UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
AMENDMENT NO. 3
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
PHOENIX MEDIA GROUP, LTD.
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(Name of Small Business Issuer in its charter)
NEVADA 33-0714007
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
290 EAST VERDUGO, SUITE 207, BURBANK, CALIFORNIA 91502
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (818) 563-3900
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Securities to be registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $0.001 PAR VALUE
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(Title of class)
CONVERTIBLE PREFERRED SERIES A, $0.01 PAR VALUE
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(Title of class)
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION PAGE
PART I
Item 1. Description of Business............................................3
Item 2. Management's Discussion and Analysis or Plan of Operations.........9
Item 3. Description of Property...........................................14
Item 4. Security Ownership of Certain Beneficial Owners and Management....14
Item 5. Directors, Executive Officers, Promoters and Control Persons;.....16
Item 6. Executive Compensation............................................16
Item 7. Certain Relationships and Related Transactions....................16
Item 8. Description of Securities.........................................17
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity
and Other Shareholder Matters.....................................18
Item 2. Legal Proceedings.................................................19
Item 3. Changes in and Disagreements With Accountants.....................19
Item 4. Recent Sales of Unregistered Securities...........................19
Item 5. Indemnification of Directors and Officers.........................20
Part F/S Financial Statements..............................................20
PART III
Item 1. Index to Exhibits.................................................21
Item 2. Description of Exhibits...........................................21
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Phoenix Media Group, Ltd. (the "Company") was organized under the laws
of the State of Utah on December 5, 1985 as Bullseye Corp., a blind pool. The
Company was formed for the purpose of raising capital to be used to investigate
and acquire interests in products and businesses which were perceived to have a
potential for profit. On June 22, 1992, the name of the Company was changed to
Natural Solutions, Ltd. and the corporate domicile was changed to the State of
Nevada. Natural Solutions, Ltd. planned to be in the medical field but was
ultimately unsuccessful in commencing operations or generating any revenues.
Subsequently, the Company's name was changed to High Seas Entertainment, Inc.,
which proposed venture was also unsuccessful.
On March 25, 1994, the Company name was changed to Phoenix Media
Group, Ltd. The Company initially commenced operations in the production of
radio and television infomercials and is now expanding into the field of
commercial cartoon character development, merchandising and licensing. The
Company was in the development stage through June 30, 1994. The fiscal year
ended June 30, 1995 year is the first year during which the Company is
considered an operating company.
The Company's objective is to become a major player in the
communications industry with an emphasis on radio, television and Internet
services. However, the Company has a long way to go before achieving that goal.
Presently, the Company has assets of approximately $134,000. The Company's gross
revenues for the year ended June 30, 1999 were approximately $277,000 and the
for the six months ended December 31, 1999, the Company's gross revenues were
approximately $189,000. The Company realized a net profit of approximately
$28,000 for the fiscal year ended June 30, 1999 but had a net loss of ($99,351)
for the six month period ended December 31, 1999. As part of its business plan,
the Company is voluntarily filing this registration statement on Form 10-SB in
order to become subject to the reporting requirements of the Securities Exchange
Act of 1934 and to enable the Company's common stock to continue to be traded on
the OTC Electronic Bulletin Board. The Company's common stock trades on the NASD
Electronic Bulletin Board under the symbol "PXMG-BB".
The Company's office is located at 290 East Verdugo, Suite 207,
Burbank, California 91502. The contact person is Ronald Irwin, CEO and the
telephone number is (818) 563-3900. The COMPANY'S WEB SITES ARE
WWW.PHOENIXMEDIAGROUP.COM AND WWW.MANFREDMOOSE.COM.
The Company's principal products are the production of radio and
television infomercials and commercials along with the development, publication,
manufacture, design and sale of books and toys in the image of or otherwise
relating to the character Manfred Moose(TM). The Company's radio and television
infomercials and commercials are solicited directly from a wide variety of
commercial prospects and distributed via electronic media to various radio and
television stations.
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Currently, the Company produces radio programs that are broadcast on
four commercial radio stations in San Francisco, Seattle, Portland and
Annapolis. The Company has been involved in producing these programs profitably
for over two years. The Company purchases the air time from the radio stations
and then re-sells the air time to the companies that sponsor the Company's shows
in the form of advertising. The shows are produced in the format of a talk show
and all shows are taped in the Company's recording studio in Burbank,
California. The Company's CEO, Ronald Irwin, acts as co-host along with Dick
Spangler, President of the Company. The shows discuss a wide range of topics
such as travel, entertainment, lifestyles, restaurant reviews and political
issues. A new show is produced each week and then broadcast at different times
over the four radio stations.
The sponsors of the radio shows either deliver a previously produced
commercial to the Company to be broadcast during the radio show or the Company
produces the commercial for the sponsor, which is then aired during the radio
show. The Company has been producing its radio show for the past two years. The
Company calls potential sponsors seeking advertising and sponsorship for its
radio show. Typically, companies sign either a three month or six month contract
with the Company. During that time, these companies are advertised on the
Company's radio show. Some companies renew their contract after the initial
period but the majority do not. Approximately twelve percent (12%) of those
companies with a six month contract renew their contract upon expiration.
Approximately twenty percent (20%) of those companies with three month contracts
renew their contracts upon expiration. There can be no guarantee that these
trends will continue in the future.
Although the Company has previously produced and marketed
infomercials on television, it presently has no such infomercials pending and
does not anticipate producing any television infomercials in the near future. It
presently has no contracts to produce any television infomercials.
During Fiscal Year 1999, the Company announced the development of the
Manfred Moose(TM) Millennium Doll and the book "Manfred Moose(TM) Flies to Hong
Kong." Both products have been completed and are being marketed on the Company's
website for sale. The Company is producing AND SELLING MANFRED MOOSE(TM) FLIES
TO HONG KONG, a 32 page full color illustrated book for children ages three to
seven. The book is sold at Amazon.com, Barnes & Noble.com and through the
Company's website. The Company is also plans to market and sell such Manfred
Moose(TM) merchandise as alarm clocks, mugs, bumper stickers, a putter head
cover and a putter. It is anticipated, however, that the Company's primary
market will be children between the ages of three and seven.
To date, sales of merchandise and books based on Manfred Moose(TM)
have been negligible. The Company's main source of revenue has been, and is
expected to continue to be for the foreseeable future, the re-sale of radio air
time and advertising. The Manfred Moose(TM) products will be available over the
Company's web site. At the present time, the Company has no agreements to
distribute or sell these products through third party retailers. The Company
anticipates marketing these products to children three to seven years of age.
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The Company has an agreement with Air Tahiti Nui to produce a Manfred
Moose(TM)coloring book for distribution on Air Tahiti Nui flights between Los
Angeles, Papeete, Tokyo and Osaka. The coloring book is presently in development
and it is expected to cost the Company approximately $10,000 in development
costs. The first printing is to expected to be for 10,000 copies.
The Company also has an agreement with Air Tahiti Nui to sell a book,
THE LEGEND OF MOANA MOOSE, through the airline's in-flight store on a duty-free
basis. The book is in development and expected to be published in September,
2000. The Company anticipates selling this book through the above-mentioned
channels, including its own web site. The development cost of this book is
estimated to be approximately $25,000 and the first printing is estimated to be
for 7,500 copies.
At this time, the Company is also in the process of developing a
three and one-half minute animated cartoon. This cartoon will be used to present
the Manfred Moose(TM) character to major television networks and program
syndicators, with the hope of eventually creating a Manfred Moose(TM) cartoon
series, although there can be no assurances that the Company will be successful
in creating or selling such a series or that such a series will ultimately be
successful. The development costs associated with this project are estimated to
be approximately $100,000 with completion of the initial development of the
animated Manfred Moose(TM) character in nine to twelve months.
The Company faces significant competition in the field of radio and
television commercials and infomercials. These include companies such as CBS,
ABC, and NBC, along with other media companies, all of which have more revenues,
assets and name recognition. These companies also command significantly higher
advertising rates than the Company charges, which makes the Company's service
more accessible to smaller companies without large advertising budgets. The
Company is unaware of any other small company providing the same services as the
Company offers. The Company's relative position in the industry is small and
there are many companies with significantly more assets, expertise and
reputation.
The competition with regard to the Company's character, Manfred
Moose(TM) is very substantial and dominated by several very large and well-known
competitors, including several major corporations, with significantly more
revenues, assets, reputation and expertise in this field. These companies
include Disney, Warner Brothers, Mattel and Tyco. These companies have
significantly higher name recognition, assets, revenues and products than the
Company does. The Company's relative position in the industry is very small. The
Company hopes that its new and innovative character that it will capture the
attention of the children to whom it is directed.
The Company holds a trademark on the name Manfred Moose(TM) and
copyrights on several Manfred Moose(TM) images.
The Company presently has four employees, two of whom work full-time
for the Company.
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RISK FACTORS
Current and prospective shareholders should carefully consider the following
risk factors, together with the other information contained in this Form 10-SB,
in evaluating the Company and its business. The factors listed below represent
certain important factors the Company believes could cause such results to
differ.
REGULATION OF PENNY STOCKS. The Company's securities are subject to a Securities
and Exchange Commission rule that imposes special sales practice requirements
upon broker-dealers who sell such securities to persons other than established
customers or accredited investors. For purposes of the rule, the phrase
Accredited investors means, in general terms, institutions with assets in excess
of $5,000,000, or individuals having a net worth in excess of $1,000,000 or
having an annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchaser
and receive the purchaser's written agreement to the transaction prior to the
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the Company's securities and also may affect the ability of purchasers in this
offering to sell their securities.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate Penny stocks. Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act of 1934,
as amended. Because the securities of the Company may constitute Penny stocks
within the meaning of the rules, the rules would apply to the Company and to its
securities. The rules may further affect the ability of owners of Shares to sell
the securities of the Company.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the security by one or a few broker-dealers that are often
related to the promoter or issuer; (ii) manipulation of prices through
prearranged matching of purchases and sales and false and misleading press
releases; (iii) boiler room practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differentials and markups by selling broker-dealers; and (v)
the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical limitations
to prevent the described patterns from being established with respect to the
Company's securities.
NO ASSURANCE OF SUCCESS OR PROFITABILITY. There is no assurance that the
Company's operations will be profitable over the short term or long term.
Although the Company previously had a year of net profit for the year ended June
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30, 1999, the six month period ending December 31, 1999 resulted in a loss of
almost $100,000. This was due, in large part, to development and marketing costs
associated with the Company's development and creation of Manfred Moose(TM). The
Company will able to recoup those losses and become profitable only in the event
that the public develops an awareness of Manfred Moose(TM) and purchases Manfred
Moose(TM) products the Company anticipates selling. If the public does not
accept or develop an interest in Manfred Moose(TM), the Company will most likely
continue to be unprofitable. Even if Manfred Moose(TM) is accepted by the
public, there is no assurance that it will generate revenues or profits, or that
the market price of the Company's Common Stock will be increased thereby.
COMPETITION. The competition in the licensed character field is intensely
competitive. The Company expects to be at a disadvantage when competing with
many firms that have substantially greater financial and management resources
and capabilities than the Company. These competitive conditions will exist in
any industry in which the Company may become interested.
SHARES ELIGIBLE FOR FUTURE SALE. Sales of a substantial number of shares of the
Company's common stock in the public market could adversely affect the market
price of the 6,880,649 shares outstanding at December 31, 1999, 2,657,649 shares
of common stock are free tradable.4,223,000 shares of common stock are eligible
for sale in the public market, subject to compliance with Rule 144 under the
Securities Act of 1933, as amended (the Securities Act). Rule 144 generally
provides that beneficial owners of shares who have held such shares for one year
may sell within a three month period a number of shares not exceeding the
greater of 1% of the total outstanding shares or the average trading volume of
the shares during the four calendar weeks preceding such sale.
