<PAGE>
Page 1 0f 28
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Period Ended: MARCH 31, 1996
--------------
Commission File No.: 33-128
------
SYNERGY MEDIA, INC.
---------------------
(Exact name of registrant as specified in its charter.)
NEVADA 87-0443269
------ ----------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
260 REGENCY PARKWAY, SUITE 220 OMAHA, NEBRASKA. 68114
-----------------------------------------------------
Registrant's telephone number, including area code: (402) 343-0195
--------------
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 X No
------ ------
The number of shares outstanding of the issuer's Common Stock:
Class: Outstanding (at May 14, 1996)
------ ------------------------------
Common Stock, 4,010,475
$0.001 par value
<PAGE>
Page 2 0f 28
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
ITEM 1
Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II: OTHER INFORMATION
Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . . .12
Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . .12
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . .15
<PAGE>
Page 3 0f 28
PART I
Item 1: Financial Statements
SYNERGY MEDIA, INC. FINANCIAL STATEMENTS (UNAUDITED)
The financial statements included herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. However, in the opinion
of management, all adjustments (which include only normal recurring accruals)
necessary to present fairly the financial position and results of operations for
the periods presented have been made. These financial statements should be read
in conjunction with the accompanying notes, and with the historical information
of the Company.
<PAGE>
Page 4 0f 28
SIERRA SOLIDS, INC.
(A Development Stage Company)
Balance Sheets
(Unaudited)
March 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
CURRENT ASSETS $ -0- $ -0-
OTHER ASSETS -0- -0-
Investment in Subsidary 200,257
----------- ---------
Total Assets $ 200,257 $ -0-
----------- ---------
----------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Bank Overdraft $ 30,945 $
Accounts Payable 104,087 15,146
----------- ---------
Total Current Liabilities $ 135,032 $ 15,146
Stockholder's Equity
Common Stock 50,000,000
Shares Authorized at $0.001 Par Value
4,621,412 Shares Issued and Outstanding $ 1,372 $ 4,621
Paid in Capital 879,005 436,599
Deficit Accumulated
In the Development Stage (815,152) (456,366)
----------- ---------
Total Stockholder's Equity 65,225 15,146
----------- ---------
Total Liabilities and Stockholder's Equity $ 200,257 $ -0-
----------- ---------
----------- ---------
</TABLE>
<PAGE>
Page 5 0f 28
SIERRA SOLIDS, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
March 31, 1996 and 1995
<TABLE>
<CAPTION>
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
<S> <C> <C>
Revenues
Sales $ -0- $ -0-
Interest -0- -0-
----------- ---------
Total Revenues $ -0- $ -0-
Expenses
Cost of Sales $ -0- $ -0-
Professional Fees 214,804 3,418
Interest Expense 13,187
Administration & General Expenses 1,053 256
----------- ---------
Total Expenses 229,045 13,674
----------- ---------
Net Loss $ 229,045 $ 13,674
----------- ---------
Weighted Average Shares Outstanding 1,127,506 4,621,412
Loss Per Share (0.20) (0.00)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Page 6 0f 28
SIERRA SOLIDS, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
For the Three Months Ended
March 31, 1996 and 1995
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Cash Flow from Operating Activities
Net Loss $ (229,045) $ (13,674)
Adjustments to Reconcile Net Income
to Net Cash Used by Operating Activities -0- -0-
Changes in Operating Liabilities:
Increase in Accounts Payable 95,169 13,126
----------- ---------
Net Cash Used by Operating Activities (133,876) (548)
Cash Flows from Investing Activities (200,257) -0-
Cash Flows from Financing Activities 410,000 548
Reduction in Debt (106,813)
----------- ---------
Increase (Decrease) in Cash (30,945) -0-
Cash at Beginning of Period -0- -0-
----------- ---------
Cash at end of Period $ (30,945) $ -0-
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
Page 7 0f 28
SIERRA SOLIDS, INC.
(A Development Stage Company)
Notes to Financial Statements
NOTE #1 - ORGANIZATION
The Company was incorporated under the laws of the state of Nevada on
February 24, 1987, using the name Sussex Enterprises, Inc. The Articles of
Incorporation grant the Corporation authority to engage in any lawful business
or activity which may be conducted under the laws of the State of Nevada or any
other state or nation wherein the Corporation shall be authorized to transact
business.
On February 19, 1988, the Company entered into a plan and Agreement of
Merger with Sierra Solids, Inc., a California Corporation, wherein the Company
issued 3,000,000 shares of its common stock for all of the outstanding shares of
Sierra Solids, Inc.
On March 9, 1988, Articles of Amendment were filed changing the name to
Sierra Solids, Inc.
The company had limited operations in l988, but produced no significant
revenue and is considered to be a development stage company.
NOTE #2 - SIGNIFICANT ACCOUNTING POLICIES
(1) Depreciation on assets has been recorded using the straight-line
method.
(2) The Company uses accrual method of accounting.
