Depreciation and amortization 15,883
Provision for doubtful accounts 34,956
(INCREASE) DECREASE IN ASSETS
Accounts receivable (105,234)
Accrued interest receivable (15,785)
INCREASE (DECREASE) IN LIABILITIES
Accounts payable 118,320
Accrued interest payable 235
- -------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (46,803)
- -------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of property and equipment (34,154)
Covenant not to compete (15,000)
- -------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (49,154)
- -------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in checks issued against future deposits 44,821
Proceeds of loans from shareholders 40,255
Proceeds of loans from employees 46,600
Repayment of note payable (24,009)
Repayment of shareholder note (5,600)
Repayments of employee notes (31,110)
Proceeds from issuance of common stock 25,000
- -------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 95,957
- -------------------------------------------------------------------------------------------
</TABLE>
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NEXT GENERATION MEDIA
CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31, 1997
==========================================================================================
<S> <C>
INCREASE IN CASH AND CASH EQUIVALENTS -
CASH AND CASH EQUIVALENTS, beginning of period -
- ------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period $ -
==========================================================================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 4,169
Shares issued in exchange for note receivable 359,050
- ------------------------------------------------------------------------------------------
NONCASH INVESTING ACTIVITY
ACQUISITION:
Stock issued for acquisition $ 16,700
Book value of assets acquired less liabilities assumed (77,715)
- ------------------------------------------------------------------------------------------
94,415
Acquisition costs 45,762
- ------------------------------------------------------------------------------------------
Goodwill $ 140,177
=========================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
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NEXT GENERATION MEDIA
CORPORATION
SUMMARY OF ACCOUNTING POLICIES
<TABLE>
<S> <C>
BASIS OF The consolidated financial statements include the statements of Next Generation
PRESENTATION Media Corporation (the "Company") and its wholly owned subsidiary Independent
News, Inc. All intercompany transactions have been eliminated.
BUSINESS The Company operates a newspaper publishing business distributing free
DESCRIPTION newspapers, supported by local advertising in New Jersey. Primarily all of its
customers are located in New Jersey.
RISK AND The publishing industry is highly competitive. The Company's revenue consists of
UNCERTAINTIES amounts received for advertising space in the newspaper. Publication of the
newspaper is dependent on future advertising revenue or obtaining additional
outside financing. Management believes that it can continue to meet working
capital requirements as they arrive.
USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make certain estimates and
assumptions, particularly regarding valuation of accounts receivable,
recognition of liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results could differ
from those estimates.
CONCENTRATION Financial instruments that potentially subject the Company to concentrations of
OF CREDIT RISK credit risk consist primarily of cash and accounts receivable. The Company
maintains its cash in bank deposit accounts, the balances of which, at times, may
exceed Federally insured limits. Exposure to credit risk is reduced by placing
such deposits in high quality financial institutions.
PROPERTY AND Property and equipment are recorded at cost. Depreciation is computed by using
EQUIPMENT both straight-line and accelerated methods over the estimated useful lives of the
assets.
</TABLE>
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NEXT GENERATION MEDIA
CORPORATION
SUMMARY OF ACCOUNTING POLICIES
<TABLE>
<S> <C>
EARNINGS (LOSS) Loss per share for the years ended December 31, 1997, has been computed using the
PER COMMON SHARE weighted average number of shares outstanding. The outstanding stock options
were not considered in the computation because their inclusion would have been
anti-dilutive.
INCOME Income taxes are calculated using the liability method specified by Statement of
TAXES Financial Accounting Standards No. 109, "Accounting for Income Taxes". Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial purposes and the amounts
used for income tax purposes. The net deferred tax asset is reduced, if
necessary, by a valuation allowance for the amount of any tax benefits that,
based on available evidence, are not expected to be realized.
RECENT In March 1997, the Financial Accounting Standards Board issued Statement of
ACCOUNTING Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128"). SFAS 128
PRONOUNCEMENTS provides a different method of calculating earnings per share than is currently
used in APB Opinion 15. SFAS 128 provides for the calculation of basic and dilut
ed earnings per share. Basic earnings per share includes no dilution and is
computed by dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that could share in the
earnings of an entity, similar to existing fully diluted earnings per share. The
Company adopted the provisions for computing earnings per share set forth in SFAS
128 in December 1997. There is no difference in basic and diluted earnings per
share.
In June 1997, the Financial Accounting Standards No. 130 Reporting Comprehensive
Income ("SFAS 130"), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of
</TABLE>
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NEXT GENERATION MEDIA
CORPORATION
SUMMARY OF ACCOUNTING POLICIES
<TABLE>
<S> <C>
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements.
Statement of Financial Accounting Standards No. 131, Disclosure about Segments of
a Business Enterprise ("SFAS 131"), establishes standards for the way that public
enterprises report information about operating segments in interim financial
statements issued to the public. It also establishes standards for disclosures
regarding products and services, geographic areas and major customers. SFAS 131
defines operating segments as components of an enterprise about which separate
financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance.
Both SFAS 130 and SFAS 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for earlier
years to be restated. Management believes the impact, if any, would not be
material to the financial statement disclosures. Results of operations and
financial position, however, will be unaffected by implementation of these
standards.
</TABLE>
11
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NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. PROPERTY AND Property and equipment consists
EQUIPMENT of the following:
<TABLE>
<CAPTION>
December 31, 1997
==================================================================================
<S> <C>
Computers and office equipment $ 68,935
Leasehold improvements 2,200
----------------------------------------------------------------------------------
71,135
Less accumulated depreciation 3,354
----------------------------------------------------------------------------------
$ 67,781
==================================================================================
Depreciation charged to operations was $3,354
</TABLE>
2. INTANGIBLE Intangible assets consist of the
ASSETS following items:
<TABLE>
<CAPTION>
December 31, 1997
==================================================================================
<S> <C>
Goodwill (Note 7) 190,177
Covenant not to compete 15,000
----------------------------------------------------------------------------------
205,177
Less accumulated amortization 12,529
----------------------------------------------------------------------------------
Intangible assets, net $ 192,648
==================================================================================
</TABLE>
The covenant not to compete is being
amortized on a straight line basis
over its contractual term of four years.