DEPENDENCE ON PRINCIPALS. The Company is particularly dependent on its officers,
who possess significant managerial and operational expertise. The loss of any of
its officers or management team would have a material adverse effect on the
Company. In particular, the Company is highly dependent on the continued
services of its senior management team, which currently is composed of a small
number of individuals. The Company currently maintains no key man life insurance
on any of its officers. The loss of the services of any member of the Company's
senior management team could have a material adverse effect on the Company
UNINSURABLE RISKS. The Company has arranged or will arrange for comprehensive
insurance, of the type and in amounts customarily obtained for those businesses
whose products, market and distribution is similar to that of the Company.
However, in many cases, certain types of losses are either uninsurable or not
economically insurable. Should such a loss occur, the Company could suffer a
loss of capital invested.
NONPAYMENT OR LACK OF DIVIDENDS. The Company has never paid dividends on its
Common Stock. The payment of dividends in the future rests within the discretion
of the Company's Board of Directors and will depend on the existence of
substantial earnings, the Company's financial requirements and other factors.
There can be no assurance that the Company will ever be in the position to pay
cash dividends.
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ABSENCE OF INDEPENDENT FEASIBILITY STUDIES. The Company has not commissioned
independent studies of the feasibility of its contemplated operations and
products; rather, the Company is relying primarily on the experience and
background of the Company's officers and directors.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used in this Form 10-SB, the words anticipated, estimate, expect, and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties and assumptions including
the possibility that the Company's will fail to generate projected revenues.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected.
General
The following discusses the financial position and results of
operations of the Company.
Significantly all of the Company's revenues came from its resale of
air time to its customers. That was the Company's principle service provided
during fiscal 1999. During fiscal 1999, the Company began purchasing air time
from a total of four stations, which is double the number of stations it was
purchasing from during fiscal 1998. Revenues from sales of items associated with
Manfred Moose(TM) were negligible. At the present time, approximately twelve
percent of customers with six month contracts renew their contracts while
approximately twenty percent of customers with three month contracts renew their
contracts. Although the Company provides service to its customers with repeat
business, there is no assurance that such customers will maintain or increase
the level of volume of business of the Company.
The Company produces a weekly radio talk show which it produces in
its Burbank offices. The Company purchases air time from four radio stations and
resells the air time to customers seeking to advertise their goods and services
during the program. The Company has been producing its radio show for over two
years. The companies which sponsor the talk show through their purchase of air
time can play their own previously produced commercials or have the Company
provide the commercial for broadcast during the show.
During fiscal 1999, the Company's total assets increased to
approximately $181,000 over approximately $157,000 during fiscal 1998. Part of
this was due to the payment of an outstanding account receivable through the
transfer of $57,750 worth of stock to the Company. For the six month period
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ended December 31, 1999, the Company's assets were approximately $134,000. This
difference from fiscal 1999 was due to the Company selling the stock it had
received to pay the Company's liabilities.
RESULTS OF OPERATIONS - The following table set forth, for the years ended June
30, 1999 and 1998, certain items from the Company's Condensed Statements of
Operations expressed as a percentage of net sales.
6 months 6 months Year Ended Year Ended
12/31/99 12/31/98 6/30/99 6/30/98
Sales, Net ........................... 100.0% 100.0% 100.0% 100.0%
Cost of Sales ........................ 17.7% 29.0% 29.0% 16.1%
Gross Margin ......................... 82.3% 71.0% 71.0% 83.9%
Operating Expenses ................... 117.4% 58.8% 58.8% 119.3%
Operating Income (Loss) .............. (35.1%) 12.2% 12.2% (35.4%)
Interest Income, Net ................. (1.2%) (1.5%) (1.5%) (2.8%)
Income (Loss) Before Income Taxes .... 52.2% 10.7% 10.7% (38.2%)
Income Taxes ......................... 0.2% 0.3% 0.3% 0.5%
Net Income (Loss) .................... 52.4% 10.7% 10.4% (38.7%)
NET SALES
Net sales for Fiscal 1999 compared to Fiscal 1998 increased by
approximately $132,000 or 91.6%. This increase was due to expansion of sales and
marketing efforts as the Company began to purchase and resell air time on four
stations in fiscal 1999 as compared to two stations in fiscal 1998. For the six
month period ended December 31, 1999, revenues were approximately $190,000 as
compared to approximately $140,000 for the six month period ended December 31,
1998 and is also attributable to the Company's increased sales and marketing
efforts.
COST OF SALES
Cost of sales for Fiscal 1999 increased approximately $57,000 or
246.0% compared to Fiscal 1998. As a percentage of sales, cost of sales
increased 12.9% from 16.1% to 29.0%. This increase was due to the purchase of
additional air time at increased costs as the Company increased from two to four
the number of stations at which it was purchasing air time. For the six month
period ended December 31, 1999, costs of sales as a percentage of sales
decreased 11.3% to 17.7%, down from 29.0% for the six month period ended
December 31, 1998. This decrease is attributable to decreases in air time costs
during this fiscal period as compared to the previous year. The Company
anticipates that costs of sales will continue to fluctuate between 15% and 30%
depending on the cost it must pay for air time.
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Also, as the Company complete development of the various Manfred
Moose(TM) projects it is currently working on, its cost of sales will be
affected, although the Company cannot predict with any degree of accuracy how
much since, to a large extent, that depends on how successful this new line of
business in for the Company.
OPERATING EXPENSES
Operating expenses during Fiscal 1999 decreased approximately $10,000
or 5.61% compared to Fiscal 1998, from $172,509 to $162,821. As a percentage of
sales, operating expenses decreased 60.5% from 119.3% to 58.8%. This decrease
was due to an executive salary reduction and fixed costs being spread across
increased revenues. For the six month period ended December 31, 1999, operating
costs were approximately $222,000 compared to approximately $81,000 for the six
month period ended December 31, 1998. Most of this increase in operating
expenses is attributable to the Company's efforts with regard to developing
Manfred Moose(TM) and related products to market and sell in the future and
includes compensation to officers and directors as well as actual production
costs. It is anticipated that this trend will continue as the Company continues
to develop and seek new opportunities to license and market Manfred Moose(TM)
merchandise. The Company cannot predict how and when, if ever, it will recoup
these operating expenses until the Company can gauge whether or not this
character will be successful with consumers and as a marketing tool for
businesses wishing to license the character for their use.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires working capital to fund its current operations.
The Company has budgeted its anticipated revenue and cash flows, after paying
expenses, from its sale of radio air time to provide for its anticipated
expenditures to fund development of the Manfred Moose(TM) project until such
time as the Company begins to receive revenue from Manfred Moote(TM) projects.
If the Company's revenues decline below present or projected levels, the Company
may have to scale back its operations and its proposed development of Manfred
Moose(TM) to accommodate the resulting shortfall in revenues to fund its
projects. During the last two fiscal years, the Company's revenues increased
approximately $130,000 from fiscal 1998 to fiscal 1999. For the first six months
of fiscal 2000, the Company's revenues have increased by approximately $50,000
over the same period during the prior year. It is anticipated that the current
operations will expand and the funds generated will exceed the Company's working
capital requirements for the next year.
The Company has long term goals to further develop Manfred Moose(TM)
merchandise and products over the next twelve month period and expects that the
projects it currently has in development will require approximately $150,000
over the next twelve months. The Company believes that its operations will be
able to provide the funds for these development costs over the next twelve
months. The Company anticipates that ultimately, these development costs will be
recouped through the eventual sales of the various products being developed. If
revenues are not sufficient to fund its operations, the Company will need to
seek alternative sources of financing either through loans or through raising
capital. There are no formal commitments from banks or other lending sources for
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lines of credit or similar short-term borrowing. There can be no assurances that
the Company will be able to obtain alternative financing through loans or
capital and the Company has no commitments for either type of financing. If
alternative financing is not available, then the Company will be forced to scale
back its proposed operations and perhaps be forced to abandon its Manfred
Moose(TM) projects or delay it significantly. The Company's lack of current
assets would be a factor to be considered by potential lenders or investors in
deciding whether or not to loan money to or invest in the Company.
For the fiscal year ended June 30, 1999, the Company had $57,750 in
investments held for sale. This consisted of securities transferred to the
Company in satisfaction of an account receivable of the Company. These
securities were sold in the fall of 1999, with the Company incurring a loss of
$32,859 on the transaction. The Company does not anticipate this type of
activity recurring in the future. For the six month period ended December 31,
1999, the Company's assets were reduced by by $57,750 due to the sale of these
securities. This loss and the issuance of stock as compensation are major
reasons why the Company reflects a loss before taxes of approximately $99,000
for the six month period ended December 31, 1999 compared to a net profit before
taxes of approximately $15,000 for the six month period ending December 31,
1998.
For the six month period ended December 31, 1999, the Company's asset
value of vehicles rose to $34,173 compared to $15,200 for the six month period
ended December 31, 1998. This increase is attributable to the purchase of a Ford
Taurus for use by the Company's CEO.
The Company generates and uses cash flows through three activities:
operating, investing, and financing. During 1999, operating activities used cash
of approximately $4,000 as compared to net cash used of approximately $7,000 for
1998. For the six month period ended December 31, 1999, the Company's operating
activities used cash of approximately $19,000 while for the six month period
ended December 31, 1998, the Company's operating activities used approximately
$2,000. Much of this increase in attributable to the Company's development and
marketing of Manfred Moose(TM).
Cash flows used by investing activities is primarily due to the
acquisition of approximately $5,000 of computer equipment and office furniture
for 1999. During 1998 investing activities provided approximately $27,000, from
shareholder loans and notes receivable and used approximately $15,000 for the
purchase of property and equipment.
Financing activities used less than $1,000 in principal payments on
debt for 1999 and 1998. During 1998 financing activities provided $5,000 in
proceeds from capital stock issued.
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RECENT DEVELOPMENTS
The Company continues to pursue its efforts in marketing and
licensing Manfred Moose(TM) and is working to complete the projects with Air
Tahiti described above. Efforts to work on a cartoon series are still
progressing. The Company entered into an agreement with a major shareholder
whereby that shareholder invested $50,000 in early 2000 to help fund the
development costs incurred by the Company in creating and marketing Manfred
Moose(TM).
Inflation and Regulation
The Company's operations have not been, and in the near term are not
expected to be, materially affected by inflation or changing prices. The Company
encounters competition from a variety of Companies in its markets. Many of these
companies have long standing customer relationships and are well-staffed and
well financed. The Company believes that competition in the its industries is
based on customer satisfaction and production of quality products and services,
although the ability, reputation and support of management is also significant.
The Company does not believe that any recently enacted or presently pending
proposed legislation will have a material adverse effect on its results of
operations.
Factors That May Affect Future Results
Management's Discussion and Analysis and other parts of this
registration statement contain information based on management's beliefs and
forward-looking statements that involve a number of risks, uncertainties, and
assumptions. There can be no assurance that actual results will not differ
materially for the forward-looking statements as a result of various factors,
including but not limited to the following:
The markets for many of the Company's offerings are characterized by
rapidly changing technology, evolving industry standards, and frequent new
product introductions. The Company's operating results will depend to a
significant extent on its ability to design, develop, or otherwise obtain and
introduce new products, services, systems, and solutions and to reduce the costs
of these offerings. The success of these and other new offerings is dependent on
many factors, including proper identification of customer needs, cost, timely
completion and introduction, differentiation from offerings of the Company's
competitors, and market acceptance. The ability to successfully introduce new
products and services could have an impact on future results of operations.