(3) Revenues and expenses are recognized in the period in which they
occur.
(4) The Company has had no noncash investing and financing activities.
(5) The Company considers all short term, highly liquid investments that
are readily convertible within 90 days, to known amount as cash. (The Company
currently has no liquid investments.)
NOTE #3 - BANKRUPTCY
On September 26, 1989, the Company's Board of Directors adopted a
resolution directing the Company to file a voluntary bankruptcy petition under
Chapter 7 of the Bankruptcy code in the United States Bankruptcy Court of the
Northern District of California. The petition was filed September 27, 1989, and
a final decree was filed on December 1, 1989.
<PAGE>
Page 8 0f 28
SIERRA SOLIDS,INC.
(A Development Stage Company)
Notes to Financial Statements
-Continued-
NOTE #4 - LOSS CARRYFORWARD
The Company has adopted FASB 109 to account for income taxes. Because of
the uncertainties of using any of its tax loss carryforward, the Company has
elected to reserve at 100% any tax asset that may arise from the application of
FASB 109.
The Company has net loss carryforwards for income tax purposed as follows:
<TABLE>
<CAPTION>
Year of Loss Amount Expiration Date
------------ ------ ---------------
<S> <C> <C>
1988 $ 442,027 2003
1989 -0- 2004
1990 -0- 2005
1991 -0- 2006
1992 -0- 2007
1993 -0- 2008
1994 663 2009
1995 143,416 2010
</TABLE>
<PAGE>
Page 9 0f 28
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Synergy Media, Inc. (the "Registrant" or "Company") was incorporated under the
laws of the state of Nevada on February 24, 1987, under the name Sussex
Enterprises, Inc. The Company was initially organized to act as a vehicle for a
company to use to become a public entity. The Company filed a registration
statement on Form S-18 with the Securities and Exchange Commission and proposed
to raise a minimum of $250,000 and a maximum of $375,000 through the sale of its
common stock, par value $0.001 per share (the "Common Stock"), at a sale price
of $0.50 per unit, with each unit consisting of one share of Common Stock and a
warrant to purchase another share of Common Stock at $1.00 per share. The
exercise term on the warrants has expired. The registration statement was
granted an effective date of June 16, 1987. On September 16, 1987, the Company
completed its offering.
On October l9, 1987, the Company entered into an Agreement and Plan of
Reorganization with Greenhill Music, Inc., a Colorado corporation ("Greenhill"),
engaged in the music recording industry. The Company advanced $20,000 to
Greenhill in anticipation of the merger but terminated the agreement before it
was submitted to the subscribers of the Company's public offering. Subsequently,
on February 19, 1988, the Company entered into a Plan and Agreement of Merger
with Sierra Solids, Inc., a California corporation ("Sierra"), wherein the
Company issued 3,000,000 shares of its Common Stock for all of the outstanding
shares of Sierra. On March 9, 1988, the Company filed Articles of Amendment
changing the name of the Company to Sierra Solids, Inc.
After the merger with Sierra, the Company was engaged in bulk nutritional and
over-the-counter contract manufacturing services to the pharmaceutical and food
industries. Unfortunately, the Company was unable to obtain the needed funds to
properly run its business and was forced to file a voluntary bankruptcy in the
Northern District of California, case number 4-89-04373 TS-2. The petition was
filed September 27, 1989, and a final decree was filed on December l, l989.
After the bankruptcy, the Company discontinued operations and has had no
business operations from the time of the bankruptcy until December l, 1995. On
April 22, 1996, the Company filed Articles of Amendment changing the name of the
Company to Synergy Media, Inc.
On April 4, 1996, the Registrant consummated a merger between its wholly owned
subsidiary and Synergy Communications, Inc., an Internet service provider.
For the first three months of 1996, ending March 31, 1996, the Company had a net
loss of $229,045. The majority of the expenses were for consulting work after
management began identifying potential acquisition candidates. During the first
quarter, the consultants were also granted 1,712,500 options converting @ $0.05
(which have registration rights) and 1,605,000 warrants converting @ $1.00 (with
no registration rights). Subsequent to end of the quarter, the Company issued
1,143,279 warrants converting @ $ 1.00 and 120,000 warrants converting @ $3.00.
The activities are described below.
<PAGE>
Page 10 0f 28
Over the next 11 to 12 month period, the Registrant anticipates it will require
approximately $10.0 million of capital to complete proposed transactions in its
business plan. At the present time, the Registrant does not have sufficient
capital to complete the transactions. The Registrant is currently in discussions
with potential investors about the possibility of their investing such capital.
There can be no assurances that necessary funds will be raised for the
acquisitions. If the Registrant is successful in making the contemplated
acquisitions, there may be substantial capital requirements to fund capital
expenditures and/or losses generated from the combined businesses.
The approximate financial requirements with each of the acquisitions is
contained below.
SYNERGY COMMUNICATIONS, INC.