12
<PAGE> 21
NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. NOTES Notes payable consist of the
PAYABLE following:
<TABLE>
<CAPTION>
December 31, 1997
==================================================================================
<S> <C>
Note to a factor with interest
at 8%, secured by the Company's
assets, due January 1, 1999 $ 27,505
Note to a factor with interest at
the lender's prime rate, secured
by the Company's assets, due
on April 15, 1996 25,449
----------------------------------------------------------------------------------
52,954
Less current portion 25,449
----------------------------------------------------------------------------------
$ 27,505
==================================================================================
Maturities of notes payable are as follows:
December 31,
==================================================================================
1998 $ 25,449
1999 27,505
----------------------------------------------------------------------------------
$ 52,954
==================================================================================
</TABLE>
13
<PAGE> 22
NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. NOTES PAYABLE - Notes payable - employees are
EMPLOYEES loans for working capital
purposes. The notes bear no
interest and are due as follows:
<TABLE>
<CAPTION>
December 31,
==================================================================
<S> <C>
1998 $ 11,669
1999 85,027
------------------------------------------------------------------
$ 96,696
==================================================================
</TABLE>
5. RELATED Amounts due to shareholders and
PARTY employees represent funds advanced
TRANSACTIONS to the Company for working capital,
and reimbursements due for expenses
paid on the Company's behalf.
6. INCOME Significant components of the
TAXES Company's deferred tax assets at
December 31, 1997, are as follows:
<TABLE>
<CAPTION>
December 31, 1997
==================================================================================
<S> <C>
Deferred tax assets
Net operating loss carryforwards for
income tax purposes $ 13,000
Reserve for doubtful accounts 8,500
----------------------------------------------------------------------------------
Total deferred tax assets 21,000
Less valuation allowance (21,500)
----------------------------------------------------------------------------------
Total $ -
==================================================================================
</TABLE>
14
<PAGE> 23
NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
Management has provided a valuation allowance for net deferred tax assets as of
December 31, 1997, as they believe that it is more likely than not that the
entire amount of deferred tax assets will not be realized.
At December 31, 1997, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $65,000, which are available to
offset future federal taxable income, if any, through 2012.
The Company's estimated effective tax rate for the year ended December 31, 1997
is -0-. The rate is lower than federal and state statutory rates due to the
existence of net operating losses.
7. STOCKHOLDERS' At December 31, 1997, stock subscriptions receivable amounts to $359,050 and
EQUITY bears interest at 5.83%. Total interest income was $16,719 for the year ended
December 31, 1997. Proceeds from the note were used to purchase 2,150,000 shares
of the Company.
On March 19, 1997 the Board of Directors of the Company approved a 1 for 10
reverse stock split of common stock. The change in the Company's common stock
for the reverse stock split has been given retroactive effect for all periods
presented.
As of December 31, 1997, 37,500 stock options were granted to an unrelated third
party and are exercisable at $.60 per share anytime prior to December 31, 1999.
The options were not granted in exchange for good or services rendered,
accordingly, the Company did not record Compensation expense.
8. PURCHASE OF On February 6, 1997, an unrelated third party purchased 85.72% of the outstanding
MICROTECH stock of Microtech Industries, Inc., from its majority shareholder for $50,000 in
INDUSTRIES cash. Effective March 31, 1997 Microtech Industries changed its name to Next
Generation Media Corporation. Current management believes that prior to February
6, 1997, the Company was a "shell" company for at least five years without
assets and liabilities. Current management is unaware of any operating history
of the Company prior to
</TABLE>
15
<PAGE> 24
NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
February 6, 1997. As a result of the transaction, goodwill of $50,000 was
recorded and is being amortized on a straight line basis over ten years.
Accumulated amortization amounted to $5,583 at December 31, 1997.
9. ACQUISITION On September 29, 1997, Pompton Valley Publishing Co. (PVP) sold to Independent
OF POMPTON News, Inc. (INI) all of its tangible property, all accounts receivable, all
VALLEY intellectual property, certain contracts and all other business property. INI
PUBLISHING CO. assumed certain liabilities of PVP. In addition to the assumption of certain
liabilities, INI also paid PVP $15,000 in cash for a covenant not to compete and
100,000 shares of the Company's common stock. The shares were valued at $16,700
based on a recent stock sale. The acquisition was accounted for as a purchase.
In conjunction with this transaction the Company has recorded approximately
$140,000 of goodwill which is being amortized on a straight line basis over 5
years.
The following unaudited pro forma summary presents the combined results of
operations of the Company and the acquired business, as if the acquisition had
occurred at the beginning of 1997. The pro forma amounts give effect to certain
adjustments, including the amortization of intangibles. This pro forma summary
does not necessarily reflect the results of operations as they would have been if
the businesses had constituted a single entity during such periods and is not
necessarily indicitive of results which may be obtained in the future.
</TABLE>
<TABLE>
<CAPTION>
(UNAUDITED)
Year ended December 31, 1997
--------------------------------------------------------------
<S> <C>
Net sales $1,549,042
Net (Loss) (183,896)
(Loss) per common share (.07)
==============================================================
</TABLE>
16
<PAGE> 25
NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. COMMITMENTS The Company entered into a lease
AND for office space in Pompton Lakes,
CONTINGENCIES New Jersey. The lease is a five
year lease commencing on January
1,1998. Annual future minimum
lease payments under this
operating lease are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
=============================================================================
<S> <C>
1998 $ 21,600
1999 21,600
2000 21,600
2001 23,760
2002 23,760
-----------------------------------------------------------------------------
$ 112,320
=============================================================================
</TABLE>
For the period ended December 31, 1997,
the Company occupied office space in
another location on a month to month
arrangement. Rent expense for the
period ended December 31, 1997 was $2,550.