YEAR 2000 COMPLIANCE - The Company utilizes software and related technologies
which have been programmed to recognize and properly process data fields
containing a two digit year and commonly referred to as the Year 2000 Compliance
issue. Management has concluded that a material effect on the Company's
financial condition is not reasonably likely to occur as a result of Year 2000
issues. While the Company has little communication with the systems of its
vendors and suppliers, it cannot measure the impact that the Year 2000 issue
will have on such parties with which it conducts business.
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ITEM 3. DESCRIPTION OF PROPERTY.
The Company maintains an office condominium at 290 East Verdugo
Avenue, Suite 207, Burbank California. The property was purchased for $75,000
and is being amortized over 39 years. The property is subject to a first
mortgage with monthly payment of $393.36 over 30 years at 8.75%.
In the opinion of management, all properties owned by the Company are
adequately insured.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Security ownership of certain beneficial owners.
The following table sets forth the number and percentage of the
Company's common shares owned of record and beneficially by each person owning
more than 5% of such common shares, and the shares beneficially owned by all
directors, executive officers and nominees: at December 31, 1999.
(1) (2) (3) (4)
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Owner Class
- -------------------------------------------------------------------------------
Common Stock Bristol Investments Limited 500,000 7.27%
1601 Kinwick Centre
32 Hollywood Road
Central Hong Kong
Zhong Hong Li
Directors & Executives
Ronald R. Irwin, CEO & Director 3,500,000 50.87%
290 E. Verdugo Ave.
Burbank, CA 91502
Richard Spangler, President & 100,000 1.45%
Director
290 E. Verdugo Ave.
Burbank, CA 91502
David Petrik, Director 25,000 0.36%
290 E. Verdugo Ave.
Burbank, CA 91502
13
<PAGE>
(1) (2) (3) (4)
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent of
Class Owner Owner Class
- -------------------------------------------------------------------------------
Wayne K. Smith, Sec/Treas. 68,000 0.99%
290 E. Verdugo Ave.
Burbank, CA 91502
Directors and executive 3,693,000 53.67%
officers as a Group
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Directors and Executive Officers.
(1) (2) (3)
NAME and AGE POSITION TERM OF OFFICE
Ronald R. Irwin 54 C.E.O. and Chairman Until next meeting
Richard Spangler 65 President & Director Until next meeting
David Petrik 52 Director Until next meeting
Wayne Smith 45 Secretary/Treasurer Until next meeting
Ronald R. Irwin - During the past 5 years, Mr. Irwin has been
engaged full time as Chairman and C.E.O. for the Company.
Richard Spangler - During the past 5 years, Mr. Spangler has served
full time as President and Director for the Company.
14
<PAGE>
David Petrik - During the past 5 years, Mr. Petrik has served as
Director and Chief Engineer for the Company. Prior to his
employment with the Company, he worked as a Radio Engineer
for KROQ Radio in Los Angeles, CA, and the Premier Radio
Network in Los Angeles, Ca.
Wayne Smith - During the past 5 years has served as
Secretary/Treasurer for the Company. During this same period
of time, he has also worked for Trans World Airlines, Inc. in
a non-executive position.
ITEM 6. EXECUTIVE COMPENSATION.
No executive received in excess of $100,000 compensation during the
past three years.
Ronald R. Irwin, C.E.O. and Chairman received compensation of
approximately $60,000 per year during the past three years.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During 1997, the Company loaned Ronald Irwin, its CEO and director,
$20,100, interest at 1%, repayable at $201 per month for ten months with a
balloon payment due in 2007. In addition,
Wayne Smith, Secretary and Treasurer of the Company, advanced $8,000 at 0%
interest, to the Company.
In September, 1999, the Company authorized the issuance of 100,000
shares of its common stock, valued at $20,000, to Mr. Irwin, CEO and 30,000
shares of its common stock, valued at $6,000, to Mr. Smith, Secretary and
Treasurer, as compensation for their work in conceiving and developing the
Manfred Moose(TM) concept. An additional 10,000 shares valued at $2,000 was
issued to the artist responsible for illustrating Manfred Moose(TM) as a bonus
for his excellent work. An additional 20,000 shares valued at $4,000 was issued
to an outside consultant who has performed numerous services for the Company
over the years.
ITEM 8. DESCRIPTION OF SECURITIES.
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of Common Stock, par value $.001. The Company presently has
6,880,649 shares of its common stock issued and outstanding. Each record holder
of Common Stock is entitled to one vote for each share held in all matters
properly submitted to the stockholders for their vote. Cumulative voting for the
election of directors is not permitted by the Amended Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
15
<PAGE>
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of Common Stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted. The Company
presently has no anti-takeover provisions in place to protect it against a
hostile takeover by another entity. The Company presently has no plans to
implement such provisions but may reconsider this issue in the future as the
Company grows and expands.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
5,000,000 shares of Series A Convertible preferred stock, par value $.01. The
Board of Directors of the Company is authorized to issue the preferred stock
from time to time in series and is further authorized to establish such series,
to fix and determine the variations in the relative rights and preferences as
between series, to fix voting rights, if any, for each series, and to allow for
the conversion of preferred stock into Common Stock. No preferred stock has been
issued by the Company. The Company anticipates that preferred stock may be
utilized in making acquisitions.
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual report
for each fiscal year containing financial statements audited by its independent
certified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim reports
to its stockholders when it deems appropriate. The Company intends to comply
with the periodic reporting requirements of the Securities Exchange Act of 1994
for so long as it is subject to those requirements.
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
The stock is traded over-the-counter with the trading symbol "PXMG".
The following high and low bid information was provided by PC Financial Network.
The quotations provided reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
1997 HIGH BID LOW BID
First Quarter (09/30/97) $0.188 $0.125
16
<PAGE>
Second Quarter (12/31/97) $0.125 $0.050
Third Quarter (03/31/98) $0.100 $0.040
Fourth Quarter (06/30/98) $0.340 $0.050
1998
First Quarter (09/30/98) $0.180 $0.125
Second Quarter (12/31/98) $0.150 $0.080
Third Quarter (03/31/99) $0.120 $0.080
Fourth Quarter (06/30/99) $0.125 $0.063
1999
First Quarter (09/30/99) $0.313 $0.060
Second Quarter (12/31/99) $0.220 $0.130
The number of shareholders of record of the Company's common stock as
of September 3, 1999 was approximately 800.
The Company has not paid any cash dividends to date and does not
anticipate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not engaged in any legal proceedings other than the
ordinary routine litigation incidental to its business operations, which the
Company does not believe, in the aggregate, will have a material adverse effect
on the Company, or its operations.
No Director, Officer or affiliate of the Company, and no owner of
record or beneficial owner of more than 5.0% of the securities of the Company,
or any associate of any such Director, Officer or security holder is a party
adverse to the Company or has a material interest adverse to the Company in
reference to pending litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
There are not and have not been any disagreements between the Company
and its accountants on any matter of accounting principles, practices or
financial statements disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
17
<PAGE>
The following table lists all sales of unregistered securities by the
Company over the past three years.
Name # of Shares Exemption Type of Purchaser Value/
Share
Concha 10,000 4(2)(not involving a public offering) Sophisticated $ .50
Irwin . 100,000 4(2)(not involving a public offering) Affiliate $ .20
Smith . 30,000 4(2)(not involving a public offering) Affiliate $ .20
Martin 20,000 4(2)(not involving a public offering) Sophisticated $ .20
Hanna . 10,000 4(2)(not involving a public offering) Sophisticated $ .20
Bristol 50,000 4(2)(not involving a public offering) Affiliate $1.00
All investors, including the non-affiliate investors, were given access to the
books and records of the Company, including financial statements, and given the
opportunity to ask management any and all questions concerning the Company and
its prospects for the future. The non-affiliate issuances of securities were
issued as compensation for services provided to the Company as were the
affiliate issuances. The investors were asked about prior investment history,
business experience and educational background. After reviewing that
information, these investors were determined to be capable of making an informed
investment decision based upon this information. All were informed as to the
restricted nature of the stock being received and all represented and warranted
that they were purchasing the stock for their own account.
In the first issuance of shares in 1997, the contract provided that
the value of the services provided was $5,000 and that ten thousand shares was
the amount of securities required to pay that sum. For the recent issuances at
$.20, the Company determined that the closing stock price on the date of
issuance was $.23. Management determined that because the stock was restricted
and not immediately tradeable, it would allow a discount of 13% over the stock
price on that date which is how the $.20 price per share was determined. The
price of the last issuance was the price negotiated between the Company and the
investor.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation and the Bylaws of the Company, filed as
Exhibits 2.1 and 2.2, respectively, provide that the Company will indemnify its
Officers and Directors for costs and expenses incurred in connection with the
defense of actions, suits, or proceedings where the Officer or Director acted in
good faith and in a manner he reasonably believed to be in the Company's best
interest and is a party by reason of his status as an Officer or Director,
absent a finding of negligence or misconduct in the performance of duty.
PART F/S
The financial statements of the Company and supplementary data are
included immediately following the signature page to this report. See Part II,
Item 1 for a list of the financial statements and financial statement schedules
included.
18
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
(a) The following documents are filed as part of this report.
1. FINANCIAL STATEMENTS PAGE
----
Independent Auditor's Report F-1
Balance Sheets, December 31, 1999 (Unaudited) and
June 30, 1999 and 1998 F-2
Statements of Operations,
For the Six Months Ended December 31, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-4
Statements of Changes in Stockholders' Equity,
For the Six Months Ended December 31, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-5
Statements of Cash Flows,
For the Six Months Ended September 30, 1999 (Unaudited) and
For the Years Ended June 30, 1999 and 1998 F-6
Notes to Consolidated Financial Statements F-7
2. FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules required by Regulation
S-X are included herein.
All Schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
3. EXHIBITS
The following exhibits are included as part of this report:
Exhibit
NUMBER EXHIBIT
3.1 Articles of Articles of Incorporation and By-Laws.
27.1 Financial Data Schedule
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Phoenix Media Group, Ltd.
DATE: January 24, 2000
BY: /S/
-----
Ronald R. Irwin, President
(Principal Executive and
Accounting Officer)
20
<PAGE>
PHOENIX MEDIA GROUP, LTD.
- : -
FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
AND
DECEMBER 31, 1999 (UNAUDITED)
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Phoenix Media Group, Ltd.
Burbank, California
We have audited the accompanying balance sheets of Phoenix Media Group,
Ltd. as of June 30, 1999 and 1998, and the related statements of operations,
retained earnings, and cash flows for the two years 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 audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Phoenix Media Group,
Ltd. as of June 30, 1999 and 1998, and the results of its operations and its
cash flows for the two years then ended in conformity with generally accepted
accounting principles.
Respectfully submitted,
/S/ ROBISON, HILL & CO.