In April 1996 the Registrant consummated a merger with Synergy Communications,
Inc. ("SynergyCom") through a wholly owned subsidiary. For the transaction, the
SynergyCom shareholders were issued 750,000 shares of the Company's common stock
(these shares have piggy back registration rights and demand rights within one
year), the Registrant released $171,000 of notes due to the Company from
SynergyCom, and committed to sell 400,000 shares to employees for $0.3636 per
share (which are yet to be issued and have no registration rights). There may be
substantial capital required to fund capital expenditures to meet the Company's
growth plans, and there is no assurance any capital will be available to meet
these plans.
COMMUNICATION SYSTEMS GROUP, INC.
Also in April 1996 the Registrant acquired 100% of the capital stock of
Communication Systems Group, Inc. ("CSG"). The terms of the agreement were to
issue CSG shareholders 700,000 shares of the Company's common stock (these
shares have piggy back registration rights) and $204,000 (of which $ 100,000 was
paid at closing and $104,000 being paid over six months following the closing).
There may be substantial capital required to fund capital expenditures to meet
the Company's growth plans, and there is no assurance any capital will be
available to meet these plans, nor is there any assurance of available capital
to meet the additional payments.
INNOVATIVE CONSULTANTS, INC.
The Registrant entered into a letter of intent in May 1996 to acquire 100% of
the capital stock of lnnovative Consultants, Inc. ("Innovative"). The terms of
the agreement are to issue Innovative shareholders 25,000 shares of the
Company's common stock (these shares have no registration rights) and $125,000
paid to Innovative creditors. Although Closing of the transaction should be
consummated by June 15, 1996, there is no assurance the necessary capital will
be available to consummate this acquisition.
RESULTS OF OPERATIONS:
CAPITAL RESOURCES & LIQUIDITY: As of December 31, 1995, the Company had no
assets and liabilities of $115,731. Liabilities increased to 135,032 on March
31, 1996, as a result of the cost of consulting work.
<PAGE>
Page 11 0f 28
In order for the Company to be adequately capitalized for its new business plan,
it has undertaken to sells shares of its common stock both in the United States
under Regulation D and outside of the United States to an institution who is not
a U. S. person pursuant to offerings under Regulation S of the Securities Act of
1993 as amended.
During the first quarter of 1996, the Registrant sold 1,127,500 shares for a
price of $0.3636 (of which 275,000 were Regulation S). The Company determined,
after discussions with various investors, this was the best available price at
the time, given the condition of the Company. Subsequent to end of the first
quarter of 1996, and up to the date of filing, the Registrant sold 137,500
shares for a price of $0.3636 (all of which were Regulation S), 266,666 shares
for a price of $0.75 (133,333 of which were Regulation S) and 66,667 shares for
a price of $ 1.50 (all of which were Regulation S). 100,000 warrants @ $ 1.00
and 100,000 warrants @ $3.00 were also issued for financing. The Company
determined, after discussions with various investors, this was the best
available price at the time, given the condition of the Company.
In order to accomplish the goals in the current business plan, the Company must
raise a significant amount of capital. At this time management is yet to make
definite arrangements to provide the required financing. Also, the Company is
unsure whether such financing will be accomplished through the use of debt or
equity. This determination could have a substantially dilutive impact on the
Registrant's shareholders.
At the present time, the Registrant has limited liquid assets. It is highly
unlikely that these assets could provide liquidity required for the contemplated
acquisitions. If the Registrant fails to raise any capital or consummate any
additional acquisitions, there is a possibility that the Registrant would not
operate as a going concern.
MATERIAL CHANGES IN FINANCIAL CONDITION: The financial condition of the Company
as of the quarter end reflects its status as a non-operating Company which was
seeking acquisitions. During the first quarter the Registrant raised a total of
$410,000 from the sale of the Company's common stock. The majority of these
funds have been expended to pay for the loans designed to
lead to business operations for the Company, to pay operating expenses of
consultants and advisors to the Company, some of whom are affiliates or
shareholders, and repay a $100,000 loan (plus $20,000 finance fee). Events
subsequent to quarter end have resulted in funds of $350,000 from the sale of
shares of the Company's common stock. The majority of these funds have been
expended to pay for the purchase of investments designed to lead to business
operations for the Company, to pay operating expenses, payments to consultants
and advisors of the Company, some of whom are affiliates or shareholders. See
the description in Item 13. Certain Relationships and Related transactions.
The Company's ultimate success in pursuing is new business plan will depend on
its ability to raise capital.
<PAGE>
Page 12 0f 28
PART II
ITEM 1. LEGAL PROCEEDINGS
Synergy Communications has the following litigation pending:
MICHAEL SHONKA VS SYNERGY COMMUNICATIONS, INC.
The original petition was filed on December 11, 1995 in the County Court of
Douglas County (Nebraska), and was subsequently dismissed. The petition was
then refiled on April 9, 1996 in District Court of Douglas County
(Nebraska), and at the date this filing is in the preliminary stages of
pleading.