The Company also leases telephones and
computer equipment under operating
leases. Annual future minimum lease
payments under these operating leases
are as follows:
<TABLE>
<CAPTION>
Year ending December 31,
=================================================================================
<S> <C>
1998 $ 11,290
1999 3,912
2000 3,260
---------------------------------------------------------------------------------
$ 18,462
=================================================================================
</TABLE>
17
<PAGE> 26
NEXT GENERATION MEDIA
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
11. SUBSEQUENT On March 18, 1998 the Company signed an agreement to acquire all of the
EVENTS outstanding Series C Preferred Stock and certain subordinated debt totaling
$1,034,000 in UNICO, Inc. ("Unico"), pending approval by 100% of the debt holders
and preferred shareholders. In exchange for Unico's preferred stock and debt,
the company will pay $100,000 and issue 250,000 shares of callable, cumulative,
preferred stock with a $5 face value. In addition, each 1.5 preferred shares
shall be accompanied by one warrant to purchase common shares. Such warrants
will have an exercise price of $.16 and be valid for 5 years from the date of
issue. In conjunction with this transaction, the Company has agreed to acquire
all of the outstanding common stock of United Coupon Corporation ("United"), a
wholly owned subsidiary of Unico, pending approval of Unico's shareholders in
April 1998. In exchange for such shares, the Company shall issue 200,000 common
shares. United had sales of $5,800,000 and an after tax loss of $(407,000) for
their fiscal year ended December 31, 1997.
Pending approval of the purchase of the Unico preferred stock and debts, the
Company agreed to issue 70,000 preferred shares , issue 250,000 warrants, and
transfer ownership of the preferred stock and debt in Unico to T.C. Capital Ltd.
of the Bahamas in exchange for $350,000. Such preferred shares shall have a
redemption price of $5 per share, pay a cumulative dividend of $.50 per share,
and be redeemable at the sole option of the holder within nine months from their
date of issue. The warrants will have an exercise price of $0.16 and be valid
for five years from the date of issue.
</TABLE>
18
<PAGE> 27
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
NEXT GENERATION MEDIA CORPORATION
The audit referred to in our report to NEXT GENERATION MEDIA Corporation, dated
April 13, 1998 which is contained in Item 8 of this Form 10-K, includes the
audit of the financial statement schedule listed in the accompanying index for
the year ended December 31, 1997. This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statement schedule based upon our audit.
In our opinion, such schedule presents fairly, in all material respects, the
information set forth therein.
BDO Seidman, LLP
Washington, D.C.
April 13, 1998
19
<PAGE> 28
NEXT GENERATION MEDIA
CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance at Charged to
Beginning of Costs and Balance at
Year Expenses Deduction End of Year
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Description
Allowance for doubtful
accounts receivable $ 13,500 $ 29,060 $ - $ 42,560
==========================================================================================================================
</TABLE>
20
<PAGE> 29
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Lawrence Grimes 43 President and
Director
Kenneth Brochin 46 Secretary/Treasurer and
Director
Joel Sens 33 Director
Jeffrey Sens 33 Director
David Grossman 48 Director
</TABLE>
Officers are appointed by and serve at the discretion of the Board of
Directors. Each officer has served since 1997. Each director holds office
until the next annual meeting of stockholders or until a successor has been
duly elected and qualified.
Lawrence Grimes has been the Company's President and a director since
February 1997. Mr. Grimes is the principal of W.B. Grimes & Co., a newspaper
brokerage business in Maryland with business throughout the United States.
Kenneth Brochin has been the Company's Secretary and Treasurer and a
director of the Company since February 1997. Dr. Brochin has been a dentist in
private practice for the past 22 years and is a Clinical Assistant Professor at
the Medical College of Ohio. Dr. Brochin is also a director and
President-elect of the Jewish Family Service Agency of Toledo. Dr. Brochin and
Joel Sens are brothers-in-law.
David Grossman has been a director of the Company since February 1997. Dr.
Grossman has been an internist in private practice for over 20 years and has
been the Medical Director for the city of Toledo, Ohio for the past four years.
Dr. Grossman is also a director of the Lucas County Mental Health Board, the
Jewish Family Service Agency of Toledo and the East Toledo Family Center.
Jeffrey Sens has been a director of the Company since February 1997. Mr.
Sens is the Director of Operations for Top Driver, Inc., a national driving
school business based in New York City. Prior to working at Top Driver, Mr.
Sens held a variety of senior operations management positions with prominent
consumer goods companies such as RJR Nabisco Corporation, Sara Lee Corporation
and President International Corp. Mr. Sens has a B.Sc. in industrial
engineering from the University of Toledo and an MBA from Clemson University.
Mr. Sens is a director of Palmetto Industries International Inc., a diversified
manufacturer and supplier of bulk packaging products for chemical and
pharmaceutical companies that Mr. Sens co-founded. Mr. Sens is the brother of
Joel Sens.
Joel Sens has been a director of the Company since March 1997. Mr. Sens is
an entrepreneur engaging in, among other things, transactions involving the
purchase and sale of barter and other businesses. In addition to these other
activities, Mr. Sens, who is the principal shareholder in the Company, assisted
the Company without compensation in the structuring of its acquisition through
INI of its community newspaper business and has also participated in the
structuring and negotiation of other transactions that were not or have not yet
been consummated. Mr. Sens is also a director of INI, the Company's sole
operating subsidiary.
8
<PAGE> 30
On February 29, 1996, Joel Sens pled guilty in the federal court for the
Eastern District of Virginia to one count of failing to disclose the existence
of an asset worth approximately $7,000 on a statement of assets filed in a
personal bankruptcy case that had been subsequently voluntarily dismissed by
Mr. Sens. Mr. Sens received one year of probation and a fine of $1,000.
ITEM 11. EXECUTIVE COMPENSATION.
None of the executive officers of the Company received or accrued any
compensation in fiscal year 1997. The Company currently does not pay or accrue
salaries or fees to directors.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of January 16, 1998, certain information
as to the beneficial ownership of the common stock of (i) each of the Company's
directors and executive officers, (ii) directors and executive officers as a
group and (iii) all persons known by the Company to be the beneficial owners of
more than five percent of the outstanding common stock.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE PERCENT OF
OWNER OF BENEFICIAL COMMON
OWNERSHIP STOCK(1)
<S> <C> <C> <C>
Lawrence Grimes P.O. Box 442 89,820 common shares 2.9%
Clarksburg, MD 20871
Kenneth Brochin 2347 Underhill Road 350,000 common shares 11.1%
Toledo, OH 43615
David Grossman 5666 Ginger Tree Road 74,850 common shares 2.4%
Toledo, OH 43623
Jeffrey Sens Top Driver 44,910 common shares 1.4%
717 Fifth Avenue, 4th floor
New York, NY 10022
Joel Sens 900 N. Stafford Street 2,045,929 common shares 64.9%
Suite 2003
Arlington, VA 22203
Executive officers and 2,605,509 common shares 82.7%
directors as a group (5
persons)
</TABLE>
(1) Percent is rounded to one decimal place. Ownership percentages assume
exercise of 37,500 warrants described in Item 5.