----------------------------
Certified Public Accountants
Salt Lake City, Utah
August 8, 1999
F - 1
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
---------------------
1999 1999 1998
--------- --------- ---------
ASSETS
<S> <C> <C> <C>
Cash .......................................... $ 1,477 $ 2,312 $ 9,563
Investments held for sale ..................... -- 57,750 --
--------- --------- ---------
Total Current Assets .................. 1,477 60,062 9,563
--------- --------- ---------
PROPERTY AND EQUIPMENT
Office Equipment .............................. 13,721 12,965 12,965
Radio Equipment ............................... 21,256 16,405 13,045
Office Condominium ............................ 75,000 75,000 75,000
Vehicles ...................................... 34,173 15,200 15,200
--------- --------- ---------
Less Accumulated Depreciation ................. (38,480) (33,560) (21,996)
--------- --------- ---------
Net Property and Equipment ............ 105,670 86,010 94,214
--------- --------- ---------
OTHER ASSETS
Stockholder Loans ............................. 19,412 18,432 19,691
Intangibles (Net of Accumulated Amortization of
$52,540 and $39,540) ....................... 5,960 12,460 25,460
Goodwill (Net of Accumulated Amortization of
$16,167 and $12,167) ....................... 1,833 3,833 7,833
--------- --------- ---------
Total Non Current Assets .............. 27,205 34,725 52,984
--------- --------- ---------
Total Assets .......................... $ 134,352 $ 180,797 $ 156,761
========= ========= =========
</TABLE>
F - 2
<PAGE>
PHOENIX MEDIA GROUP, LTD.
BALANCE SHEETS
(CONTINUED)
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
---------------------
1999 1999 1998
--------- --------- ---------
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
<S> <C> <C> <C>
Accounts payable .................................. $ 8,620 $ 2,135 $ 4,894
Accrued expenses .................................. 13,928 19,128 20,728
Stockholder loans ................................. 8,000 8,000 8,000
Current portion of long-term debt ................. 4,732 477 437
--------- --------- ---------
Total Current Liabilities ................. 35,280 29,740 34,059
--------- --------- ---------
LONG-TERM DEBT .................................... 63,596 48,230 48,708
--------- --------- ---------
Stockholders' equity
Series A convertible preferred stock
(par value $.01), 5,000,000 shares authorized,
no shares issued or outstanding ............. -- -- --
June 30, 1999 and 1998
Common Stock (par value $.001),
50,000,000 shares authorized,
6,720,649 shares issued and outstanding
June 30, 1999, and 1998 ...................... 6,881 6,721 6,721
Paid in capital in excess of par value ............ 317,689 285,849 285,849
Retained deficit .................................. (289,094) (189,743) (218,576)
--------- --------- ---------
Total Stockholders' Equity ................ 35,476 102,827 73,994
--------- --------- ---------
Total Liabilities and Stockholders' Equity $ 134,352 $ 180,797 $ 156,761
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 3
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-------------------------
1999 1999 1998
----------- ----------- -----------
REVENUE
<S> <C> <C> <C>
Sales ................................... $ 189,498 $ 277,112 $ 144,656
Cost of sales ........................... 33,572 80,439 23,247
----------- ----------- -----------
Gross Margin .................... 155,926 196,673 121,409
OPERATING EXPENSES
General and Administrative .............. (222,491) (162,821) (172,509)
OTHER INCOME (EXPENSE)
Interest expense ........................ (2,307) (4,283) (4,319)
Interest income ......................... -- 109 234
Realized loss on sale of investments .... (32,859) -- --
Gain (loss) on sale of assets ........... 2,780 (45) --
----------- ----------- -----------
Income (loss) before income taxes ....... (98,951) 29,633 (55,185)
Income taxes ............................ 400 800 800
----------- ----------- -----------
Net Income (Loss) ....................... $ (99,351) $ 28,833 $ (55,985)
=========== =========== ===========
BASIC & DILUTED EARNINGS (LOSS) PER SHARE $ (0.01) $ 0.00 $ (0.01)
=========== =========== ===========
Weighted Average Shares Outstanding ..... 6,826,736 6,720,649 6,720,649
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 4
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Capital in
Preferred Stock Common Stock Excess of Retained
Shares Amount Shares Amount Par Value Deficit
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance July 1, 1997 .................. -- $ -- 6,710,649 $ 6,711 $ 280,859 $(162,591)
Issuance of shares for services ....... -- -- 10,000 10 4,990 --
Net Loss .............................. -- -- -- -- -- (55,985)
--------- --------- --------- --------- --------- ---------
Balance June 30, 1998 ................. -- -- 6,720,649 6,721 285,849 (218,576)
Net Income ............................ -- -- -- -- -- 28,833
--------- --------- --------- --------- --------- ---------
Balance June 30, 1999 ................. -- -- 6,720,649 6,721 285,849 (189,743)
--------- --------- --------- --------- --------- ---------
Issuance of shares for employee bonuses -- -- 160,000 160 31,840 --
Net Loss .............................. -- -- -- -- -- (99,351)
--------- --------- --------- --------- --------- ---------
Balance December 31, 1999 (Unaudited) . -- $ -- 6,880,649 $ 6,881 $ 317,689 $(289,094)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 5
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-------------------
1999 1999 1998
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) ................................. $(99,351) $ 28,833 $(55,985)
Adjustments to reconcile Net income (loss)
to net cash provided by (used in)
Operating activities:
Amortization and depreciation ............... 17,200 29,719 27,417
(Gain) Loss on sale of assets ............... (2,780) 45 --
Common stock issued for services ............ 32,000 -- --
(Gain) Loss on sale of investments .......... 32,859 -- --
Change in operating assets and liabilities:
Accounts receivable ......................... -- -- 5,500
Investments held for sale ................... -- (57,750) --
Accounts payable ............................ 6,485 (2,759) (1,071)
Checks written in excess of cash in bank .... -- -- (3,994)
Accrued expenses ............................ (5,200) (1,600) 20,728
-------- -------- --------
Net cash used by operating activities ............. (18,787) (3,512) (7,405)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Stockholders loans ................................ 980 1,259 7,909
Proceeds From Investments ......................... 24,300 -- --
Notes receivable .................................. -- -- 19,500
Purchase of property and equipment ................ (5,775) (4,561) (15,200)
-------- -------- --------
Net cash used in investing activities ............. 19,505 (3,302) 12,209
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt .................... -- -- --
Principle payments on debt ........................ (1,553) (437) (404)
Proceeds from capital stock issued ................ -- -- 5,000
-------- -------- --------
Net cash provided by (used in) financing activities (1,553) (437) 4,596
-------- -------- --------
Net increase (decrease) in
cash and cash equivalents ....................... (835) (7,251) 9,400
Cash and cash equivalents at beginning of period .. 2,312 9,563 163
-------- -------- --------
Cash and cash equivalents at end of period ........ $ 1,477 $ 2,312 $ 9,563
======== ======== ========
</TABLE>
F - 6
<PAGE>
PHOENIX MEDIA GROUP, LTD.
STATEMENTS OF CASH FLOW
CONTINUED
<TABLE>
<CAPTION>
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-------------------
1999 1999 1998
-------- -------- --------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
<S> <C> <C> <C>
Interest ........................ $ 2,371 $ 4,283 $ 4,319
Income taxes .................... 800 -- 1,050
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
- ---------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F - 7
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES
This summary of accounting policies of Phoenix Media Group, Ltd. is
presented to assist in understanding the Company's financial statements. The
accounting policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
The unaudited financial statements as of December 31, 1999 and for the
Six months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the Four months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full Year.
ORGANIZATION AND BASIS OF PRESENTATION
The Company was organized under the laws of the State of Utah on
December 5, 1985 as Bullseye Corp. On June 22, 1992 the name of the Company was
changed to Natural Solutions, Ltd. and the corporate domicile was changed to the
State of Nevada. On March 25, 1994, the Company name was changed to Phoenix
Media Group, Ltd. The Company is in the development stage through June 30, 1994.
The June 30, 1995 year is the first year during which it is considered an
operating company.
NATURE OF BUSINESS
The Company was formed for the purpose of creating a vehicle to obtain
capital to seek out, investigate and acquire interests in products and
businesses which may have potential for profit. The Company's objective is to
become a major player in the communications industry with an emphasis on radio,
television and Internet services.
CASH EQUIVALENTS
For the purpose of reporting cash flows, the Company considers all
highly liquid debt instruments purchased with maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
INCOME TAXES
The Company accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.
F - 8
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
EARNINGS (LOSS) PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128,
"Earnings per Share" (EPS). SFAS No. 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
The reconciliations of the numerators and denominators of the basic and
diluted earnings per share ("EPS") computations are as follows:
For the Six Months Ended December 31, 1999
------------------------------------------
Per Share
Income Shares Amount
--------- --------- ---------
EPS
Net Income to common
SHAREHOLDERS .......................... $ (99,351) 6,826,736 (0.01)
========= ========= =========
For the Year Ended June 30, 1999
------------------------------------
Per Share
Income Shares Amount
--------- --------- ---------
EPS
Net Income to common
SHAREHOLDERS ......................... $ 28,833 6,720,649 $ --
========= ========= =========
For the Year Ended June 30, 1998
------------------------------------
Per Share
Income Shares Amount
--------- --------- ---------
EPS
Net Loss to common
SHAREHOLDERS .......................... $ (55,985) 6,720,649 $ (0.01)
========= ========= =========
F - 9
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
AMORTIZATION
Intangibles and goodwill are amortized using the straight line method
over five years. Amortization expense related to intangibles and goodwill
totaled $17,000 for each of the years ended June 30, 1999 and 1998.
Goodwill was created by the excess of the purchase price over cost of
acquisitions made in fiscal year 1995, and is amortized on a straight-line basis
over 5 years. Management regularly assesses the carrying amount of intangible
assets and where, in their opinion, the value is less than the carrying amount,
the loss is recognized immediately.
The Company has implemented the provisions of SFAS No. 121, "Accounting
for the impairment of Long-Lived Assets and for Long-Lived Assets Disposed of."
SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. If the sum of the expected future cash flows
from the use of the assets and its eventual disposition (undiscounted and
without interest charges) is less than the carrying amount of the asset, an
impairment loss is recognized.
DEPRECIATION
Office furniture, equipment and leasehold improvements, are stated at
cost. Depreciation and amortization are computed using the straight-line method
over the estimated economic useful lives of the related assets as follows:
Office furniture 5-10 years
Equipment 5- 7 years
Vehicles 5-10 years
Office Condominium 39 years
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
F - 10
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications have been made in the 1998 financial
statements to conform with the 1999 presentation.
CONCENTRATION OF CREDIT RISK
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
INVESTMENTS
The Company's securities investments that are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities. Trading securities are recorded at fair value on the balance
sheet in current assets, with the change in fair value during the period
included in earnings.
Investments in securities are summarized as follows:
December 31, 1999
-------------------------------
Gross Gros
Unrealized Unrealized Fair
Gain Loss Value
--------- --------- ---------
Trading Securities ............................ -- -- --
========= ========= =========
F - 11
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
- --------------------------------------------------------------------
INVESTMENTS (CONTINUED)
June 30, 1999
-------------------------------
Gross Gros
Unrealized Unrealized Fair
Gain Loss Value
--------- --------- ---------
Trading Securities ......................... -- -- 57,750
========= ========= =========
June 30, 1998
-------------------------------
Gross Gros
Unrealized Unrealized Fair
Gain Loss Value
--------- --------- ---------
Trading Securities ............................ -- -- --
========= ========= =========
Realized Gains and losses are determined on the basis of specific
identification. During the six months ended December 31, 1999 and the years
ended June 30, 1999 and 1998, sales proceeds and gross realized gains and losses
on securities classified as trading securities were:
(Unaudited)
For the Six
Months Ended For the Year Ended
December 31, June 30,
-----------------------
1999 1999 1998
--------- --------- ---------
Sale Proceeds ........................ $ 24,300 $ -- $ --
========= ========= =========
Gross Realized Losses ................ $ 32,859 $ -- $ --
========= ========= =========
Gross Realized Gains ................. $ -- $ -- $ --
========= ========= =========
F - 12
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 2 - CAPITAL TRANSACTIONS
PREFERRED STOCK
The Board of Directors of the Company has the authority to fix by
resolution for each particular series of preferred stock the number of shares to
be issued; the rate and terms on which cumulative or non-cumulative dividends
shall be paid; conversion features of the preferred stock; redemption rights and
prices, if any; terms of the sinking fund, if any to be provided for the shares;
voting powers of preferred shareholders; and any other special rights,
qualifications, limitations, or restrictions.