Shonka sued Synergy pursuant to an alleged oral contract for the recovery
of the following:
1. $30,000 salary per year (not specified for number of years).
2. Recovery of 8% of gross sales of Synergy (not limited in time).
3. Recovery of 20% of Synergy stock.
4. Recovery of incidental expenses.
Mr. Shonka was a sales employee for Synergy in the first and second quarters,
1995. Mr. Shonka resigned from Synergy in June, 1995 after refusing to sign the
company's standard employment agreement and unsuccessfully demanding increased
compensation terms. Synergy denies all allegations and at no time promised
Shonka the items which he is requesting, and the Company is planning to
vigorously defend itself in this action.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
NAME CHANGE
On April 22, 1996, the Registrant filed Articles of Amendment changing the name
of the Company to Synergy Media, Inc.
POTENTIAL ACQUISITION
The Registrant entered into a letter of intent in May 1996 to acquire 100% of
the capital stock of lnnovative Consultants, Inc. ("Innovative"). The terms of
the agreement are to issue Innovative shareholders 25,000 shares of the
Company's common stock (these shares have no registration rights) and $125,000
paid to Innovative creditors. Although Closing of the transaction should be
<PAGE>
Page 13 0f 28
consummated by June 15, 1996, there is no assurance the necessary capital will
be available to consummate this acquisition.
<PAGE>
Page 14 0f 28
SIGNATURES
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.
SYNERGY MEDIA, INC.
/s/ Michael S. Luther May 16. 1996
- ------------------------------ ----------------
By: Michael S. Luther Date
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Michael S. Luther May 16, 1996
- ------------------------------- ----------------
By: Michael S. Luther Date
Chairman
/s/ Lois Meridith May 16. 1996
- ------------------------------- ----------------
By: Lois Meridith Date
Secretary, Treasurer and Director
<PAGE>
Page 15 0f 28
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a). PRESS RELEASES
1. Press Release, dated February 26, 1996
2. Press Release, dated April 4, 1996
3. Press Release, dated April 10, 1996
4. Press Release, dated April 11, 1996
5. Press Release, dated April 25, 1996
6. Press Release, dated May 1, 1996
7. Press Release, dated May 7, 1996
(b). FORM 8-K REPORTS
1. Incorporated by reference to exhibits of Registrant's current report
on Form 8-K dated April 18, 1996.
2. Incorporated by reference to exhibits of Registrant's current report
on Form 8-K dated May 8, 1996.
(c). OTHER
1. Letter of Intent to purchase Innovative Consultants, Inc., dated May
7, 1996.
2. Certificate of Amendment for the articles of incorporation of Sierra
Solids, Inc.to change Registrant's name to Synergy Media, Inc., dated
April 22, 1996.
<PAGE>
Page 16 0f 28
SYNERGY MEDIA, INC. NEWS RELEASE
- -------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media FOR IMMEDIATE RELEASE
402.346.4638
[email protected]
SIERRA SOLIDS ENTERS MERGER AGREEMENT
WITH SYNERGY COMMUNICATIONS, INC.
OMAHA, Neb. -- (BUSINESS WIRE)--Feb. 26, 996--Sierra Solids, Inc. (OTC:
SISD), which has moved its headquarters to 260 Regency Pkwy., Ste. 220, Omaha,
NE 68114, announced it has entered into a merger agreement with Synergy
Communications, Inc. ("Synergy") of Omaha.
Sierra Solids received the option to merge in conjunction with loaning
Synergy $171,000. The merger is anticipated to be consummated on or about March
1, 1996. Following the merger there will be 3,547,141 shares outstanding and 1
million warrants to purchase stock at $1 per share.
Synergy, formed in 1993 by James R. Saker Jr., offers Internet services to
businesses and individuals and Internet-based commerce using an online mall.
Synergy's focus is on business consumers with merchant processing and
communications architectures.
Synergy is one of the few network service providers (NSP) in the United
States allowing it to fully maintain and manage network connections. Synergy
has established the Midwest's first network service provider with connections
throughout Nebraska, Iowa, Missouri, Minnesota and Virginia and operates
national backbone facilities connecting to major peering facilities in
Washington, D.C.; Santa Clara, Calif.; and St. Louis, Mo.
Synergy was an early member of CIX, Commercial Internet Exchange, which
gives the economy recognition as an established provider of network services.
CONTACT: Sierra Solids, Inc.
Edward J. Jarzobski or Lois Meridith, 402/343-0195
<PAGE>
Page 17 0f 28
SYNERGY MEDIA, INC. NEWS RELEASE
- -------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media FOR IMMEDIATE RELEASE
402.346.4638
[email protected]
SYNERGY ANNOUNCES CONSUMMATION OF MERGER
OMAHA, NEBRASKA -- APRIL 4, 1996--Sierra Solids (OTC:SISD) announced it has
consummated its merger between its wholly owned subsidiary and Synergy
Communications, Inc., a leading regional Internet service provider based in
Omaha, Nebraska. The Directors have approved a name change from Sierra Solids
Inc. to Synergy Media Inc. ("Synergy Media").