9
<PAGE> 31
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On April 1, 1997, the registrant consummated a transaction with Joel Sens
whereby Mr. Sens was issued 2,150,000 shares of common stock in exchange for a
secured promissory note in the principal amount of $359,050, bearing interest
at the rate of 5.83%. The principal shall be due in full on April 1, 2000.
Interest is due annually on April 1. Mr. Sens' obligations under this note are
secured by a pledge to the Company of the purchased shares.
On September 29, 1997, INI, a wholly-owned subsidiary of the Company,
assumed certain liabilities and contracts of Pompton Valley and purchased all
of the assets of Pompton Valley relating to or used by Pompton Valley in
connection with Pompton Valley's community newspaper publishing business. Mr.
Lawrence Grimes, the President and a director of the registrant, acted on
behalf of Pompton Valley as broker in the negotiation and consummation of this
transaction. In accordance with applicable Nevada law, the nature of Mr.
Grimes' relationship with Pompton Valley was fully disclosed to the directors
of the Company, and Mr. Grimes' vote was not counted for purposes of the
registrant's authorization of this transaction. Pursuant to the related asset
purchase agreement, INI agreed to pay any and all fees for services rendered by
Mr. Grimes to Pompton Valley.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
------ ----------- --------
<S> <C> <C>
3.1 Articles of Incorporation (under the name Included herein.
Micro Tech Industries Inc.)
3.2 Amendment to the Articles of Incorporated by reference in the
Incorporation filing of the Company's quarterly
report on Form 10-Q filed on May
15, 1997.
3.3 Bylaws of the Company (under the name Included herein.
Micro Tech Industries Inc.)
10.1 Stock Purchase Agreement dated February Incorporated by reference in the
6, 1997 between Joel Sens and Pocotopaug filing of the Company's current
Investment, Inc. report on Form 8-K filed on
February 10, 1997.
</TABLE>
10
<PAGE> 32
<TABLE>
<S> <C> <C>
10.2 Promissory Note and Pledge and Security Incorporated by reference in the
Agreement, each dated April 1, 1998 filing of the Company's quarterly
between Joel Sens and the Company. report on Form 10-Q filed on August
14, 1997.
10.3 Asset Purchase Agreement dated Incorporated by reference in the
September 29, 1997, among Independent filing of the Company's current
News, Inc., Next Generation Media Corp., report on Form 8-K filed on October
Pompton Valley Publishing Co., Joseph 8, 1997.
Nicastro and Joseph Pellegrino.
21.1 Subsidiaries of the Registrant Included herein.
24.1 Power of Attorney Included on the signature page
hereto.
27.1 Financial Data Schedule Included herein.
</TABLE>
The registrant did not file any reports on Form 8-K during the last quarter
of the period covered by this report.
11
<PAGE> 33
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
NEXT GENERATION MEDIA CORP.
Date: April 15, 1998 By: /s/ Larry Grimes
---------------------------------
Lawrence Grimes, President
(principal executive officer)
Date: April 15, 1998 By: /s/ Kenneth Brochin
---------------------------------
Kenneth Brochin, Secretary and
Treasurer (principal financial
officer)
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Larry Grimes and Kenneth Brochin, and
each of them, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign this annual report on Form 10-K, and to file
the same with all exhibits thereto, and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Larry Grimes President and Director April 15, 1998
- ------------------
Lawrence Grimes
/s/ Kenneth Brochin Secretary, Treasurer and April 15, 1998
- --------------------- Director
Kenneth Brochin
/s/ David Grossman Director April 15, 1998
- --------------------
David Grossman
/s/ Jeffrey Sens Director April 15, 1998
- ------------------
Jeffrey Sens
/s/ Joel Sens Director April 15, 1998
- ---------------
Joel Sens
</TABLE>
12
<PAGE> 34
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION/PAGE NUMBER
------ ----------- --------------------
<S> <C> <C>
3.1 Articles of Incorporation (under the name Micro Page
Tech Industries Inc.)
3.2 Amendment to the Articles of Incorporation Incorporated by reference in the filing of
the Company's Form 10-Q for the first
quarter, 1997, filed on May 15, 1997.
3.3 Bylaws of the Company
10.1 Stock Purchase Agreement dated February 6, 1997 Incorporated by reference in the filing of
between Joel Sens and Pocotopaug Investment, the Company's Form 8-K, filed on February
Inc. 10, 1997.
10.2 Promissory Note and Pledge and Security Incorporated by reference in the filing of
Agreement, each dated April 1, 1998 between Joel the Company's Form 10-Q for the second
Sens and the Company. quarter, 1997, filed on August 14, 1997.
10.3 Asset Purchase Agreement dated September 29, Incorporated by reference in the filing of
1997, among Independent News, Inc., Next the Company's Form 8-K, filed on October 8,
Generation Media Corp., Pompton Valley 1997.
Publishing Co., Joseph Nicastro and Joseph
Pellegrino.
21.1 Subsidiaries of the Registrant Page
24.1 Power of Attorney Page
27.1 Financial Data Schedule Page
</TABLE>
13
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION
of
MICRO TECH INDUSTRIES, INC.
--------------------
KNOW ALL MEN BY THESE PRESENTS:
That we, the undersigned, have this day voluntarily associated
ourselves together for the purpose of forming a corporation under and pursuant
to the laws of the State of Nevada, and we do hereby certify:
I
That the name of the corporation shall be:
MICRO TECH INDUSTRIES, INC.
II
That the principal office and place of business of this corporation shall
be located at 3407 W. Charleston Blvd., Las Vegas, Nevada 89102; and that KEVIN
M. KELLY, ESQ., shall be the Resident Agent in charge thereof.
III
That offices may be established and maintained in any other part of the
State of Nevada, or in any other state, territory, or possession of the United
States, or in any foreign country, for the transaction of any business of the
corporation.