NOTE 3 - STOCK OPTIONS
Effective April 9, 1993 the Board of Directors approved a five year
"Option to Purchase" to be exercised on or after May 1, 1993 and to expire at
midnight, mountain time, on June 30, 1998. Under the provisions of the plan,
options to purchase up to 230,000 shares at prices ranging from $1.00 to $5.00
per share were granted to eight directors and members of the Advisory Board. The
purchase price for the common stock under these options may be paid in cash, by
delivering shares of common stock already owned by the optionee (valued at its
fair market value at the time of exercise), by delivering options (valued at the
amount by which the fair market value of the common stock at the time of
exercise exceeds the exercise price), or other consideration acceptable to the
Company. At June 30, 1998 all 230,000 options expired unexercised.
NOTE 4 - INCOME TAXES
Deferred taxes result from temporary differences in the recognition of
income and expenses for income tax reporting and financial statement reporting
purposes. Deferred benefits of $64,000 and $74,000 for the years ended June 30,
1999 and 1998 respectively, are the result of net operating losses.
F - 13
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 4 - INCOME TAXES (CONTINUED)
The Company has recorded net deferred income taxes in the accompanying
balance sheets as follows:
As at June 30,
---------------------
1999 1998
--------- ---------
Future deductible temporary differences related to
Reserves, accruals, and net operating losses ........ $ 64,000 $ 74,000
Valuation allowance .................................... (64,000) (74,000)
--------- ---------
Net Deferred Income Tax ................................ $ -- $ --
========= =========
As of June 30, 1999, the Company had a net operating loss ("NOL") carry
forward for income tax reporting purposes of approximately $189,000 available to
offset future taxable income. This net operating loss carry forward expires at
various dates between June 30, 2001 and 2009. A loss generated in a particular
year will expire for federal tax purposes if not utilized within 15 years.
Additionally, the Internal Revenue Code contains provisions which could reduce
or limit the availability and utilization of these NOLs if certain ownership
changes have taken place or will take place. In accordance with SFAS No. 109, a
valuation allowance is provided when it is more likely than not that all or some
portion of the deferred tax asset will not be realized. Due to the uncertainty
with respect to the ultimate realization of the NOLs, the Company established a
valuation allowance for the entire net deferred income tax asset of $64,000 as
of June 30, 1999. Also consistent with SFAS No. 109, an allocation of the income
(provision) benefit has been made to the loss from continuing operations.
The difference between the effective income tax rate and the federal
statutory income tax rate on the loss from continuing operations are presented
below:
As at June 30,
---------------------
1999 1998
--------- ---------
Expense (Benefit) at the federal statutory rate of 34% $ 9,800 $ (19,000)
Nondeductible expenses 340 (12)
--------- ---------
Utilization of net operating loss carryforward $ (10,140) $ 19,012
--------- ---------
$ -- $ --
========= =========
f - 14
<PAGE>
PHOENIX MEDIA GROUP, LTD.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(REFERENCES TO DECEMBER 31, 1999 ARE UNAUDITED)
(CONTINUED)
NOTE 5 - RELATED PARTY TRANSACTIONS
During 1997 The Company loaned an officer/director $20,100, interest at
1%, repayable at $201 per month for ten months with a balloon payment due in
2007. In addition an officer/director advanced $8,000 at 0% interest, to the
Company.
During the six months ended December 31, 1999, the Company loaned an
additional $980.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
(Unaudited)
December 31, As at June 30,
-----------------
1999 1999 1998
------- ------- -------
Mortgage payable with interest at 8.75%,
payable monthly $393.36, due March 22,
2003, collateralized by deed of trust ........... $48,474 $48,707 $49,145
Note Payable with interest at 4.90%,
payable monthly $398.81, due July 15, 2004 ..... 19,854 -- --
------- ------- -------
Less Current Maturities .......................... 4,732 477 437
------- ------- -------
Net Long-term Debt ............................... $63,596 $48,230 $48,708
======= ======= =======
Annual principal payments on long-term debt are as follows:
2000 $ 4,732
2001 4,633
2002 4,886
2003 5,154
2004 3,333
------------------
thereafter $ 45,844
==================
F - 15
ARTICLES OF INCORPORATION
(1) NAME OF CORPORATION: NATURAL SOLUTIONS, INC.
(2) RESIDENT AGENT:
Name of Resident Agent: The Corporation Trust Company of Nevada
Mailing Address: #1 East First Street Reno 89501
(3) Shares: (number of shares the corporation is authorized to issued)
Number of shares with par value: 55,000,000 Par value: $.001 Number
of shares without par value:
(4) GOVERNING BOARD: SHALL BE STYLED AS (CHECK ONE): X DIRECTORS Trustees
The FIRST BOARD OF DIRECTORS shall consist of 2 members and the names
and addresses are as follows:
Erma Davis Johnson #4 Triad Center, Ste. 220, S.L.C., UT 84180
Barbara Terpstra #4 Triad Center, Ste. 220, S.L.C., UT 84180
(5) PURPOSE (optional - see reverse side): The purpose of the corporation
shall be:
(6) PERSONAL LIABILITY(PURSUANT TO NRS 78.037):CHECK ONE: X ACCEPT
Decline IF YOU CHOOSE ACCEPT, PLEASE CHECK ONE: LIMITING X
Eliminating This provision eliminates or limits the personal
liability of directors, officers or stockholders for damages for
breach of fiduciary duty as a director or officer, but such provision
must not eliminate or limit the liability of a director or officer
for: (a) Acts or omissions which involve intentional misconduct,
fraud or knowing violation of law; or (b) The payments of
distributions in violation of NRS 78.300.
(7) OTHER MATTERS: Any other matters to be included in these articles may
be noted on separate pages and incorporated by reference herein as a
part of THESE ARTICLES: NUMBER OF PAGES ATTACHED 4. ---
(8) SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (Signatures must be notarized)
/S/ ERMA DAVIS JOHNSON Subscribed and sworn before
-------------------------------
ERMA DAVIS JOHNSON THIS 10TH day of June, 1992.
#4 TRIAD CENTER, STE. 220, SLC, UT 84180 /S/
---------------------------------------- ----------------
Notary Public
/S/ BARBARA TERPSTRA
Barbara Terpstra
#4 TRIAD CENTER, STE. 220, SLC, UT 84180
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
The Corporation Trust Company of Nevada hereby accepts appointment as
Resident Agent for the above named corporation.
BY /S/ CORINNE M. LUDE, CORINNE M. LUDE, ASST. SEC. JUNE 11, 1992
---------------------- -------------
Signature of Resident Agent Date
23
<PAGE>
7. OTHER MATTERS
The total number of shares of all classes of stock which this
corporation shall have authority to issue is 55,000,000 shares, consisting of
5,000,000 shares of preferred stock, par value $.001 per share (hereinafter the
"Preferred Stock"), and 50,000,000 shares of common stock, per value $0.001
(hereinafter "Common Stock"). A shareholder shall have no pre-emptive rights to
acquire any securities of this Corporation.
1. Preferred Stock. Shares of Preferred Stock may be issued from time
to time in one or more series as may from time to time be determined by the
Board of Directors. Each series shall be distinctly designated. All shares of
any one series of the Preferred Stock shall be alike in every particular, except
that there may be different dates from which dividends thereon, if any, shall be
cumulative, of made cumulative. The powers, preferences and relative,
participating, optional and other rights of each such series, and the
qualifications, limitations or other restrictions thereof, if any, may differ
from those of any and all other series at any time outstanding. Except as
hereinafter provided, the Board of Directors of this corporation is hereby
expressly granted authority to fix by resolution or resolutions adopted prior to
the issuance of any shares of each particular series of Preferred Stock, the
designation, powers, preferences and relative, participating, optional and other
rights, and the qualifications, limitations and restrictions thereof, if any, of
such series, including, but without limiting the generality of the foregoing,
the following:
(a) the distinctive designation of, and the number of shares of
Preferred Stock which shall constitute the series, which number may be increased
(except as otherwise fixed by the Board of Directors) or decreased (but not
below the number of shares thereof then outstanding) from time to time by action
of the Board of Directors;
(b) the rate and times at which, and the terms and conditions upon
which, dividends, if any, on shares of the series shall be paid, the extent of
preferences or relation, if any, of such dividends to the dividends payable on
any other class or classes of stock of this corporation, or on series of
Preferred Stock or any other class or classes of stock of this corporation, and
whether such dividends shall be cumulative or non-cumulative;
(c) the right, if any, of the holders of the shares of the series to
convert the same into, or exchange the same for, shares of any other class or
classes of stock of this corporation, or of any series of Preferred Stock or of
any other class or classes of stock of this corporation, and the terms and
conditions of such conversion or exchange;
(d) whether shares of the series shall be subject to redemption, and
the redemption price or prices including, without limitation, a redemption price
or prices payable in shares of the Common Stock and the time or times at which,
and the terms and conditions upon which, shares of the series may be redeemed;
(e) the rights, if any, of the holders of the shares of the series
upon voluntary or involuntary liquidation, merger, consolidation, distribution
or sale of assets, dissolution or winding-up of this corporation;
(f) the terms of the sinking fund or redemption of purchase account,
if any, to be provided for shares of the series and
24
<PAGE>
(g) the voting powers, if any, of the holders of shares of the series
which may, without limiting the generality of the foregoing, include the right
to more or less than one vote per share on any or all matters voted upon by the
shareholders and the right to vote, as a series by itself or together with other
series of Preferred Stock as a class, upon such matters, under such
circumstances as the Board of Directors mat fix including, without limitation,
the right, voting as a series by itself or together with other series of
Preferred Stock or together with all series of Preferred Stock as a class, to
elect one or more directors of this corporation in the event that there shall
been a default in the payment of dividends on any one or more series of
Preferred Stock or under such other circumstances as the Board may determine.
2. Common Stock.
(a) Each outstanding share of Common Stock of the Corporation shall
entitle the holder thereof to one vote on each matter submitted at a vote at a
meeting of shareholders or for their consent or approval. A shareholder shall
have no right to cumulate his votes.
(b) After the requirements with respect to preferential dividends on
Preferred Stock (fixed in accordance with the provisions of subparagraph 1(b) of
this matter), if any, shall have been met and after this corporation shall have
complied with all the requirements, if any, with respect to the setting aside of
sums as sinking funds or redemption or purchase accounts (fixed in accordance
with the provisions of subparagraph 1(b) of this matter) and subject further to
any other conditions which may be fixed in accordance with the provisions of
paragraph 1 of this matter, then, but not otherwise, the holders of Common Stock
shall be entitled to receive such dividends, if any, as may be declared from
time to time by the Board of Directors.
(c) After distribution in full of the preferential amount (fixed in
accordance with the provisions of paragraph 1 of this matter), if any, to be
distributed to the holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets, dissolution or winding-
up this corporation, tangible and intangible, or whatever kind available for
distribution to stockholders, ratable in proportion to the number of shares of
Common Stock held by each.
(d) Except as may otherwise be required by law, this Item 7, Other
Matters under the Articles of Incorporation, or the provisions of the resolution
or resolutions as may be adopted by the Board of Directors pursuant to paragraph
1 of this matter, each share of Common Stock held by such holder on each matter
voted upon by shareholders.