Synergy Media is moving to solidify its position as a leading provider of
Internet services. It plans to expand its current network infrastructure to key
markets throughout the United States. Synergy Media will continue to provide
high-end data communications solutions for commercial and federal clients
nationwide.
Dimensions Enterprises Inc., a strategic Internet consulting firm with
headquarters in Herndon, Virginia, is providing both backbone engineering and
strategic consulting services for the merger.
James R. Saker, Jr., founder of Synergy Communications Inc. Has been named to
the board and appointed CEO of Synergy Media Inc. Michael S. Luther and Brian
R. Barger, Omaha investment and merchant bankers, are existing board members.
Newly-appointed board members include Anders Ulegard, Chairman of Quaestus S.A.,
a Geneva based investment firm; Lois Meridith, private investor; Edward
Jarzobski, investment analyst; Brian Brown, Director of Business Development and
Strategic Ventures of Dimension Enterprises Inc.; and Susan Fitzgerald, Vice
President of Dimensions Enterprises and Executive Director of the Commercial
Internet Exchange Association.
Contact: Synergy Media Inc.
James R. Saker, Jr., 402/346-4638
<PAGE>
Page 18 of 28
SYNERGY MEDIA, INC. NEWS RELEASE
- --------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media FOR IMMEDIATE RELEASE
402.346.4638
[email protected]
SYNERGY NAMES NEW PRESIDENT
Wednesday, April 10, 1996
[Omaha] - Synergy Media Inc. (OTC:SISD) today announced the appointment of Tim
Hammelman to the position of President and Chief Operating Officer of Synergy
Communications, Inc., a wholly-owned subsidiary of Synergy Media, Inc.
Hammelman, who will also serve on the company's board of directors, will oversee
the company's Internet services operations, including corporate media and access
services and the expansion of the company's national network.
"Tim brings an extensive focus on information technology management to Synergy,"
said James R. Saker Jr., Chief Executive Officer of Synergy Media, Inc. "His
experience in managing large-scale information technology organizations will
greatly assist Synergy in its expansion as a dominant national provider of
Internet media services."
Hammelman joins Synergy after serving as Associate Director of the Omaha-based
Applied Information Management Institute (AIM), a Midwest center for information
technology. Through his involvement at the AIM Institute, Hammelman facilitated
the development of new services, including the CareerLink online employment
database and initiated dialog betweem information technology leaders and the
academic community.
Previous to coming to Omaha to help establish the AIM Institute, Hammelman
directed telecommunications and application development for Agribank of
Minneapolis, managed information systems for Marshfield Clinic in Wisconsin, and
was an information systems consulted to national and international technology
industries.
<PAGE>
Page 19 of 28
SYNERGY MEDIA, INC. NEWS RELEASE
- --------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media FOR IMMEDIATE RELEASE
402.346.4638
[email protected]
SYNERGY ANNOUNCES INTENT TO ACQUIRE
COMMUNICATION SERVICES GROUP
MICROWAVE ACQUISITION TO LAUNCH WIRELESS INTERNET NETWORK
Omaha, Neb. - APRIL 11, 1996 - Synergy Media Inc. (OTC:SISD), an Omaha based
Internet communications provider, announced its intent to acquire Phoenix based
Communications Systems Group (CSG).
CSG is a high speed wireless communications integrator that offers high speed
microwave and spread spectrum solutions as an alternative to conventional
communications services, such as traditional leased line services from local
exchange and long distance providers.
Synergy Media CEO, James R. Saker Jr., sees this acquisition, valued at
$904,000, as a key strategic addition to services they provide their customers.
"We've seen a tremendous increase in the bandwidth requirements of businesses on
the Internet," said Saker. "Many businesses are simply being priced out of the
loop by the expense of high-performance network facilities. We believe that
microwave technology provides an opportunity to deliver high performance
connections from DS1 (1,544 Mbps) to OC3 (155,000 Mbps) to our clients at a cost
significantly under traditional carriers."
While initial competition in local access markets by competitive access
providers (CAP) such as Metro Fiber Systems and Teleport Communications Group
has reduced some expenses, their impact has been limited by the extent of the
networks.
"Companies directly on a competitive access provider's network can benefit from
their cost-effective products, but if you're more than a few miles off of their
ring, you're left with no other option but the local telephone company," Saker
said. "We're excited about the opportunity of our microwave network to
complement a CAP's network and bring strong Internet and voice access to
companies that are presently out of service range."
The acquisition positions Synergy Media to become the first network service
provider of Internet access to control both the long distance backbone and the
local connection to the customer.
"I believe this control not only allows us to offer a more competitive, better
managed product to our business customers, but it offers our shareholders
significant value in that we will be one of a very limited few Internet
providers that owns the network from the ground up," Saker said.