IV
That the nature of the business and the objects and purposes proposed to be
transacted, promoted, or carried on by the corporation are, and shall continue
to be, to carry on and conduct any and all lawful activities or business; and to
develop and manufacture electronic components in accordance with the laws of the
State of Nevada and the United States of America.
V
That this corporation is authorized to issue 10,000 shares of common stock
at $.10 par value.
<PAGE> 2
VI
That the initial number of stockholders of this corporation is three (3) in
number. The number of directors shall not be less than the number of
stockholders. However, if the number of stockholders shall be increased to a
number in excess of three (3), the number of directors shall be correspondingly
increased, but may not be less than the number of stockholders, pursuant to the
terms of N.R.S. 78.115. The number of directors of this corporation may from
time to time be increased as set forth herein by an amendment to the By-Laws in
that regard, and without the necessity of amending these Articles of
Incorporation.
VII
That the names and addresses of the first board of Directors are as
follows:
1. Thomas F. McSharry, Jr., President/Treasurer; 2990 Carnelian Street,
Las Vegas, Nevada, 89121.
2. Patricia A. McSharry, Vice President; 2990 Carnelian Street, Las
Vegas, Nevada 89121.
3. Kevin M. Kelly, Secretary; 3407 W. Charleston, Las Vegas, Nevada
89102.
VIII
That the names and addresses of the incorporators signing these
Articles are as follows:
1. Thomas F. McSharry, Jr.; 2990 Carnelian, Las Vegas, Nevada 89121.
2. Patricia A. McSharry; 2990 Carnelian Street, Las Vegas, Nevada
89121.
3. Kevin M. Kelly; 3407 W. Charleston Blvd., Las Vegas, Nevada, 89102.
IX
That the capital stock, after the amount of the subscription price, or
par value, has been paid in, shall not be subject to assessment to pay the
debts of the corporation.
<PAGE> 3
X
That the corporation is to have perpetual existence.
XI
That in furtherance, and not in limitation, of the powers conferred by
statute, the Board of Directors is expressly authorized, subject to the
By-Laws, if any, adopted by the stockholders, to make, alter, or amend the
By-Laws of the corporation.
XII
That meetings of the stockholders may be held outside of the State of
Nevada at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the corporation.
XIII
That this corporation reserves the right to amend, alter, change, or
repeal any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed, and all rights conferred upon stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, we have hereunto set our hands this 14th day of
November, 1980.
/s/ THOMAS F. MCSHARRY, JR.
---------------------------
Thomas F. McSharry, Jr.
/s/ PATRICIA A. MCSHARRY
---------------------------
Patricia A. McSharry
/s/ KEVIN M. KELLY
---------------------------
Kevin M. Kelly
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this 14th day of November, 1980, personally appeared before me, a
Notary Public in and for said County and State,
<PAGE> 4
THOMAS F. McSHARRY, JR., PATRICIA A. McSHARRY, and KEVIN M. KELLY, know to me
to be the persons described in and who executed the foregoing instrument; and
they acknowledged to me that they executed the same freely and voluntarily, and
for the uses and purposes herein mentioned.
/s/ KAREN A. O'NEIL
- -------------------
NOTARY PUBLIC
[SEAL] Notary Public - State of Nevada
CLARK COUNTY
Karen A. O'Neil
My Appointment Expires Oct. 15, 1984
<PAGE> 1
EXHIBIT 3.3
BYLAWS
OF
MICRO TECH INDUSTRIES, INC.
ARTICLE I. Shareholders
Section 1. Annual Meetings
An Annual Meeting of Shareholders will be held within six (6) months
after the close of the fiscal year of the Corporation for the purpose of
electing Directors and transacting such other business as may come before the
meeting. The Annual Meetings will be held at the time and place fixed by the
Board.
Section 2. Special Meetings
A Special Meeting of Shareholders may be called for any purpose by the
President, or the Board, or by the holders of not less than one-tenth of the
shares entitled to vote at the meeting. The Special Meeting will be held at
the time and place fixed by the persons calling the Special Meeting.
Section 3. Time and Place of Meeting
If no designation of time and place is made by the persons calling an
Annual or Special Meeting of Shareholders, the place of meeting will be the
registered office of the corporation, and the time of meeting will be 10:00
a.m.
Section 4. Notice of Meeting
Written notice stating the time, place, and the purpose, will be
delivered not fewer than ten nor more than sixty days before the meeting date,
either personally or by mail, at the direction of and signed by the President
or Vice President or, the Secretary or Assistant Secretary, or persons calling
the meeting, to each Shareholder entitled to vote at the meeting. If mailed,
the notice will be deemed delivered when deposited, postage prepaid, in the
United States mail, addressed to the Shareholder at the address on the Stock
Transfer Books of the Corporation.
Section 5. Closing of Stock Transfer Books or Fixing
of Record Date
For the purpose of determining Shareholders entitled to notice of, or
to vote at, any meeting of Shareholders or any
<PAGE> 2
adjournment thereof, or Shareholders entitled to receive payment of any
dividend, or in order to make a determination of Shareholders for any other
proper purpose, the Board may close the Stock Transfer Books of the Corporation
for a stated period not to exceed 60 days. If the Stock Transfer Books are
closed for the purpose of determining Shareholders entitled to notice of, or to
vote at, a meeting of Shareholders, the Stock Transfer Books shall be closed
for at least 10 days immediately preceding the meeting, In lieu of closing the
Stock Transfer Books, the Board may fix in advance a date as the record date
for any such determination of Shareholders, the date to be not more than 60
days and, in case of a meeting of Shareholders, not fewer than 10 days, before
the date on which the particular action, requiring that determination of
Shareholders, is to be taken. If the Stock Transfer Books are not closed and
no record date is fixed for the determination of Shareholders entitled to
notice of, or to vote at, a meeting of Shareholders, or of Shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the Board declaring
the dividend is adopted, as the case may be, will be the record date for the
determination of Shareholders. When a determination of Shareholders entitled
to vote at any meeting of Shareholders has been made as provided in this
section, the determination will apply to any adjournment thereof.