3. Other Provisions.
(a) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the powers, preferences and rights of each other
series of Preferred Stock shall, in each case, be fixed from time to time by the
Board of Directors in the resolution or resolutions adopted pursuant to
authority granted in paragraph 1 of this matter, and the consent by class or
series vote or otherwise of the holders of Preferred Stock as are from time to
time outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether the powers, preferences
and rights of such other series shall be fixed by the Board of Directors as
senior to, or on parity with, the powers, preferences and rights of such
outstanding series, or any of them; provided, however, that the Board of
Directors may provide in such resolution or resolutions adopted with respect to
any series of Preferred Stock
25
<PAGE>
that the consent of the holders of a majority (or such greater proportion as
shall therein be fixed) of the outstanding shares of such series voting thereon
shall be required for the issuance of any or all there series of Preferred
Stock.
(b) Subject to the provisions of the last preceding subparagraph,
shares of any series of Preferred Stock may be issued from time to time as the
Board of Directors shall determine and on such terms and for such consideration
and shall be fixed by the Board of Directors.
(c) Shares of Common Stock may be issued from time to time as the
Board of Directors shall determine and on such terms and for such consideration
as shall be fixed by the Board of Directors.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or series
of stock or of other securities of the corporation shall have any pre-emptive
right to purchase or subscribe for any unissued stock of any class or series or
any additional shares of any class of series to issued by reason of any increase
of the authorized capital stock of the corporation of any class or series, or
bonds, certificates of indebtedness, debentures or other securities convertible
into or exchangeable for stock of the corporation of any class or series, or
carrying any right to purchase stock of any class or series, or carrying any
right to purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any right to
purchase stock, may be issued and disposed of pursuant to resolution of the
Board of Directors to such persons, firms, corporations or associations, whether
such holders or others, and upon such terms as may be deemed advisable by the
Board of Directors in the exercise of its sole discretion.
4. By-laws.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the By- laws of the Corporation.
5. Indemnification
The Corporation may indemnify each director and officer, and any
employee or agent of the Corporation, his heirs, executors and administrators,
against expenses reasonably incurred or liability incurred by him in connection
with any action, suit or proceeding to which he may be made a party by reason of
his being or having been a director, officer, employee or agent of the
Corporation to the full extent permitted by the laws of the State of Nevada now
existing or as such laws may hereafter be amended.
6. Amendment
The Corporation reserves the right to amend, alter, change, or repeal
all or any portion of the provisions contained in its Certificate of
Incorporation from time to time in accordance with the laws of the State of
Nevada, and all rights conferred on stockholders herein are granted subject to
this reservation.
26
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
NATURAL SOLUTIONS, LTD.
We the undersigned Erma D. Johnson (President or Vice President) and
Marlen Johnson (Secretary or Assistant Secretary) of Natural Solutions, Ltd. do
hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 8 day of February, 1994, adopted a resolution
to amend the original articles as follows:
Article 1 is hereby amended to read as follows:
Amendment to the Corporate name.
To: Highseas Entertainment and Casino, Ltd.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 16,016,875, that the
said change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/S/ ERMA D. JOHNSON
President or Vice President
/S/ MARLEN JOHNSON
Secretary or Assistant Secretary
State of Utah
County of Salt Lake
On March 17, 1994, personally appeared before me, a Notary Public,
Erma D. Johnson and Marlen Johnson, who acknowledged that the executed the above
instrument.
/S/ NOTARY PUBLIC
27
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
HIGHSEAS ENTERTAINMENT AND CASINO, LTD.
We the undersigned Erma D. Johnson (President or Vice President) and
Marlen Johnson (Secretary or Assistant Secretary) of Highseas Entertainment and
Casino, Ltd. do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened, held on the 22 day of March, 1994, adopted a resolution to
amend the original articles as follows:
Article 1 is hereby amended to read as follows:
Amendment to the Corporate name.
To: Phoenix Media Group, Ltd.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 2,225,374, that the
said change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/S/ ERMA D. JOHNSON
President or Vice President
/S/ MARLEN JOHNSON
Secretary or Assistant Secretary
State of Utah
County of Salt Lake
On March 22, 1994, personally appeared before me, a Notary Public,
Erma D. Johnson and Marlen Johnson, who acknowledged that the executed the above
instrument.
/S/ NOTARY PUBLIC
28
<PAGE>
BY-LAWS
OF
NATURAL SOLUTIONS, LTD.
ARTICLE I
NAME, REGISTERED OFFICE, AND REGISTERED AGENT
SECTION 1. NAME. The Name of this corporation is Natural Solutions,
Ltd.
SECTION 2. REGISTERED OFFICE AND REGISTERED AGENT. The address of the
registered office of this corporation in the State of Nevada is 1 East First
Street, Reno, Nevada 89501. The name of the registered agent of this corporation
at that address is Corporation Trust Company of Nevada. The corporations shall
at all times maintain a registered office. The location of the registered office
may be changed by the Board of Directors. The corporation may also have offices
in such other places as the Board may from time to time designate.
ARTICLE II
SHAREHOLDERS MEETINGS
SECTION 1. ANNUAL MEETINGS. The annual meeting of the shareholders of
the corporation shall be held at such place within or without the State of Utah
and at such time as the Board of Directors shall determine in compliance with
these By-laws. If such day is a legal holiday, the meeting shall be on the next
business day. This meeting shall be for the election of Directors and for the
transaction of such other business as may properly come before it.
SECTION 2. SPECIAL MEETINGS. Special meetings of shareholders, other
than those regulated by statute, may be called at any time by the Chairman of
the Board, the President or a majority of the Directors, and must be called by
the President upon written request of the holders of ten percent (10%) of the
outstanding shares entitled to vote at such special meeting. Written notice of
such meeting stating the place, the date and hour of the meeting, the purpose or
purposes of for which it is called, and the name of the person by whom or at
whose direction the meeting is called shall be given. The notice shall be given
to each shareholder of record in the same manner as notice of the annual
meeting. No business transactions other than that specified in the notice of the
meeting shall be transacted at any such special meeting.
SECTION 3. NOTICE OF SHAREHOLDERS MEETINGS. The Secretary shall give
written notice stating the place, the date, and hour of the meeting and, in the
case of a special meeting, the purpose(s) for which the meeting is called, which
shall be delivered not less than ten (10) nor more than sixty (60) days prior to
the date of the meeting, either personally or by mail to each
29
<PAGE>
shareholder of record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited on the United States mail,
addressed to the shareholder at his address as it appears on the stock transfer
books of the given corporation, with postage thereon prepaid. The written notice
may also be given by any other officer of the corporation.
SECTION 4. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Utah as the place of meeting for
any annual meeting called by the Board of Directors. A waiver of notice signed
by all shareholders entitled to vote at a meeting may designate any place,
either within or without the State of Utah, as the place for the holding of such
meeting.
SECTION 5. RECORD DATE. The Board of Directors may fix a date not
less than ten (10) nor more than sixty (60) days prior to any meeting as the
record date for the purpose of determining shareholders entitled to notice of
and to vote at any such meeting of the shareholders. The stock transfer books
may be closed by the Board of Directors for a stated period not to exceed sixty
(60) days for the purpose of determining shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other purpose.
SECTION 6. QUORUM. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at any meeting of shareholders. If less than a majority of
the outstanding shares are represented at any such meeting, a majority of the
shares so represented may adjourn the meeting from time to time without further
notice. At a meeting resumed after such any adjournment at which a quorum shall
be present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at any
duly assembled meeting at which a quorum is in attendance may continue to
transact business until adjournment, notwithstanding the withdrawal of the
shareholders in such number that less than a quorum remain.
SECTION 7. VOTING. The holder of an outstanding share entitled to
vote at any meeting may vote at such meeting in person or by proxy. Every
shareholder shall be entitled to one vote for each share standing in his name on
the records of the corporation upon each matter submitted to a vote at a meeting
of shareholders and all shareholder actions shall be determined by a majority of
the voted cast at any meeting of shareholders by the holders or proxies of
shares entitled to vote thereon.
SECTION 8. PROXIES. At all meetings of shareholders, a shareholder
may vote in person or by proxy executed in writing by the shareholder or by his
duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary
or other officer of the corporation before or at the time of the meeting. No
proxy shall be valid after eleven (11) months from the date of its execution,
unless otherwise provided in the proxy.
ARTICLE III
30
<PAGE>
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
Corporation shall be managed by its Board of Directors. The Board of Directors
may adopt such rules and regulations for the conduct of its meetings and the
management of the Corporation as it deems proper.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of Directors
of the Corporation shall not be less than one (1) or more than twenty-five (25).
Each Director shall hold office until the next annual meeting of shareholders
and until his successor shall have been duly elected and qualified. Directors
need not be residents of the State of Utah or shareholders of the Corporation.
The number of Directors may be fixed by a resolution of the Board of Directors.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this By-law, immediately
following after the same place as the annual meeting of shareholders. The Board
of Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special Meetings of the Board of
Directors may be called by order of the Chairman of the Board, the President, or
by a majority of Directors. The Secretary, shall give notice of the time and
place of each special meeting by mailing the same at least two (2) days before
the meeting or by telephoning or telegraphing the same at lease one day before
the meeting to each Director.
SECTION 5. MEETING BY TELEPHONE. Members of the Board of Directors or
any committee designated by the Board may participate in a meeting of the Board
or committee by means of conference telephone or similar communications
equipment by which all persons participating in the meeting can hear each other,
and participation in a meeting under this section shall constitute presence in
person at the meeting.
SECTION 6. QUORUM. A majority of the Board of Directors shall
constitute a quorum for the transactions of business, but less than a quorum may
adjourn any meeting from time to time until a quorum shall be present, whereupon
the meeting may be held, as adjourned, without further notice. At any meeting at
which every director shall be present, even though without any notice, any
business may be transacted.
SECTION 7. MANNER OF ACTING. At all meeting of the Board of
Directors, each Director shall have one vote. The act of a majority present at a
meeting shall be the act of the Board of Directors, provided a quorum is
present.
SECTION 8. VACANCIES. A vacancy in the Board of Directors shall be
deemed to exist in case of death, resignation, or removal of any director, or is
the authorized number of directors be increased, or if the shareholders fail, at
any meeting of shareholders at which any director is to be
31
<PAGE>
elected, to elect the full, authorized number to be elected at that meeting. If
any vacancy shall occur in the Board of Directors, the remaining directors may,
by the vote of the majority of such remaining directors, appoint such personas
as substitute directors or new interim directors who shall be directors during
such absence, disability or interim period or until the replaced director shall
return to duty or until the next annual meeting of shareholders. The
determination by the Board of Directors, as shown on the minutes of the fact of
such absence or disability or the desirability of an interim director and the
duration of the terms for such directors shall be conclusive as to all persons
and the corporation.
SECTION 9. REMOVALS. Directors may be removed at any time without
cause by vote of the shareholders holding a majority of the shares outstanding
and entitled to vote. Such vacancy shall be filled by the directors then in
office, though less than a quorum, and any person so designated or appointed
shall hold office until the next annual meeting or until his successor is DULY
ELECTED AND QUALIFIED; PROVIDED that any directorship to be filled by reason of
removal by the shareholders may be filled by election by the shareholders at the
meeting at which the director is removed. No reduction of the authorized number
of directors shall have the effect of removing any director prior to the
expiration of his term of office.
SECTION 10. RESIGNATION. A director may resign at any time by
delivering written notification thereof to the President or Secretary of the
Corporation. Resignation shall become effective upon its acceptance by the Board
of Directors; provided, however, that if the Board of Directors has not acted
thereon within ten (10) days after the date of its delivery, the resignation
shall be deemed accepted upon the tenth day.