<PAGE>
Page 20 of 28
Upon completion of the acquisition, Communications Systems Group will be renamed
CSG Wireless to better reflect their focus. The management team for CSG Wireless
will remain Ken McLeod, President; John Gorman, Sr. Vice President, Business
Development and Operations; Al Pheltz, Vice President Sales and Marketing and
Rich Gonzales, Director, Technical Services.
<PAGE>
Page 21 of 28
SYNERGY MEDIA, INC. NEWS RELEASE
- --------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media FOR IMMEDIATE RELEASE
402.346.4638
[email protected]
SYNERGY ACQUIRES CSG WIRELESS
ACQUISITION LAUNCHES CONVERGENCE COMMUNICATIONS NETWORK
Thursday, April 25, 1996 [Omaha] Synergy Media Inc. (OTC:SISD), an Omaha based
communications provider, announced that it has acquired Phoenix based
Communications Systems Group (CSG).
Started as a division of Random Access, CSG had built its wireless business by
servicing medium and large corporate clients with high performance wireless
communication solutions.
"What separates CSG wireless from the traditional microwave or spread spectrum
vendor is that our focus is on the integration of wireless into the customer's
network," said Ken McLeod, President of CSG Wireless. "We have the ability to
not only provide the most cost effective technology, but we can integrate our
equipment into their networking environment and deliver a complete solution."
The acquisition of CSG positions Synergy Media to launch its wireless Internet
and voice network, implementing both local carrier bypass services as well as
regional backbone connections.
"Phone companies love Internet providers - we're always buying their service to
connect our customers to our network," said James Saker, Chief Executive Officer
of Synergy Media. "By deploying CSG's technology at the customer site, we turn a
major cost center into a profit center."
In addition to allowing Synergy to bypass local exchange carrier networks, the
wireless technologies also allow the company to introduce next-generation voice
and data Internet service.
"We've seen a real opportunity to introduce a next generation network using
wireless technologies," Saker said. "Today, Internet consumers are being
pressured by rapidly growing bandwidth requirements, especially as more business
is conducted on the Internet. Instead of growing with the demand, much of the
older generation network providers are collapsing under the added weight.
Wireless has a key role in the rollout of the next generation network."
Using wireless technology, Synergy will provide connections with 6 to 72 times
more capacity than traditional "T1" service, commonly used to connect companies
to the Internet. Combining these high-capacity connections with new routing
protocols, Synergy expects to create a network product that provides the first
full quality of service guarantee in the industry.
<PAGE>
Page 22 of 28
"One of the greatest opportunities Synergy has is building a new network based
on the lessons learned by the older Internet network providers" Saker said.
"It's a revolution similar to the introduction of the airline spoke-and-hub
model, allowing us to offer first class service while realizing one of the
lowest cost-per-seat elements in the industry."
Through the acquisition, CSG has become a wholly-owned subsidiary of Synergy
Media, Inc., with CSG offices in Phoenix and Omaha. Ken McLeod has been
appointed as President and Chief Operating Officer of the new subsidiary,
overseeing the CSG Wireless company. The acquisition follows an April 11
announcement of Synergy's intent to acquire CSG. Synergy said it intends to
acquire 6 to 8 additional Internet communications companies within 1996 as it
deploys its national network.
<PAGE>
Page 23 of 28
SYNERGY MEDIA, INC. NEWS RELEASE
- --------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media For Immediate Release
402.346.4638
[email protected]
SYNERGY ANNOUNCES NAME AND TICKER CHANGE
Omaha, Neb. - May 1, 1996 - Synergy Media Inc. (OTC:SYME), an Omaha based
communications provider, announced that it had completed its ticker symbol
change to "SYME".
Formerly trading under the "SISD" symbol over the counter, Synergy Media had
been given approval to the use of the new symbol, reflecting the company's
recent name change from Sierra Solids to Synergy Media.
Investors locating the company should find the symbol easy to remember, said
James R. Saker Jr., chief executive officer of Synergy Media.
"SYME is a great symbol for Synergy Media," Saker said. "It's an easily
pronounced combination of the first two letters of Synergy and Media."
Synergy has provided a bulletin announcing the change on its Internet web site,
complete with a link to current trading information and press releases.
Individuals can access Synergy's web site at: www.synergy.net
Investor inquiries should be directed to Edward Jarzobski at 800.357.8316.
<PAGE>
Page 24 of 28
SYNERGY MEDIA, INC. NEWS RELEASE
- --------------------------------------------------------------------------------
Contact: Jamie Saker, Synergy Media FOR IMMEDIATE RELEASE
402.346.4638
[email protected]
SYNERGY ANNOUNCES INTENT TO ACQUIRE
INNOVATIVE CONSULTANTS INC.
INTERNET PROVIDER ACQUISITION TO EXPAND
CONVERGENCE COMMUNICATIONS NETWORK (CCN)
Omaha, Neb. - MAY 7, 1996 - Synergy Media Inc. (OTC:SYME), an Omaha based
communications provider, announced its intent to acquire Minneapolis based
Innovative Consultants, Inc..