Section 6. Quorum - Action
One-third of the shares entitled to vote, represented in person or by
proxy, will constitute a quorum at a meeting of Shareholders. If fewer than
one-third of the outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting until a quorum can be
obtained. At the adjourned meeting at which a quorum is present, any business
may be transacted which could have been transacted at the meeting as originally
convened. A quorum once attained continues until adjournment despite voluntary
withdrawal of enough shares to leave less than a quorum. If a quorum is
present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter will be the act of the
Shareholders unless the vote of a greater or lesser number of class voting is
required by the Law of the Corporation's state of incorporation.
Section 7. Voting
At all meetings of the Stockholders, every registered owner of shares
entitled to vote may vote in person or by proxy executed in writing by the
Shareholder or by the Shareholder's duly authorized attorney in fact, and will
have one vote for each
<PAGE> 3
such shares standing in the name of the Shareholder on the Stock Transfer
Books. At all elections of Directors, the voting will be by ballot. Proxies
will be filed with the Secretary of the Corporation before or at the time of
the meeting. No proxy will be valid after six months from the date of its
execution unless otherwise provided in proxy. A proxy may be revoked only by
filing with the Secretary an instrument revoking it or a duly executed proxy
bearing a later date. The Board or, if the Board shall not have made the
appointment, the chairman presiding at an meeting of Shareholders, will have
power to appoint two or more persons to act as inspectors to receive, canvass,
and report the votes cast by the Shareholders to determine the validity of
proxies at such meeting. No candidate for Director will be appointed as
inspector at any meeting at which Directors are elected.
ARTICLE II. Board of Directors
Section 1. Powers, Numbers, Tenure, Qualification and Election
The Directors will manage the business and affairs of the Corporation,
and may act only as a Board with each Director having one vote. The Board will
consist of not fewer than 3 nor more than 9 Directors who will be elected
annually by a plurality of the votes cast at the election by the Shareholders
at their Annual Meeting. The Directors will serve until their successors have
been elected and qualified. A Director need not be a Shareholder or a resident
of the sate of incorporation. A Director may be removed with or without cause
by the Shareholders or may resign.
Section 2. Annual Meetings
An Annual Meeting of the Board will be held without notice immediately
following the Annual Meeting of the Shareholders, or any adjournment thereof,
for the purpose of the organization of the Board, the election or appointment
of Officers for the coming year, and for the transaction of such other business
as may be brought before the meeting.
Section 3. Regular Meetings
The Board may provide by resolution for the holding of Regular
Meetings at which any business may be transacted. The resolution will set
forth the place and time for the meeting. No notice of Regular Meetings need
be given.
Section 4. Special Meetings
<PAGE> 4
Special Meetings of the Board may be called by any Director or
Officer, and will be held at the time and place fixed by the person calling the
Special Meeting. Notice stating the time, place and purpose of the Special
Meeting will be given by the person calling the Special Meeting at least
twenty-four hours before the Special Meeting time by written notice delivered
personally, or by mail, or by telegram, or by telephonic oral notice to each
Director. If mailed, the notice will be deemed to be delivered when deposited
in the United States mail, with postage thereon prepaid. If notice is given by
telegram, the notice will be deemed to be delivered when the telegram is
delivered to the telegraph company. If notice is given by telephone, the
notice will be deemed given if the telephone call is monitored by one other
Director.
Section 5. Quorum - Action
A majority of the number of Directors fixed by the Bylaws will
constitute a quorum at Board Meetings. A quorum once attained continues until
adjournment despite voluntary withdrawal of enough Directors to leave less than
a quorum. The act of a majority of the Directors present at a meeting at which
a quorum is present will be the act of the Board.
Section 6. Vacancies
Any vacancy occurring in the Board may be filled by the affirmative
vote of a majority of the remaining Directors even though the remaining
Directors constitute less than a quorum of the Board. Newly created
directorships may be filled by the Directors for a term of office continuing
only until the next election of Directors by the Shareholders.
Section 7. Compensation
The Board may by resolution pay the Directors their expenses, if any,
of attendance at each meeting of the Board, a fixed sum for attendance at each
Board meeting or a stated salary for services rendered as Director. No such
payment will preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 8. Presumption of Assent
A Director who is present at a Board meeting at which an action on a
corporate matter is taken will be presumed to have assented to the action taken
unless the Director's dissent is entered in the minutes or unless the Director
sends such dissent by registered mail to the Secretary of the Corporation
<PAGE> 5
immediately after the adjournment of the meeting. The right to dissent will
not apply to a Director who voted in favor of the action.
Section 9. Committees
The Board, by resolution adopted by a majority of the Board, may
appoint from among the Directors an Executive Committee and one or more other
Committees, each of which, to the extent provided in the resolution and by law,
will have and may exercise the authority of the Board. The Board may also
designate alternates to serve in the absence of a regular Member of a
committee. The Board reserves to itself alone the power to declare dividends
or authorize distributions; approve or recommend to shareholders actions or
proposals required by this act to be approved by shareholders; designate
candidates for the office of director, for purposes of proxy solicitation or
otherwise, or fill vacancies on the Board or any committee thereof; amend the
bylaws; approve a plan of merger not requiring shareholder approval; authorize
or approve the reacquisition of shares unless pursuant to general formula or
method specified by the Board; or authorize or approve the issuance or sale of,
or any contract to issue or sell, shares or designate the terms of a series of
a class of shares, provided that the Board, having acted regarding general
authorization for the issuance or sale of shares, or any contract therefor,
and, in the case of a series, the designation thereof, may, pursuant to a
general formula or method specified by the Board of resolution or by adoption
of a stock option or other plan, authorize a committee to fix the terms of any
contract for the sale of the shares and to fix the terms upon which such shares
may be issued or sold, including, without limitation, the price, the dividend
rate, provisions for redemption, sinking fund, conversion, voting or
preferential rights, and provisions for other features of a class of shares, or
a series of a class of shares, with full power in such committee to adopt any
final resolution setting forth all the terms thereof and to authorize the
statement of the terms of a series for filing with the commission under the
laws of the state of incorporation. A majority of the Members of a Committee
may fix its rules of procedure. All action by a Committee will be reported to
the Board at a Board meeting succeeding such action and will be subject to
revision by the Board, although no rights of third parties shall be affected by
any such revision.