SECTION 11. PRESUMPTION OF ASSENT. A director of the Corporation who
is present at a meeting of the Board of Directors shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after adjournment of the meeting. Such right of dissent
shall not apply to a director who voted in favor of such action.
SECTION 12. COMPENSATION. By resolution of the Board of Directors,
the directors may be paid for their expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid a fixed sum for attendance at
each such meeting or a stated salary as director. No such payment shall preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor.
SECTION 13. INFORMAL ACTION BY DIRECTORS. Any action required to be
taken at a meeting of Directors or any action which may be taken at a meeting of
directors, may be taken without a meeting by a written consent, setting forth
the action so taken, signed by all of the directors of the Corporation.
32
<PAGE>
SECTION 14. CHAIRMAN. THE BOARD OF DIRECTORS MAY elect from its own
number a Chairman of the Board, who shall preside at all meetings of the Board
of Directors, and shall perform such other duties as may be prescribed from time
to time by the Board of Directors. The Chairman of the Board shall be authorized
to do and perform all actions which the President of the Corporation may do and
perform.
ARTICLE IV
DIVISIONS OF THE CORPORATION
SECTION 1. OPERATION OF DIVISIONS. The Board of Directors shall have
the power to establish one or more operating divisions of the Corporation. Each
division of the Corporation shall have such authority, responsibilities, and
duties as may be delegated to it from time to time by the Board of Directors.
Each division of the Corporation shall adopt Rules of Procedure for the conduct
of its affairs not inconsistent with the Articles of Incorporation and By-laws
of the Corporation. Such Rules of Procedure shall become effective when approved
by the Board of Directors.
SECTION 2. ADVISORY BOARD. The Board of Directors of the Corporation
may appoint individuals who may, but need not, be directors, officers or
employees of the Corporation to serve as members of an Advisory Board to one or
more of the divisions of the Corporation. The members of any such Advisory Board
shall keep minutes of their meetings which shall be submitted to the Board of
Directors of the Corporation. The term of office of any member of the Advisory
Board shall be at the pleasure of the Board of Directors of the Corporation. The
function of such Advisory Board shall be to advise with the respect of the
affairs of the operating divisions of the Corporation to which it is appointed.
SECTION 3. OFFICERS OF THE DIVISIONS. The divisions of the
Corporation shall each have a President and such Vice Presidents as the Board of
Directors may appoint. The Secretary and Treasurer of the Corporation shall also
be deemed the Secretary and Treasurer of each division.
SECTION 4. DUTIES OF OFFICERS OF DIVISIONS. Any employee designated
as an officer of a division shall have such authority, responsibilities, and
duties with respect to the applicable division corresponding to those normally
vested in the comparable officer of the Corporation by these By-laws, subject to
such limitations as may be imposed by the Board of Directors, the Articles of
Incorporation or by these By-laws. The President of a division may sign, execute
and deliver in the name of such division only such contracts, agreements or
other documents as may be prescribed from time to time by the President of the
Corporation or the Board of Directors. The designation of any individual as
President of Vice President of any division of the Corporation shall not be
permitted to conflict in any way with any executive or administrative authority
of any officer of the Corporation established from time to time by the Board of
Directors of the Corporation. The president of each division shall report
directly to President and Chief Executive Officer of the Corporation. The
President of a division, upon written approval
33
<PAGE>
of the President of the Corporation, may appoint or remove such agents or
employees of a division as may, from time to time, become necessary or useful to
the operation of such division.
SECTION 5. TERM OF OFFICE, RESIGNATION AND REMOVAL. Each officer of a
division shall hold office until his successor shall have been duly appointed by
the Board of Directors, or until his death, or until he shall resign. Any
officer of a division may resign at any time by delivery of a written
resignation either to the President of the Corporation, the Secretary of the
Corporation or the Board of Directors. Such resignation shall take effect upon
delivery. Any officer of the division may be removed from office only by the
Board of Directors. Such officer shall be removed when in the sole judgement of
the Board of Directors the best interests of the division of the Corporation
will serve thereby. Any such removal shall require majority vote of the Board of
Directors.
SECTION 6. AUTHORIZED SIGNATURES AND CHECKING ACCOUNTS. The Board of
Directors may authorize each division to have a separate checking account. Any
check issued by or for the benefit of any division shall require at least two
signatures, unless the Board of Directors, by resolution, provides otherwise.
The corporate or divisional officers authorized to sign such checks of any
division shall be the President of such division, the President of the
Corporation, the Secretary of the Corporation and the Treasurer of the
Corporation.
ARTICLE V
OFFICERS
SECTION 1. NUMBER. The corporate officers shall be a President, or
one or more Vice Presidents as determined from time to time by the Board of
Directors, a Secretary, and a Treasurer, each of whom shall be elected by a
majority of the Board of Directors. Such other corporate officers and assistant
officers may be deemed necessary may be elected or appointed by the Board of
Directors. In its discretion, the Board of Directors may leave unfilled for any
such period as it may determine any corporate office except those of President
and Secretary. Any two or more corporate offices may be held by the same person,
except the offices of President and Secretary. Corporate officers need not be
directors or shareholders of the Corporation.
SECTION 2. ELECTION AND TERM OF OFFICE. The corporate officers to be
elected by the Board of Directors shall be elected annually by the Board of
Directors at the first meeting of the Board of Directors held after each annual
meeting of the shareholders. If the election of corporate officers shall not be
held at such meeting, such election shall be held as soon thereafter as
convenient. Each corporate officer shall hold office until his successor shall
have been duly elected and shall have qualified or until his death or until he
shall resign or shall have been removed in the manner hereinafter provided.
34
<PAGE>
SECTION 3. RESIGNATION. Any corporate officer may resign at any time
by delivering a written resignation either to the corporate President, the
corporate Secretary, or the Board of Directors. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
SECTION 4. REMOVAL. Any corporate officer or agent may be removed by
the Board of Directors, with or without cause, whenever in its judgement, the
best interests of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of a corporate officer or agent shall not of itself
create contract rights. Any such removal shall require a majority vote of the
Board of Directors, exclusive of the corporate officer in question if he is also
a Director.
SECTION 5. VACANCIES. A vacancy is any corporate office because of
death, resignation, removal, disqualification or otherwise, or if a new
corporate office shall be created, may be filled by the Board of Directors for
the unexpired portion of the Term.
SECTION 6. PRESIDENT. The corporate President shall be the chief
executive and administrative officer of the Corporation. The President shall
preside at all meetings of the shareholders and, in the absence of the Chairman
of the Board, at meetings of the Board of Directors. The President shall
exercise such duties as customarily pertain to the office of President and shall
have general and active supervision over the property, business, officers, and
affairs of the Corporation and each division. The President may appoint
officers, agents, or employees on the corporate or divisional level other than
those appointed by the Board of Directors. The President may sign, execute and
deliver in the name of the Corporation powers of attorney, contracts, bonds and
other obligations, and shall, perform such other duties as may be prescribed
from time to time by the Board of Directors or by these By-laws.
SECTION 7. EXECUTIVE VICE PRESIDENT. In the event that the Board of
Directors authorized the election of an Executive Vice President, the corporate
Executive Vice President shall be the chief executive and administrative officer
of the Corporation in the absence of the President, and in such absence shall be
vested with all rights, powers, privileges, and obligations of the President as
more fully set forth in Section 6 of the Article V. In addition, the Executive
Vice President may sign, execute, and deliver in the name of the Corporation,
powers of attorney, contracts, bonds and other obligations when the corporate
President is present but unavailable for the execution of such documents, and he
shall perform such other duties as may be prescribed from time to time by the
Board of Directors, and the corporate President or these By-laws.
SECTION 8. VICE PRESIDENTS. Corporate Vice President shall have such
powers and perform such duties as may be assigned to them by the Board of
Directors or by the corporate President. In the absence or disability of the
corporate President, the corporate Vice President designated by the Boars or by
the corporate President shall perform the duties and exercise the powers of the
corporate President. A corporate Vice President may sign and execute contracts
and other obligations pertaining to the regular course of his/her duties.
35
<PAGE>
SECTION 9. SECRETARY. The corporate Secretary shall also be deemed
the Secretary of each division. The corporate Secretary shall, subject to the
direction of the corporate President, Executive Vice President, or a designated
Vice President, keep the minutes of all meetings of the shareholders and the
Board of Directors and, to the extent ordered by the board of Directors or the
corporate Presidents, the minutes of meetings of all divisions and committees.
The Secretary shall cause notice to be given of the meetings of the
shareholders, Board of Directors, and of any committee appointed by the Board,
he/she shall have custody of the corporate papers of the Corporation and each
division not pertaining to the performance of the duties vested in other
officers, which records, documents and papers shall at all reasonable time be
open to examination by any Director. He/she may sign or execute contracts with
the corporate President, Executive Vice President, or Vice President thereunto
authorized in the name of the Corporation and affix the seal of the Corporation
thereto, provided, however, that he/she may not simultaneously act both in the
capacity of the Secretary and that of corporate Executive Vice President or Vice
President upon the execution of such documents. He/she shall perform such other
duties as may be prescribed from time to time by the Board of Directors or by
these By- laws. He/she shall be sworn to the faithful discharge of his/her
duties. If necessary, assistant Secretaries shall assist the corporate Secretary
and shall keep and record such minutes of meetings as shall be directed by the
Board of Directors.
SECTION 10. TREASURER. The corporate Treasurer shall, subject to the
direction of the corporate President, have general custody and control of the
collection and disbursement of funds of the Corporation and each division for
collection checks, notes, and other obligations, and shall deposit the same to
the credit of the corporation or the division in such bank(s) or depositories as
the Board of Directors may designate. He/she may sign, with the corporate
president or such other persons as may be designated for the purpose of the
Board of Director, all the bills of exchange or promissory notes of the
Corporation or any division, provided, however, that he/she may not
simultaneously act in the capacity of corporate Treasurer and that of Executive
Vice President or Vice President upon the execution of such documents. He/she
shall enter or cause to be entered regularly in the books of the Corporation or
any division full and accurate account of all monies received and paid by
him/her or under his/her direction on account of the Corporation or such
divisions. He/she shall at all reasonable times exhibit his/her books and
account to any Director of the Corporation upon timely application at the office
of the Corporation during business hours, and, whenever required by the Board of
Directors of the Corporate President, he/she shall render a statement of his/her
accounts. He/she shall perform such other duties as may be prescribed from time
to time by the Board of Directors or by the By-laws. If necessary, assistant
Treasurer shall assist the corporate Treasurer and shall perform such duties as
shall be directed by the Board of Directors. He/she shall give bond for the
faithful performance of his/her duties in such cum and with or without such
surety as shall be required by the Board of Directors, if so required.
SECTION 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Board
of Directors may appoint such assistant Secretaries and assistant Treasurers as
may be necessary for the expedient discharge of the affairs of the corporation
of any division. The assistant Secretaries and assistant
36
<PAGE>
Treasurers shall be authorized to perform any duties of the corporate Secretary
and corporate Treasurer, respectively, in the absence of the corporate Secretary
or the Corporate Treasurer, or in any situation where the corporate Secretary or
corporate Treasurer may be acting in another capacity such as corporate
Executive Vice President or Vice President.