Innovative Consultants, Inc. is a business to business Internet service provider
that offers metropolitan area Internet communication services in the greater
Minneapolis marketplace.
Synergy Media CEO, James R. Saker Jr., sees this acquisition as a continuation
of its Internet Service Provider (ISP) acquisition strategy which was outlined
by the company in March 1996.
"This acquisition will have two very important benefits for Synergy Media," said
Saker. "It expands Synergy's CCN into the Minneapolis market 120 days ahead of
schedule and it also represents the prompt execution of our ISP acquisition
strategy."
The acquisition, which is expected to be finalized within 30 days, will place
Innovative Consultants into Synergy Communications Inc., a wholly-owned
subsidiary of Synergy Media that operates the Convergence Communications Network
backbone.
"This acquisition will allow us to provide Minneapolis with an avenue for
complete Internet media solutions," said Greg Vice President and Chief
Information Officer of Innovative Consultants. "In addition to traditional
connectivity services, we will provide web presence services, wireless
connectivity, and fully-redundant high-bandwidth Internet services."
Innovative Consultants Inc., a privately-held Wisconsin corporation, is headed
by Gerald Ogdahl, President, Greg Ogdahl, Vice President and Chief Information
Officer, and Eric Ostigaard, Chief Operations Officer.
Inquiries about Synergy Media companies should be directed to:
[email protected]
May 7, 1996
Innovative Consultants, Inc.
601 Lakeshore Parkway, Suite 1074
Minnetonka, MN 55305-5219
<PAGE>
Page 25 of 28
Dear Gregory Ogdahl, Gerald Ogdahl, and Erik Ostigaard:
We are pleased to provide you with this letter of intent pursuant by which
Synergy Media, Inc. describes its terms to purchase one hundred percent (100%)
of stock in Innovative Consultants, Inc. ("ICI" or the "Company"), pursuant to a
definitive agreement with Synergy (the "Merger Agreement").
The structure of the transaction will be in stock and cash in exchange for 100%
of ICI stock, according to the following terms:
1. 25,000 shares of restricted Synergy Media, Inc. common stock issued at
closing.
2. Payoff liabilities of ICI up to, but no more than $125,000.
1. ICI will operate its business in the ordinary course of business and will
use its best efforts to (i) preserve its present business organization in
tact; (ii) keep available the services of its present sales force and
employees; (iii) preserve its present relationships with persons having
business dealings with it; and (iv) maintain insurance on all assets in
such amounts and kinds comparable to that previously in effect.
2. The Company and its accountants, attorneys, and representatives shall
assist Synergy receiving any regulatory and preexisting contractual
approvals required. Synergy or its advisors will be given full access on
the company's premises, to the books, accounting, financial and statistical
records, tax returns and other business files of the Company, as well as to
the advisors and personnel of the Company.
3. The Company agrees to keep the existence of this letter of intent and
discussions related thereto in strictest confidence and not to disclose the
existence of such discussions to any third party for any reason without our
prior written consent, unless in the opinion of counsel to the Company
disclosure is required by any applicable law or agency (including the NASD)
or is required in order to obtain stockholder approval, provided that if
the Company proposes to make any disclosure based upon the opinion of such
counsel, the Company, as the case may be, will advise and consult with
Synergy prior to such disclosure concerning the information proposed to be
disclosed. The provisions of this paragraph shall survive the termination
or expiration of this Agreement.
4. The Company shall not incur any material liabilities outside the ordinary
course of business during the term of this Agreement and the Company shall
not enter into any material business ventures without informing Synergy
during the term of this agreement. Further, during the term of this
agreement, the Company agrees to advise Synergy of any
business, legal or regulator developments outside the ordinary course of
business within 24 hours of their receipt by the Company.
5. The Company agrees that Synergy would not have an adequate remedy at law
for money damages in the event that the covenants contained herein are not
performed in accordance with their terms and agree that Synergy will be
entitled to specific performance of the terms hereof in addition to any
other remedy to which Synergy may be entitled at law or
<PAGE>
Page 26 of 28
in equity.
6. This Agreement shall expire on the earlier of (a) the execution and
delivery by the Company and Synergy of the definitive Merger Agreement, or
(b) the expiration of period of exclusivity, June 15, 1996, unless an
extension is granted by both parties.
7. This Agreement on is not intended to, and shall not create a binding
obligation on the part of Synergy to proceed with the Transaction, but is
otherwise binding on the parties hereto and their respective successors and
assigns. During the due diligence review described below, the parties will
act in good faith and negotiate definitive agreements, and such other
ancillary terms and conditions typical in transactions of this nature,
including indemnities, representations, warranties, covenants and closing
conditions.