ARTICLE III. Corporate Officers
Section 1. Number, Tenure, Qualification and Election
The Corporate Officers of the Corporation will be a President, one or
more Vice Presidents, a Secretary, a Chairman
<PAGE> 6
of the Board, a Treasurer, and such other Corporate Officers, including as the
Board may decide, each of whom will be elected annually by the Board at its
Annual Meeting to serve until their successors are elected and qualified.
Officers need not be Shareholders, or Directors, or residents of the state of
incorporation. An Officer may be removed with or without cause by the Board,
or may resign. Vacancies and newly created Offices will be filled by the
Board. One person may hold more than one Office, except as provided by the law
of the state of incorporation. Officers will perform the duties, and will have
the power and authority, assigned by the Board, incident to the Office, and
provided in these Bylaws. The chief executive officer of the Corporation will
be the Chairman of the Board or the President, as the Board may designate.
Section 2. Chairman of the Board:
If the Corporation has a Chairman of the Board, the Chairman of the
Board will, if present, preside at all meetings of the Shareholders and of the
Board of Directors, will have the same powers as the President, including the
power to sign documents on behalf of the Corporation, will be responsible for
over-all management of the corporate affairs, and during the absence or
disability of the President, may exercise all the powers and discharge all the
duties of the President.
Section 3. President:
The President will preside at all Corporation meetings, except
meetings at which the Chairman of the Board is present, and when authorized
will execute and deliver documents in the name of the Corporation.
Section 4. Vice Presidents:
The Vice President (or, if there is more than one Vice President, the
Vice Presidents in the order designated, or in the absence of any designation,
then in the order of their election) may perform the duties of the President
during the disability, absence or failure to act of both the Chairman of the
Board and the President. One Vice President may be designated as Executive
Vice President and, if so designated, will be responsible for day-to-day
management of the Corporation.
Section 5. The Secretary
The Secretary, or any Assistant Secretary during the absence,
disability or failure to act, of the Secretary, will: (a) keep the minutes of
the meetings of the Shareholders and the
<PAGE> 7
Board; (b) see that all notices are duly given in accordance with law and these
Bylaws; (c) be custodian of the corporate minutes, records, and seal; (d) keep
a register of the post office address of each Shareholder which will be
furnished to the Secretary by such Shareholder; (e) when authorized, execute,
attest, seal and deliver documents of the Corporation; and (f) have general
charge of the Stock Transfer Books of the Corporation.
Section 6. The Treasurer
The Treasurer, or any Assistant Treasurer during the absence,
disability or failure to act, of the Treasurer, will: (a) if required by the
Board, give a bond for the faithful discharge of the Treasurer's duties in such
sum and with surety or sureties as the Board will determine; (b) have charge
and custody of and be responsible for all funds and securities of the
Corporation; (c) receive and give receipts for moneys due and payable to the
Corporation from any source whatsoever; and (d) deposit all such moneys in the
name of the Corporation in such banks, trust companies, or other depositaries
as are selected in accordance with the provisions of these Bylaws.
Section 7. Compensation
The compensation of the Officers will be fixed from time t time by the
Board, giving due regard to the services performed as an Officer as
distinguished from services rendered as a Director or as an Employee. No
Officer will be prevented from receiving compensation for being an Officer
because the Officer is also a Director or Employee of the Corporation.
Compensation of employees will be established by the Chief Executive Officer.
ARTICLE IV. Share Certificates and Transfer
Section 1. Registered Shareholders
Each Shareholder is entitled to a certificate registered in the
Shareholder's name, signed by the Chairman of the Board, President or a Vice
President, and by the Secretary or an Assistant Secretary, sealed with the
corporate seal or a facsimile thereof, and representing the number of shares
owned by the Shareholder. If the certificate is countersigned or otherwise
authenticated by a transfer agent and a registrar, facsimile signatures of the
designated officers may be used. The Corporation may treat the person or
entity in whose name a certificate is registered on its books as the owner of
the shares represented by the certificate and as the person or entity
exclusively entitled to receive notifications, dividends or other
distributions, to vote and otherwise to exercise all the rights and powers of
Shareholders, with regard to those shares, and
<PAGE> 8
shall not be bound to recognize any adverse claim with regard to the shares
whether or not the Corporation has actual or other notice thereof.
Section 2. Form of Certificate
The Board will adopt the form of certificate to represent each class
of shares of the Corporation. Certificates will be numbered consecutively and
entered in the books of the Corporation as they are issued. Each certificate
will state on its face the fact that the Corporation is a corporation of the
state of its incorporation, the name of the holder in whose name the
certificate is registered, the number of the certificate, the class and series
of shares represented by the certificate, the number of shares represented by
the certificate and, if applicable, the par value (or a statement that the
shares are without par value) of the shares represented by the certificate. If
more than one class of shares are outstanding, all certificates of every class
will state that the Corporation will furnish to any Shareholder upon request
and without charge a full statement of the designations, relative rights,
preferences and limitations of the shares of each class authorized to be issued
by the Corporation.
Section 3. Shareholder Records, Stock Transfer Books,
Transfer Agents and Registrars
Share transfer and issuance will be done by the Secretary, or the
Secretary's designee, in the manner provided by the law of the state of
incorporation. The Board may appoint Transfer Agents and Registrars for the
Transfer and registration of certificates representing any class of shares of
the Corporation and may require that any share certificate be countersigned by
a Transfer Agent or registered by a Registrar. If any Officer who signed, or
whose facsimile signature was placed on any certificate, has ceased to be that
Officer before the certificate is issued, the certificate may nevertheless be
issued with the same effect as if the person continued to be that Officer at
the date of issue. The name and address of the person to whom the certificate
is issued, the number and class of shares represented by the certificate, the
date of issuance of the certificate, and any shareholders from whom the shares
are transferred, will be entered on the stock transfer books of the
Corporation.
Section 4. Lost, Destroyed or Stolen Certificates
New share certificates may be issued in place of any certificate
previously issued by the Corporation which is alleged to have been lost,
destroyed or stolen, upon (a) the execution
<PAGE> 9
and delivery to the Corporation by the person claiming the certificate to have
been lost, destroyed or stolen of an affidavit of that fact, specifying whether
or not at the time of such alleged loss, destruction or theft, the certificate
was endorsed; and (b) the furnishing to the Corporation of indemnity
satisfactory to the Corporation, and to all Transfer Agents and Registrars of
the class of shares represented by the certificate, against any and all losses,
damages, costs, expenses or liabilities to which they or any of them may be
subjected by reason of any claim which may be made in respect of the old
certificate.