SECTION 12. GENERAL MANAGER. The Board of Directors may employ and
appoint a General Manager who may or may not be one of the officers or directors
of the Corporation. He shall be the chief operating officer of the Corporation
and, subject to the direction of the Board of Directors and of the President,
shall have general charge of the business operation of the Corporation and
general supervision over its employees and agents. He may be given the exclusive
management of the business of the Corporation in any or all of its dealings, but
at all times he shall be subject to the control of the Board of Directors or of
the Executive Committee. He may employ all employees of the Corporation, or
delegate such employment to subordinate officers or division chiefs, and he may
have the authority to discharge any person so employed. He shall make a report
to the President and Directors quarterly, or more often if required to do so,
setting forth the result of the operations under his charge, together with
suggestions looking to the improvement and betterment of the condition of the
Corporation. He may perform such duties as the Board of Directors shall require.
SECTION 13. OTHER OFFICERS. Other officers shall perform such duties
and have such powers as may be assigned to them by the Board of Directors.
SECTION 14. SALARIES. The salaries and other compensation of the
corporate officers and the officers of any division of the Corporation shall be
fixed from time to time by the Board of Directors, except that the Board of
Directors may delegate to any person or group of persons the power to fix the
salaries or other compensation of any subordinate officers or agents. No officer
shall be prevented from receiving any such salary or compensation by reason of
the fact that he is also a Director of the Corporation.
SECTION 15. SURETY BONDS. If the Board of Directors shall so require
any corporate or division officer or agent shall execute to the Corporation a
bond in such sums and with surety or sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his duties to the
Corporation or the applicable division, including his responsibility for
negligence and for the accounting of all property, monies or securities of the
Corporation or a division which may come into his hands.
ARTICLE VI
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEES. The Board of Directors may appoint
from among its members an Executive Committee of not less than two (2) nor mor
than five (5) members, one of whom shall be the President or the Chairman of the
Executive Committee. The Board of
37
<PAGE>
Directors may also designate one of such members as alternates to serve as
members of the Executive Committees in the absence or disability of a regular
member(s). The Board of Directors reserves itself alone the power to declare
dividends, issue stock, recommend to stockholders any action requiring their
approval, change the membership of any committee at any time, fill vacancies
therein, and disband any committee either with or without cause at any time.
Subject to foregoing limitations, the Executive Committee shall possess and
exercise all other powers of the Board of Directors during the intervals between
meetings.
SECTION 2. OTHER COMMITTEES. The Board of Directors may also appoint
from among its own members such other committees as the Board of Directors may
determine. Such committees shall in each case consist of not less than two (2)
directors, and shall have such powers and duties as shall from time to time be
prescribed by the Board. The President or Chairman of the Board shall be a
member ex officio of each committee appointed by the Board of Director. A
majority of the members of any committee may fix its rules of procedure.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any
officer(s), or agent(s), to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation, and such authority may
either be general or confined to specific instances.
SECTION 2. LOANS. No loan or advances shall be contracted on behalf
of the Corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
Corporation shall be mortgaged, pledged, hypothecated, or transferred as
security for payment of any loan, advance, indebtedness or liability of the
Corporation unless and except as authorized by the Board of Directors. Any such
authorization maybe either general or confined to specific instances.
SECTION 3. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies, or other depositories as the Board of Directors
may select, or as may be selected by any officer pr agent so authorized by the
Board of Directors.
SECTION 4. CHECKS AND DRAFTS. All notes, drafts, acceptance, checks,
endorsements and evidence of indebtedness of the Corporation shall be signed by
such officer(s) or such agent(s) of the Corporation and in such a manner as the
Board of Directors from time to time may determine. Endorsements for deposit to
the credit of the Corporation in any of its duly authorized depositories shall
be made in such manner as the Board of Directors from time to time may
determine.
38
<PAGE>
SECTION 5. BONDS AND DEBENTURES. Every bond and debenture issued by
the Corporation shall be evidenced by an appropriate instrument which shall be
signed by the President or Vice President and by the Treasurer or by the
Secretary. The seal may be a facsimile, engraved or printed. Where such bond or
debenture is to be authenticated with the manual signature of an authorized
officer of the Corporation or other trustee designated by the indenture of trust
or other agreement under which such security is issued, the signature of an
authorized officer of the Corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the Corporation=s officers named thereon may be facsimile.
In case any officer who shall cease to be an officer of the Corporation, such
bond or debenture may nevertheless be adopted by the Corporation and issued and
delivered as though the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such an officer.
ARTICLE VIII
CAPITAL STOCK
SECTION 1. CERTIFICATE FOR SHARES. The shares of the Corporation
shall be represented by certificates prepared on a form authorized by the Board
of Directors and signed by the Chairman of the Board or the President or Vice
President, and by the Secretary, and sealed with the seal of the corporation or
a facsimile. The signatures of such officers upon a certificate may be
facsimiles if the certificate is counter-signed by a transfer agent or
registered by a registrar other than the Corporation itself or one of its
employees. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares are
issued, with the number of shares and the date of issue, shall be entered on the
stock transfer books of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled. No new certificates shall be issued
until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in the case of a lost, destroyed or
mutilated certificate, a new one may be issued therefor upon such terms of
indemnity to the Corporation as the Board of Directors may prescribe.
SECTION 2. TRANSFER OF SHARES. Transfers of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holders
of record thereof or by his legal representative, or by his attorney thereunto
authorized by a power of attorney duly executed and such representative or
attorney shall furnish proper evidence of his authority to so transfer the
shares to the Secretary of the Corporation upon the surrender for cancellation
of the certificate for such shares. The person in whose name shares stand on the
stock transfer books of the Corporation shall be deemed by the Corporation to be
the owner thereof for all purposes.
SECTION 3. TRANSFER AGENT AND REGISTRAR. The Board of Directors shall
have the power to appoint one or more transfer agents and registrars, who may
also be employees of the Corporation, for the transfer and registration of
certificates of stock nay class, and may require
39
<PAGE>
that stock certificates shall be countersigned and registered by one or more or
such transfer agents and registrars.
SECTION 4. LOST OR DESTROYED CERTIFICATES. The Board of Directors may
direct a new certificate to be issued to replace any certificate theretofore
issued by the Corporation and alleged to have been lost or destroyed if the new
owner makes an affidavit that the certificate is lost or destroyed. The Board of
Directors may, at its discretion, require the owner of such certificate or his
legal representative to give the Corporation a bond in such sum and with such
sureties as the Board of Directors may direct to indemnify the Corporation and
transfer agents and registrars, if any, against claims that may be made on
account of the issuance of such new certificates. A new certificate may be
issued without requiring a bond.
SECTION 5. CONSIDERATION FOR SHARES. The capital stock of the
Corporation shall be issued for such consideration as shall be fixed from time
to time by the Board of Directors, but in no event shall such value be less than
the par value of such shares. In the absence of fraud, the determination of the
Board of Directors as to the value of any property or services received in full
or partial payment for shares shall be conclusive.
SECTION 6. REGISTERED SHAREHOLDERS. The Corporation shall be entitled
to treat the holder of record any share or shares of stock as the holder thereof
in fact and shall not be bound to recognize any equitable or other claim to or
interest in the shares.
ARTICLE IX
INDEMNIFICATION
SECTION 1. INDEMNIFICATION. No officer or Director shall be
personally liable for any obligations of the Corporation or for any duties or
obligations arising out of any acts or conduct of said officer or Director
performed for or on behalf of the Corporation. This Corporation shall indemnify
any person who was or is threatened to be made a party to any threatened,
pending or complete action, suit, or proceeding, whether civil, criminal,
administrative or investigative, except an action by or in the right of the
Corporation, by reason of the fact that he/she 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, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys= fees, judgements, fines and amounts paid in settlement
actually and reasonable incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the Corporation, and,
with respect to any criminal action proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgement, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not
40
<PAGE>
opposed to the business interests of the Corporation, and that, with respect to
any criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
This Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or complete action
or suit by or in the right of the Corporation to procure a judgement in its
favor by reason of the fact he 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 or agent of another Corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys= fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed in or not opposed to the
best interest of the Corporation. Indemnification may not be made for any claim,
issue, or matter as to which such a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the Corporation or for amounts paid in settlement to the Corporation, unless
and only to the extent that the court in which the action or suit was brought or
other court of competent jurisdiction determines upon application that in view
of all the circumstances of the case as the court deems proper. The expenses of
officers and directors incurred in defending a civil or criminal action, suit or
proceeding shall be paid by the Corporation as they are incurred and in advance
of the final disposition of the action, suit or proceeding, upon receipt of the
amount if it is ultimately determined by a court of competent jurisdiction that
he is not entitled to be indemnified by the Corporation.
SECTION 2. OTHER INDEMNIFICATION. The indemnification herein provided
shall not be deemed exclusive of any other right to indemnification to which any
person seeking indemnification may be under any By-law, agreement, vote of
stockholders or disinterested Directors, or otherwise, both as to action taken
in his official capacity and as to action taken in any other capacity while
holding such office. It is the intent hereof that all officers and Directors be
and hereby are indemnified to the fullest extent permitted the laws of the State
of Utah and these By-laws. The indemnification herein provided shall continue as
to any person who has ceased to be a Director, officer or employee and shall
inure to the benefit of the heirs, executors and administrators of any such
person.
SECTION 3. INSURANCE. The Board of Directors may, in its discretion,
direct that the Corporation purchase and maintain insurance of any person who is
or was a Director, officer or employee of the Corporation, or is or was serving
at the request of the Corporation as Director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by his in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against liability under the provisions of
this Section.
SECTION 4. SETTLEMENT BY CORPORATION. The right of any person to be
indemnified shall be subject always to the right of the Corporation by the Board
of Directors, in lieu of such
41
<PAGE>
indemnity, to settle any such claim, action, suit or proceeding at the expense
of the Corporation by the payment of the amount of such settlement and the costs
and expenses incurred in connection therewith.
ARTICLE X
WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder or
Director of the Corporation under the provisions of these By-laws or under the
provisions of the Articles of Incorporation or under the provisions of the Utah
Corporation and Business Laws, a waiver thereof in writing signed by the
person(s) entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Attendance at
any meeting shall constitute a waiver of notice of such meetings, except where
attendance is for the express purpose of objecting to the illegality of that
meeting.
ARTICLE XI
AMENDMENTS
These By-laws may be altered, amended, repealed, or new By-laws
adopted by a majority vote of the entire Board of Directors at any regular or
special meeting. Any By-law adopted by the Board may be repealed or changed by a
majority vote of the shareholders.
ARTICLE XII
FISCAL YEAR
The fiscal year end of the Corporation shall be fixed and may be
varied by resolution of the Board of Directors.
ARTICLE XIII
DIVIDENDS
The Board of Directors may at any regular or special meeting, as it
deems advisable, declare dividends payable out of the surplus of the
Corporation.
ARTICLE XIV
CORPORATE SEAL
42
<PAGE>
The Corporation may, in the discretion of the Board of Directors,
have an official seal which shall bear the name of the Corporation and the state
and year of incorporation.
The above and foregoing By-laws were adopted by and for the
Corporation by the Board OF DIRECTORS ON THE 26TH day of June, 1992.
---------------------------
Richard Sax, Secretary
43
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET OF PHOENIX MEDIA GROUP, LTD. AS OF DECEMBER 31, 1999 AND THE
RELATED STATEMENTS OF OPERATIONS AND CASH FLOWS FOR THE SIX MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1
<PP&E> 144
<DEPRECIATION> 38
<TOTAL-ASSETS> 134
<CURRENT-LIABILITIES> 35
<BONDS> 0
0
0
<COMMON> 7
<OTHER-SE> 28
<TOTAL-LIABILITY-AND-EQUITY> 134
<SALES> 189
<TOTAL-REVENUES> 189
<CGS> 34
<TOTAL-COSTS> 34
<OTHER-EXPENSES> 222
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (99)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