8. Synergy 's obligation to proceed with the Transaction will only become
binding upon (i) the satisfaction in the absolute discretion of Synergy
with the results of a review of the Company's business and affairs, (ii)
the execution and delivery by the parties of a definitive Merger Agreement
in form and content satisfactory to both of us, (iii) the approval of the
Transaction by the Board of Directors of Synergy and ICI's stockholders in
their absolute discretion, and (iv) Synergy receiving any regulatory
approvals required and the lapse of all time periods during which any
regulatory agencies could object to consummation of the Transaction. In the
event any of the foregoing conditions are not satisfied, neither party will
have any obligation or liability to the other for failure to execute a
definitive Merger Agreement or to consummate the Transaction, and each
party shall bear all its own expenses incurred in connection with these
matters.
9. This Agreement shall be construed under and governed by the laws of
Wisconsin without regard to principles of conflict of laws.
10. The offer stated herein may be accepted only by Synergy's receipt not
later than 5:00 p.m. CST, on May 7, 1996 of a copy of this Agreement
executed in original below by the duly authorized signatories of the
Company.
11. This Agreement may be amended, modified, superseded or canceled, and any of
the terms, provisions, covenants, representatives, warranties or conditions
hereof may be waived, only by written instrument executed by the parties
hereto or, in the cases of a waiver, by the party waiving compliance. The
failure to enforce or to require the performance at any time of any of the
provisions of this Agreement shall in no way be construed to be a waiver of
such provisions and shall not affect either the validity of this Agreement
or any part hereof or the right of any party thereafter to enforce each and
every provision in accordance with the terms of this Agreement.
12. Synergy will advance $20,000 in working capital into over the 10 day period
following closing. The Company shall provide Synergy with a Statement of
Projected Use of Funds.
13. Synergy will provide Erik Ostigaard and Gregory Ogdahl employment
contracts. The basic terms of the contract will be as follows: 2 year
employment contract, $35,000 yearly
<PAGE>
Page 27 of 28
salary, stock options based on performance included in a definitive
agreement. This employment contract will be part of the merger agreement.
Synergy Media, Inc. Date: May 7, 1996
/s/Edward J. Jarzobski
- --------------------------------------
Edward J. Jarzobski
Its: Vice President
The undersigned hereby agrees to the foregoing terms and conditions.
/s/Gerald Ogdahl Date: May 7, 1996
- --------------------------------------
Gerald Ogdahl
Its: President
/s/Gregory Ogdahl Date: May 7, 1996
- --------------------------------------
Gregory Ogdahl
/s/Erik Ostigaard Date: May 7, 1996
- --------------------------------------
Erik Ostigaard
<PAGE>
Page 28 of 28
CERTIFICATE OF AMENDMENT FOR THE ARTICLES OF INCORPORATION OF
SIERRA SOLIDS, INC
FILED IN THE OFFICE OF THE SECRETARY OF THE STATE OF NEVADA NO. 1255-97 ON
APRIL 22, 1996, DEAN HELLER SECRETARY OF STATE (BY REFERENCE)
I
The name of the Corporation filing these Articles of Amendment to Articles
of Incorporation is Sierra Solids, Inc., a corporation existing pursuant to the
corporate law of Nevada.
II
Pursuant to the Board of Directors of the Corporation having unanimously
adopted a resolution to change the name of the Company, and which, at a special
meeting of the stockholders held on the 23rd day of June, 1995, the stockholders
present either in person or by proxy unanimously approved the Board of
Directors' authority to change the Company's name, the undersigned President and
Secretary set forth the following Amendment to the Company's Articles of
Incorporation:
ARTICLE I shall be replaced with the following:
ARTICLE I
NAME
The name of the corporation is Synergy Media, Inc.
IN WITNESS WHEREOF, the undersigned Corporation has caused these Articles
of Amendment to be signed by two duly authorized officers this 4th day of April,
1996.
SIERRA SOLIDS, INC.
By /s/Michael S. Luther By /s/Brian Barger
------------------------------ -------------------------
Michael S. Luther, President Brian Barger, Secretary
STATE OF NEBRASKA )
) ss.
COUNTY OF DOUGLAS )
The foregoing instrument was acknowledged before me this 4th day of April, 1996,
by Michael S. Luther, President, and Brian Barger, Secretary of Sierra Solids,
Inc., a Nevada corporation, on behalf of the corporation.
/s/ Judith E. Sundberg
-----------------------------
Notary Public
<PAGE>
A A B C
1
2 Ed Jarzobski 12,000
3 Mark Luther 7,875
4 Brady Barger 16,000
5 Lois Meridith 16,625
6 Judy Sundberg 7,000
7 Jim DiPrima 18,000
------
8 77,500
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 200,257
<DEPRECIATION> 0
<TOTAL-ASSETS> 200,257
<CURRENT-LIABILITIES> 135,032
<BONDS> 0
0
0
<COMMON> 1,372
<OTHER-SE> 63,853
<TOTAL-LIABILITY-AND-EQUITY> 200,257
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 215,857
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,187
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (299,045)
<EPS-PRIMARY> .20
<EPS-DILUTED> 0
</TABLE>