Section 5. Registration of Transfer
Shares will be transferred only on the Stock Transfer Books of the
Corporation. No transfers of fractional shares may be made. Upon surrender to
the Corporation, or any Transfer Agent for the class of shares represented by
the certificate surrendered, of a certificate properly endorsed for
registration of transfer, accompanied by such assurances as the Corporation or
Transfer Agent may require as to the genuineness and effectiveness of each
necessary endorsement, and satisfactory evidence of compliance with all
applicable laws relating to the collection of taxes and securities
registration, the Corporation or Transfer Agent will issue a new certificate,
and record the transaction upon its books, thereby registering the transfer.
ARTICLE V. Monetary Matters
Section 1. Funds and Borrowing
The depository for corporate funds, the persons entitled to draw
against these funds, the person entitled to borrow on behalf of the
Corporation, and the manner of accomplishing these matters will be determined
by the Board.
Section 2. Fiscal Year
The fiscal year of the Corporation will begin on the first day of
September of each year and end on the last day of August of each year.
ARTICLE VI. Waiver of Notice
Whenever any notice is required to be given to any Shareholder,
Director or Committee Member, a waiver thereof in writing signed by the person
entitled to the notice is equivalent to the giving of the notice. The
attendance of a Shareholder in person or by proxy, or of a Director, or of a
Committee Member, at a meeting constitutes a waiver of notice of the meeting
except
<PAGE> 10
when attendance is for the sole purpose of objecting because the meeting is not
lawfully called or convened.
ARTICLE VII. Seal
The Board may adopt a corporate seal which the Corporation may use by
impressing or affixing it or a facsimile thereof, but the failure to have or
affix a corporate seal does not affect the validity of any instrument or any
action taken in reliance thereon or in pursuance thereof.
ARTICLE VIII. Action Without a Meeting
Any action required or permitted to be taken at a meeting of Directors
or of a Committee may be taken without a meting if a consent in writing setting
forth the action so taken is signed by all of the Directors or all the Members
of the Committee, as the case may be.
ARTICLE IX. Interested Parties
No transaction of the Corporation will be affected because a
Shareholder, Director, Officer or Employee of the Corporation is interested in
the transaction, and no interested party will be liable to the Corporation for
the party's profits, or for the Corporation's losses, from the transactions if
(i) (x) the interest is disclosed to the Corporation before the transaction and
noted in the minutes, (y) the interested party does not participate in the
Corporation's decision whether to enter into the transaction, and (z) the
transaction is approved by a vote sufficient for the purpose for Directors
present and not interested in the transaction or (ii) the transaction is fair
as to the Corporation at the time it is approved.
ARTICLE X. Indemnity
I. The Corporation will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative, or investigative,
other than an action by or in the right of the Corporation (collectively an
Action), by reason of the fact that the person is or was a Director, Officer,
Employee or Agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, agent or committee member of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
an Action, if the person acted in
<PAGE> 11
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal Action had no reasonable cause to believe the conduct was unlawful.
The termination of any Action by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, will not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal Action, had reasonable cause to
believe that the conduct was unlawful.
II. The Corporation will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor
(collectively a Suit) by reason of the fact that the person is or was a
Director, Officer, Employee or Agent or the Corporation, or is or was serving
at the request of the Corporation as director, officer, employee, agent or
committee member of another corporation, partnership, joint venture, trust, or
other enterprise, and against expenses (including attorneys' fees) actually and
reasonably incurred by the person in connection with the defense or settlement
of the Suit if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification will be made in respect of any
claim, issue or matter as to which the person will have been adjudged to be
liable for negligence or misconduct in the performance of the person's duty to
the Corporation unless and only to the extent that the court in which the Suit
was brought determines upon application that, despite the adjudication of
liability that in view of all circumstances of the case, the person is fairly
and reasonably entitled to indemnity for such expenses which such court deems
proper.
III. Any indemnification (unless ordered by a court) will be made by the
Corporation upon a determination that indemnification of the person is proper
under the circumstances because the person has met the applicable standards of
conduct set forth in subsections A or B. This determination will be made (i)
by a majority of Directors who were not parties to the Action or to the Suit
(if a quorum consisting of at least two disinterested Directors is present) or
(ii) is such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested Directors so directs, by independent legal counsel, selected by
the disinterested quorum, or if none exists, by the Corporation's President, in
a written opinion, or (iii) by the Shareholders.
<PAGE> 12
IV. Expenses (including attorneys; fees) incurred in defending an Action
or a Suit will be paid by the Corporation in advance of the final disposition
of such Action or Suit as authorized in the manner provided in subsection C
upon receipt of an undertaking by or on behalf of the person to repay such
amounts unless it is ultimately determined that the person is entitled to be
indemnified by the Corporation as authorized in this section.
V. This indemnification provided by this section is not exclusive of any
other rights to which the person may be entitled under any vote of Shareholders
or otherwise, both as to action in the person's official capacity and as to
action in another capacity while holding the office, and will continue as to a
person who has ceased to be a Director, Officer, Employee, Agent or Committee
Member and will inure to the benefit of the heirs, and personal representatives
of such a person.
VI. The Corporation may purchase and maintain insurance on behalf of any
person who is or was a Director, Officer, Employee or Agent of the Corporation,
or is director, officer, employee, agent or committee member of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred in any such capacity or
arising out of the person's status as such, whether or not the Corporation
could indemnify the person under the foregoing provisions.
ARTICLE XI. Amendments
These Bylaws may be altered, amended or repealed by the Board unless
the power to do so is reserved to the Shareholders by the Articles of
Incorporation.
Secretary's Certificate
I certify the foregoing to be the true copy of the Bylaws duly adopted
by the Corporation on April 20, 1983.
/s/ Thomas F. McSharry, Jr.
---------------------------
Secretary
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARY OF THE CORPORATION
Independent News, Inc., a Delaware corporation.
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